Fact Sheet | Jobs and Unemployment

Misclassifying workers as independent contractors is costly for workers and states

Summary: Workers misclassified as independent contractors lose out on critical protections, benefits, and labor rights including minimum wage, overtime pay, unemployment insurance, the right to form a union, and anti-discrimination protections in most states. 

Executive summary

  • Workers misclassified as independent contractors lose out on critical protections, benefits, and labor rights including minimum wage, overtime pay, unemployment insurance, the right to form a union, and anti-discrimination protections in most states. Additionally, these workers bear the full financial costs of Social Security and Medicare contributions.
  • This analysis estimates the cost of independent contractor status for 11 commonly misclassified jobs. For example, a typical construction worker, as an independent contractor, would lose as much as $19,526 per year in income and job benefits compared with what they would have earned as an employee. A typical truck driver, as an independent contractor, would lose as much as $21,532 per year in income and job benefits compared with what they would have earned as an employee.
  • Lost compensation due to misclassification also varies by state. Estimated annual per-worker costs in lost compensation are as high as $26,253 for truck drivers in New Jersey.
  • Home health care aides, janitors, and landscapers are some of the occupations most affected by misclassification, as well as being relatively low-paying jobs. Misclassification further threatens the economic security of these workers leaving them vulnerable to exploitation and harmful labor practices.

What is misclassification?

Misclassification is when an employer wrongly classifies an employee as an independent contractor. The problem of workers being misclassified as independent contractors is pervasive and widespread. An analysis from the National Employment Law Project focusing on state-level reports on misclassification estimated that as many as 10–30% of employers misclassify their workers.1 An earlier study commissioned by the Department of Labor in 2000 found 10–30% of employers misclassified at least some workers.2 

The way a worker is classified has serious implications for their labor rights and costs to their economic security. Federal, state, and local labor laws provide extensive protections for employees that are not available to independent contractors, for example:

  • When a worker is misclassified as an independent contractor, they are no longer eligible to earn minimum wage or overtime pay.
  • These misclassified workers are no longer eligible to participate in unemployment insurance systems or to qualify for workers’ compensation insurance.
  • They do not qualify for paid sick or family leave in places where those benefits are statutorily prescribed and they do not receive employer-provided health insurance or retirement benefits.
  • They are no longer protected by the National Labor Relations Act, which ensures workers’ rights to form unions and bargain collectively to improve their working conditions.
  • In most states, misclassified workers no longer receive federal anti-discrimination and sexual harassment protections.3
  • Workers misclassified as independent contractors also must assume the full financial cost of Social Security and Medicare contributions, rather than split it evenly with their employer when classified as employees.

Losing these protections leaves independent contractors in a far more vulnerable position than employees when it comes to their basic rights on the job.

Employers have argued that many workers prefer being classified as independent contractors because they value “flexibility” over fundamental labor rights. But this so-called flexibility is often illusory, given the degree of control many employers retain over workers and their schedules.4 Misclassification remains pervasive because the costs to individual workers are hard to quantify and thus easy to obscure. Prior research has estimated the costs of misclassification by quantifying the number of workers misclassified; the amount of wage theft experienced by misclassified workers; and the loss in federal and state tax revenues resulting from employers not paying payroll taxes and workers’ compensation insurance.5 This fact sheet presents estimates of two types of costs caused by misclassification for 11 commonly misclassified occupations:

  1. the difference in the value of a job to a worker if the worker is classified as an independent contractor rather than as an employee, and
  2. the difference in payments to social insurance funds if a worker is classified as an independent contractor rather than as an employee.

The cost to workers

Table 1 highlights the individual worker costs of misclassification as an independent contractor for 11 occupations that are most prone to misclassification.6 In the first scenario, independent contractors are not compensated for health and retirement benefits (the low estimate of net job value in Table 1). In the second scenario, independent contractors are fully compensated for health and retirement benefits (the high estimate of net job value in Table 1).

Table 1

Summary of range of costs to workers of independent contractor status, by representative occupations, 2024 dollars

 

Range of value to worker of job as
independent contractor
Range of cost to worker of
independent contractor 
Occupations Median annual W-2 earnings Value to worker, as employee Low estimate  High estimate  Low estimate of cost to worker High estimate of cost to worker
Construction workers $55,680.00  $59,939.74 $40,412.97 $47,498.90 $12,440.84 $19,526.77
Truck drivers $54,320.00  $60,497.82 $38,965.24 $47,560.00 $12,937.82 $21,532.58
Janitors and cleaners $35,020.00  $35,931.82 $25,717.08 $28,703.78 $7,228.04 $10,214.74
Home health and personal care aides $33,530.00  $34,592.92 $24,346.41 $27,363.98 $7,228.93 $10,246.50
Retail sales workers $31,940.00  $32,283.20 $24,064.00 $26,381.77 $5,901.43 $8,219.20
Housekeeping cleaners $33,450.00  $34,320.94 $24,552.49 $27,405.29 $6,915.65 $9,768.45
Landscaping workers $37,360.00  $38,332.74 $27,452.84 $30,639.11 $7,693.63 $10,879.90
Customer service reps/call center workers $39,680.00  $40,713.15 $29,173.77 $32,557.90 $8,155.25 $11,539.38
Security guards $37,070.00  $38,035.19 $27,237.73 $30,399.26 $7,635.93 $10,797.47
Light truck delivery drivers $42,470.00  $47,300.11 $30,408.18 $37,127.98 $10,172.13 $16,891.93
Manicurists and pedicurists $34,250.00  $35,615.33 $25,240.67 $28,555.58 $7,059.75 $10,374.66

 

Notes: The low estimate of the value to worker of job as an independent contractor is calculated as the occupation's median annual earnings via regular pay, which excludes supplemental pay, paid leave, and employer contributions to health insurance and retirement plans. The high estimate is calculated as regular pay plus the dollar value of employer contributions to health insurance and retirement plans. Some differences may not be exact due to rounding. 

Source: Economic Policy Institute analysis of data from the Bureau of Labor Statistics' (BLS) National Compensation Survey's Employer Costs for Employee Compensation data and the BLS' Occupational Employment and Wage Statistics data.

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Scenario 1: No compensation for health and retirement benefits

In this scenario, we assume regular pay is the same as that of a W-2 employee. However, the independent contractor receives no supplemental pay (e.g., overtime or shift differentials), paid leave, or health insurance and retirement benefits. The independent contractor must also pay the full employer and employee contribution to Social Security and Medicare (15.3% of earnings) and cover paperwork costs like invoicing, bookkeeping, and small business tax filings. The net value of a job for a worker in this scenario is shown in column 3.

Under these assumptions, we conservatively estimate the net value of a construction job done as an independent contractor falls as $40,413 per year—a difference of $19,527 (column 6) or 32.6% less than a W-2 employee ($59,940 in column 2). Notably, misclassified truck drivers also see a massive decline in net value of the job. As a W-2 employee, a truck driving job is worth $60,498, while an independent contractor receiving the same wage, but no supplemental pay or benefits earns $38,965—$21,533 less.

Scenario 2: Full compensation for health and retirement benefits

This scenario assumes the regular pay is the same as a W-2 employee plus the full value of health insurance and retirement benefits. Access to these benefits increases the annual earnings of an independent contractor, but once we deduct Social Security and Medicare contributions and paperwork costs, the net value still falls below the net value of a W-2 employee. In Table 1, this is reflected in the comparatively less conservative high-end estimates in column 4. For a construction worker, the net value of the job as an independent contractor is only $47,499, or more than $12,000 below the net value of the same job done as an employee. For a truck driver, the switch to independent contractor status would cost $12,938.

Table 1 also shows estimates for 9 other occupations with lower annual earnings than construction workers and truck drivers. As W-2 employees, these workers had median annual earnings between $31,940 and $42,470. Under the more conservative estimates in scenario 1, being misclassified as an independent contractor would cost between $8,219 (retail sales workers) and $16,892 (light truck delivery drivers). Under scenario 2, the costs would be $5,901 and $10,172, respectively.

Mapping cost to workers by state

Similarly, we estimate the cost of misclassification to workers at the state level. Again, the value of a job to W-2 employees and independent contractors is calculated using available state- and occupation-specific data. The net value of a job to a W-2 employee is then compared to that of an independent contractor with and without compensation for health and retirement benefits.

Figure A maps the financial penalty that workers face when wrongfully misclassified as independent contractors without health and retirement benefits.The annual per-worker cost in lost compensation ranges from $6,517 for janitors and cleaners in Mississippi to $26,253 for truck drivers in New Jersey. See Appendix Table 1 and Appendix Table 2 for a detailed breakdown of costs to workers by occupation and state for independent contractors with and without compensation for health and retirement benefits.

Figure A

Wrongful misclassification costs workers thousands of dollars per year: Summary of range of cost to workers of independent contractor status, by representative occupation and state, 2023 dollars

State Construction Laborers Construction Laborers Customer Service Representatives Customer Service Representatives Heavy and Tractor-Trailer Truck Drivers Heavy and Tractor-Trailer Truck Drivers Home Health and Personal Care Aides Home Health and Personal Care Aides Janitors and Cleaners, Except Maids and Housekeeping Cleaners Janitors and Cleaners, Except Maids and Housekeeping Cleaners Landscaping and Groundskeeping Workers Landscaping and Groundskeeping Workers Light Truck Drivers Light Truck Drivers Maids and Housekeeping Cleaners Maids and Housekeeping Cleaners Manicurists and Pedicurists Manicurists and Pedicurists Retail Salespersons Retail Salespersons Security Guards Security Guards
Alabama $12,242 -31.7% $8,696 -27.6% $21,146 -34.1% $6,816 -28.9% $7,510 -27.8% $9,771 -27.5% $17,498 -34.2% $7,426 -27.8% $8,323 -28.1% $7,153 -24.8% $7,974 -27.7%
Alaska $18,764 -33.0% $11,198 -28.9% $24,691 -35.9% $11,074 -30.1% $10,885 -28.9% $13,364 -28.7% $21,320 -36.0% $9,726 -29.0% $13,531 -29.5% $9,473 -25.9% $13,997 -28.7%
Arizona $15,249 -31.2% $10,523 -27.2% $18,008 -34.0% $10,135 -28.4% $8,909 -27.4% $10,273 -27.3% $18,598 -34.0% $9,581 -27.3% $10,077 -28.0% $8,431 -24.5% $9,971 -27.3%
Arkansas $12,251 -31.9% $9,657 -27.7% $18,684 -34.3% $8,187 -28.9% $7,816 -27.9% $9,968 -27.7% $17,237 -34.4% $8,238 -27.9% $8,231 -28.4% $7,323 -24.9% $9,963 -27.7%
California $20,554 -32.9% $13,094 -28.7% $23,181 -36.0% $11,463 -30.1% $10,776 -28.9% $11,633 -28.8% $18,683 -36.1% $11,408 -28.8% $10,644 -29.7% $9,473 -25.9% $11,518 -28.8%
Colorado $15,586 -31.2% $11,450 -27.2% $21,592 -33.9% $9,953 -27.3% $12,300 -27.1% $17,363 -34.0% $10,555 -27.2% $16,461 -27.6% $8,763 -24.5% $11,001 -27.2%
Connecticut $19,439 -35.8% $12,221 -31.0% $24,450 -38.4% $12,573 -32.1% $11,026 -31.1% $14,534 -30.9% $20,569 -38.5% $12,312 -31.0% $9,975 -31.4% $9,730 -27.5% $11,827 -31.1%
Delaware $15,951 -31.4% $10,335 -27.6% $20,915 -34.3% $9,831 -28.9% $8,783 -27.8% $10,346 -27.6% $17,712 -34.4% $8,497 -27.8% $8,285 -28.7% $7,827 -25.0% $8,729 -27.8%
Florida $12,920 -31.5% $10,466 -27.6% $20,431 -34.3% $9,217 -29.0% $8,057 -27.8% $9,982 -27.6% $16,345 -34.4% $8,595 -27.8% $9,811 -28.5% $7,690 -25.0% $8,786 -27.8%
Georgia $12,666 -31.6% $9,805 -27.7% $22,108 -34.3% $8,600 -29.0% $8,182 -27.8% $10,186 -27.6% $17,225 -34.4% $8,302 -27.8% $7,987 -28.7% $7,234 -25.1% $9,490 -27.7%
Hawaii $22,254 -32.9% $10,928 -28.9% $22,235 -36.0% $10,899 -30.1% $10,267 -28.9% $11,273 -28.9% $11,673 -28.8% $7,775 -30.0% $9,273 -25.9% $11,173 -28.9%
Idaho $14,368 -31.3% $9,899 -27.3% $19,785 -34.0% $8,939 -28.5% $9,479 -27.3% $10,964 -27.2% $18,092 -34.0% $8,097 -27.5% $10,252 -27.9% $7,745 -24.6% $9,245 -27.4%
Illinois $23,594 -34.4% $11,820 -29.9% $25,240 -37.3% $11,356 -31.0% $10,995 -30.0% $13,964 -29.8% $23,644 -37.4% $11,986 -29.9% $12,044 -30.4% $9,294 -26.7% $11,355 -30.0%
Indiana $18,392 -34.6% $10,772 -30.0% $24,747 -37.4% $10,194 -31.1% $9,697 -30.1% $11,569 -29.9% $19,577 -37.5% $9,754 -30.1% $8,902 -30.7% $8,213 -26.9% $11,617 -29.9%
Iowa $17,352 -34.2% $11,090 -29.6% $21,470 -37.0% $10,855 -30.7% $9,156 -29.8% $11,740 -29.5% $20,056 -37.1% $12,473 -29.5% $10,731 -30.2% $8,110 -26.6% $11,016 -29.6%
Kansas $14,854 -34.3% $11,102 -29.6% $24,689 -36.9% $11,191 -30.7% $8,748 -29.8% $11,874 -29.5% $19,399 -37.1% $9,693 -29.7% $9,089 -30.3% $8,306 -26.5% $9,752 -29.7%
Kentucky $14,263 -31.6% $9,565 -27.5% $20,504 -34.2% $8,718 -28.6% $8,278 -27.6% $10,089 -27.5% $18,058 -34.2% $7,657 -27.7% $10,203 -27.9% $7,289 -24.8% $8,612 -27.6%
Louisiana $13,664 -31.8% $9,878 -27.7% $17,972 -34.3% $7,061 -29.1% $6,761 -28.1% $8,519 -27.8% $17,241 -34.4% $6,835 -28.1% $7,852 -28.4% $7,105 -25.0% $8,230 -27.9%
Maine $17,108 -35.9% $11,552 -31.1% $21,225 -38.5% $12,095 -32.1% $11,755 -31.1% $14,646 -30.9% $21,452 -38.5% $11,743 -31.1% $23,085 -30.9% $9,920 -27.5% $12,537 -31.0%
Maryland $15,540 -31.4% $11,047 -27.6% $21,177 -34.3% $10,422 -28.9% $9,946 -27.6% $10,797 -27.6% $18,440 -34.4% $8,571 -27.8% $10,370 -28.5% $8,300 -24.9% $10,800 -27.6%
Massachusetts $24,530 -35.7% $14,393 -30.9% $25,066 -38.4% $12,811 -32.1% $11,699 -31.1% $15,031 -30.9% $21,863 -38.5% $12,059 -31.1% $11,102 -31.3% $10,048 -27.5% $12,944 -31.0%
Michigan $17,861 -34.6% $11,500 -29.9% $21,809 -37.4% $10,707 -31.1% $9,842 -30.1% $11,596 -29.9% $19,857 -37.5% $10,660 -30.0% $10,415 -30.5% $8,645 -26.8% $10,926 -30.0%
Minnesota $21,151 -34.0% $12,229 -29.5% $25,148 -36.9% $11,691 -30.6% $11,403 -29.6% $14,041 -29.4% $20,498 -37.0% $11,230 -29.6% $11,436 -30.1% $9,408 -26.4% $13,093 -29.5%
Mississippi $12,130 -31.7% $9,152 -27.5% $21,461 -34.1% $7,488 -28.8% $6,517 -27.9% $8,658 -27.6% $17,261 -34.3% $6,587 -27.9% $10,136 -27.9% $6,886 -24.8% $7,746 -27.7%
Missouri $18,352 -34.1% $11,117 -29.6% $22,094 -37.0% $10,945 -30.7% $9,135 -29.8% $11,269 -29.6% $19,035 -37.1% $9,457 -29.7% $10,675 -30.2% $8,256 -26.5% $11,597 -29.5%
Montana $15,772 -31.2% $9,479 -27.3% $21,900 -33.9% $9,488 -28.4% $10,082 -27.3% $10,982 -27.2% $18,565 -34.0% $12,311 -27.1% $7,627 -28.2% $8,208 -24.6% $9,498 -27.3%
Nebraska $16,678 -34.2% $10,876 -29.6% $25,181 -36.9% $10,864 -30.7% $9,129 -29.8% $11,919 -29.5% $19,589 -37.1% $8,760 -29.8% $8,082 -26.6% $11,159 -29.6%
Nevada $15,746 -31.2% $10,262 -27.3% $21,500 -33.9% $8,717 -28.5% $8,038 -27.5% $10,108 -27.3% $16,850 -34.0% $9,017 -27.4% $9,920 -28.0% $7,977 -24.6% $9,920 -27.3%
New Hampshire $17,851 -35.8% $12,043 -31.1% $25,152 -38.4% $12,319 -32.1% $11,643 -31.1% $14,052 -30.9% $19,905 -38.6% $10,429 -31.2% $9,758 -31.4% $9,738 -27.5% $14,380 -30.9%
New Jersey $22,442 -33.6% $12,643 -29.5% $26,253 -37.1% $12,022 -30.9% $10,721 -29.6% $13,250 -29.4% $18,990 -37.2% $11,060 -29.6% $10,126 -30.8% $9,383 -26.6% $11,357 -29.5%
New Mexico $12,496 -31.4% $10,173 -27.3% $17,216 -34.0% $8,455 -28.6% $8,022 -27.5% $10,141 -27.3% $16,791 -34.0% $8,154 -27.5% $12,943 -27.8% $7,432 -24.7% $8,842 -27.4%
New York $21,018 -33.6% $12,973 -29.4% $23,976 -37.1% $11,580 -31.0% $11,164 -29.6% $11,929 -29.5% $19,098 -37.2% $11,774 -29.5% $10,866 -30.8% $9,764 -26.6% $11,613 -29.5%
North Carolina $12,917 -31.5% $9,897 -27.6% $19,493 -34.3% $8,757 -29.0% $7,940 -27.9% $10,093 -27.6% $16,959 -34.4% $7,823 -27.9% $8,696 -28.6% $7,481 -25.0% $8,658 -27.8%
North Dakota $17,513 -34.2% $9,579 -29.7% $25,516 -36.9% $12,366 -30.6% $10,846 -29.6% $13,680 -29.4% $20,341 -37.0% $11,037 -29.6% $9,246 -26.4% $11,150 -29.6%
Ohio $18,759 -34.5% $11,315 -30.0% $23,673 -37.4% $10,065 -31.2% $9,334 -30.1% $11,285 -30.0% $19,147 -37.5% $9,250 -30.1% $11,598 -30.4% $8,245 -26.8% $9,528 -30.1%
Oklahoma $12,827 -31.8% $10,412 -27.6% $19,508 -34.3% $7,437 -29.1% $8,314 -27.9% $10,161 -27.7% $17,540 -34.4% $7,633 -28.0% $7,830 -28.4% $7,282 -24.9% $7,968 -27.9%
Oregon $17,297 -33.0% $11,593 -28.8% $24,474 -35.9% $11,795 -30.1% $10,664 -28.9% $12,869 -28.8% $18,687 -36.1% $11,337 -28.8% $10,677 -29.7% $9,192 -25.9% $11,449 -28.8%
Pennsylvania $17,755 -33.7% $10,843 -29.6% $24,282 -37.1% $11,376 -31.0% $9,575 -29.7% $11,390 -29.5% $19,201 -37.2% $9,355 -29.7% $8,902 -31.0% $8,205 -26.8% $10,974 -29.6%
Rhode Island $21,728 -35.7% $11,999 -31.1% $25,893 -38.4% $12,866 -32.1% $11,399 -31.1% $14,252 -30.9% $21,379 -38.5% $12,465 -31.0% $11,894 -31.3% $9,654 -27.5% $12,315 -31.0%
South Carolina $12,800 -31.5% $9,963 -27.6% $20,187 -34.3% $8,731 -29.0% $7,848 -27.9% $10,088 -27.6% $16,733 -34.4% $8,470 -27.8% $8,183 -28.7% $7,248 -25.1% $8,772 -27.8%
South Dakota $14,843 -34.3% $10,166 -29.7% $25,429 -36.9% $11,439 -30.6% $9,520 -29.7% $10,974 -29.6% $20,230 -37.1% $13,752 -29.4% $12,351 -30.0% $8,931 -26.5% $11,004 -29.6%
Tennessee $13,520 -31.7% $10,053 -27.5% $21,668 -34.1% $8,752 -28.6% $8,229 -27.7% $10,553 -27.4% $18,091 -34.2% $9,356 -27.5% $8,219 -28.1% $7,384 -24.8% $8,818 -27.6%
Texas $12,607 -31.8% $10,374 -27.7% $19,932 -34.3% $8,167 -28.9% $8,126 -27.9% $10,082 -27.7% $17,865 -34.3% $8,723 -27.8% $10,053 -28.2% $7,428 -24.9% $8,461 -27.8%
Utah $15,398 -31.2% $10,423 -27.3% $21,698 -33.9% $10,160 -28.4% $8,261 -27.5% $10,864 -27.2% $16,238 -34.1% $10,195 -27.3% $8,589 -28.1% $8,101 -24.6% $10,431 -27.3%
Vermont $17,081 -35.9% $11,896 -31.1% $22,265 -38.5% $11,795 -32.1% $11,683 -31.1% $15,019 -30.9% $25,923 -38.4% $12,600 -31.0% $11,134 -31.3% $10,015 -27.5% $12,591 -31.0%
Virginia $12,653 -31.6% $10,033 -27.6% $21,103 -34.3% $9,879 -28.9% $8,451 -27.8% $10,680 -27.6% $18,093 -34.4% $9,215 -27.7% $10,639 -28.4% $7,832 -25.0% $10,751 -27.6%
Washington $19,509 -32.9% $12,490 -28.8% $23,918 -35.9% $12,485 -30.0% $11,046 -28.9% $13,609 -28.7% $20,279 -36.0% $11,690 -28.8% $14,219 -29.5% $9,711 -25.9% $13,275 -28.7%
Washington D.C. $15,779 -31.4% $13,964 -27.4% $22,691 -34.3% $10,508 -28.8% $10,536 -27.6% $12,768 -27.4% $10,558 -27.6% $9,805 -28.5% $9,220 -24.8% $14,201 -27.4%
West Virginia $12,695 -31.6% $9,636 -27.7% $17,638 -34.4% $8,552 -29.0% $7,641 -27.9% $8,231 -27.8% $17,154 -34.4% $7,165 -28.0% $11,076 -28.4% $7,008 -25.1% $7,853 -27.9%
Wisconsin $18,688 -34.5% $11,530 -29.9% $23,823 -37.4% $11,296 -31.0% $10,280 -30.0% $12,457 -29.9% $20,192 -37.5% $9,839 -30.1% $9,901 -30.6% $8,545 -26.8% $11,303 -30.0%
Wyoming $13,793 -31.3% $10,289 -27.3% $22,215 -33.9% $8,534 -28.6% $8,264 -27.5% $10,525 -27.2% $17,103 -34.0% $14,529 -27.0% $7,375 -24.7% $9,665 -27.3%

Source: EPI analysis of data from the Bureau of Labor Statistics' Employer Cost for Employee Compensation 2024Q2 and Occupational Employment and Wage Statistics Research Estimates by State and Industry May 2023 data.

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The cost to social insurance

Table 2 illustrates the impact of worker misclassification on payments to social insurance funds (Social Security, Medicare, federal and state unemployment insurance, and Workers’ Compensation).

Table 2

Summary of range of losses to social insurance of independent contractor status, by representative occupations, 2024 dollars

 

Total contributions to social insurance, independent contractor status Total cost to social insurance programs of independent contractor status
Occupations Median annual W-2 earnings Total employer and employee contributions to social insurance, employee status Low estimate High estimate Low estimate High estimate
Construction workers $55,680.00  $10,370.20 $7,300.10 $8,580.08 $1,790.11 $3,070.10
Truck drivers $54,320.00  $9,659.08 $7,038.59 $8,591.12 $1,067.96 $2,620.50
Janitors and cleaners $35,020.00  $6,158.82 $4,645.47 $5,184.98 $973.84 $1,513.35
Home health and personal care aides $33,530.00  $5,811.12 $4,397.88 $4,942.96 $868.15 $1,413.24
Retail sales workers $31,940.00  $5,578.35 $4,346.86 $4,765.54 $812.81 $1,231.48
Housekeeping cleaners $33,450.00  $5,882.71 $4,435.10 $4,950.42 $932.29 $1,447.61
Landscaping workers $37,360.00  $6,570.34 $4,959.01 $5,534.57 $1,035.77 $1,611.33
Customer service reps/call center workers $39,680.00  $6,978.35 $5,269.88 $5,881.18 $1,097.17 $1,708.47
Security guards $37,070.00  $6,519.34 $4,920.16 $5,491.25 $1,028.10 $1,599.19
Light truck delivery drivers $42,470.00  $7,551.94 $5,492.86 $6,706.71 $845.23 $2,059.08
Manicurists and pedicurists $34,250.00  $5,681.87 $4,559.41 $5,158.21 $523.66 $1,122.46

 

Notes: The low estimate of the value to worker of job as an independent contractor is calculated as the occupation's median annual earnings via regular pay, which excludes supplemental pay, paid leave, and employer contributions to health insurance and retirement plans. The high estimate is calculated as regular pay plus the dollar value of employer contributions to health insurance and retirement plans. Some differences may not be exact due to rounding. For further details, see "Heidi Shierholz, “EPI comments on independent contractor status under the Fair Labor Standards Act,” October 26, 2020.

Source: Economic Policy Institute analysis of data from the Bureau of Labor Statistics' (BLS) National Compensation Survey's Employer Costs for Employee Compensation data and the BLS' Occupational Employment and Wage Statistics data.

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When a worker is misclassified as an independent contractor, the entire cost of Social Security and Medicare contributions is shifted to the worker but no contributions are made to federal and state unemployment insurance and workers’ compensation funds.7 Under our first set of assumptions (independent contractors are paid only their regular pay on a job when they are classified as independent contractors with no health or retirement benefits), total contributions to social insurance fall for construction workers by close to 30% ($3,070). Under our second set of assumptions (independent contractors receive the regular pay on the job plus the full cost of insurance and retirement benefits), payments to social insurance drop by less—17.3% ($1,790) due to the higher base pay.

Mapping the cost to social insurance funds

Expanding this methodology to states reveals how misclassification deprives state social insurance funds of crucial dollars needed to maintain safety net programs, such as unemployment insurance and Workers’ Compensation. Figure B maps the difference in contributions to social insurance funds between W-2 employees and independent contractors without compensation for health and retirement benefits. The median, annual, per-person cost to social insurance funds ranges from $609 for pedicurists and manicurists in Oklahoma to $3,713 for construction workers in Hawaii. See Appendix Table 3 and Appendix Table 4 for a detailed breakdown of costs to social insurance funds by occupation and state for independent contractors with and without compensation for health and retirement benefits.

Figure B

Wrongful misclassification robs the social safety net of thousands of dollars per worker, per year: Summary of range of losses to social insurance of independent contractors status, by representative occupations, 2023 dollars

State Construction Laborers Construction Laborers Customer Service Representatives Customer Service Representatives Heavy and Tractor-Trailer Truck Drivers Heavy and Tractor-Trailer Truck Drivers Home Health and Personal Care Aides Home Health and Personal Care Aides Janitors and Cleaners, Except Maids and Housekeeping Cleaners Janitors and Cleaners, Except Maids and Housekeeping Cleaners Landscaping and Groundskeeping Workers Landscaping and Groundskeeping Workers Light Truck Drivers Light Truck Drivers Maids and Housekeeping Cleaners Maids and Housekeeping Cleaners Manicurists and Pedicurists Manicurists and Pedicurists Retail Salespersons Retail Salespersons Security Guards Security Guards
Alabama $1,728 -26.0% $1,098 -20.5% $2,282 -23.1% $786 -19.9% $943 -20.5% $1,239 -20.5% $1,883 -23.1% $932 -20.5% $714 -15.2% $887 -17.9% $1,004 -20.5%
Alaska $3,122 -30.5% $1,737 -25.2% $3,196 -28.1% $1,596 -24.9% $1,687 -25.2% $2,083 -25.2% $2,754 -28.1% $1,503 -25.2% $1,543 -20.4% $1,485 -22.7% $2,184 -25.2%
Arizona $2,456 -28.2% $1,551 -22.8% $2,229 -25.5% $1,381 -22.4% $1,306 -22.8% $1,513 -22.8% $2,303 -25.5% $1,408 -22.8% $1,054 -17.8% $1,243 -20.4% $1,467 -22.8%
Arkansas $1,625 -24.9% $1,128 -19.3% $1,895 -22.1% $879 -18.9% $906 -19.3% $1,165 -19.3% $1,746 -22.1% $957 -19.3% $641 -14.1% $825 -16.7% $1,165 -19.3%
California $3,425 -30.5% $2,040 -25.2% $2,998 -28.1% $1,654 -24.9% $1,670 -25.2% $1,807 -25.2% $2,408 -28.1% $1,771 -25.2% $1,206 -20.4% $1,485 -22.7% $1,788 -25.2%
Colorado $2,512 -28.2% $1,692 -22.8% $2,680 -25.5% $1,465 -22.8% $1,821 -22.8% $2,148 -25.5% $1,556 -22.8% $1,743 -17.8% $1,294 -20.4% $1,624 -22.8%
Connecticut $2,543 -28.1% $1,450 -22.2% $2,470 -25.3% $1,388 -21.8% $1,305 -22.2% $1,731 -22.2% $2,073 -25.3% $1,461 -22.2% $818 -16.7% $1,121 -19.0% $1,402 -22.2%
Delaware $2,291 -26.1% $1,325 -20.7% $2,311 -23.7% $1,168 -20.5% $1,120 -20.7% $1,326 -20.7% $1,952 -23.7% $1,082 -20.7% $735 -16.0% $983 -18.3% $1,113 -20.7%
Washington D.C. $2,265 -26.1% $1,804 -20.7% $2,510 -23.7% $1,251 -20.5% $1,351 -20.7% $1,646 -20.7% $1,354 -20.7% $875 -16.0% $1,165 -18.3% $1,836 -20.7%
Florida $1,847 -26.1% $1,342 -20.7% $2,256 -23.7% $1,093 -20.5% $1,024 -20.7% $1,278 -20.7% $1,798 -23.7% $1,095 -20.7% $875 -16.0% $965 -18.3% $1,120 -20.7%
Georgia $1,810 -26.1% $1,255 -20.7% $2,444 -23.7% $1,017 -20.5% $1,040 -20.7% $1,305 -20.7% $1,897 -23.7% $1,056 -20.7% $707 -16.0% $906 -18.3% $1,213 -20.7%
Hawaii $3,713 -30.5% $1,694 -25.2% $2,874 -28.1% $1,570 -24.9% $1,589 -25.2% $1,749 -25.2% $1,813 -25.2% $871 -20.4% $1,452 -22.7% $1,733 -25.2%
Idaho $2,311 -28.2% $1,456 -22.8% $2,453 -25.5% $1,213 -22.4% $1,393 -22.8% $1,618 -22.8% $2,240 -25.5% $1,183 -22.8% $1,073 -17.8% $1,138 -20.4% $1,357 -22.8%
Illinois $3,257 -28.0% $1,492 -22.4% $2,664 -25.3% $1,327 -22.0% $1,385 -22.4% $1,770 -22.4% $2,493 -25.3% $1,513 -22.4% $1,063 -17.1% $1,157 -19.5% $1,432 -22.4%
Indiana $2,529 -28.0% $1,356 -22.4% $2,611 -25.3% $1,188 -22.0% $1,217 -22.4% $1,459 -22.4% $2,059 -25.3% $1,224 -22.4% $778 -17.1% $1,018 -19.5% $1,466 -22.4%
Iowa $2,477 -28.4% $1,462 -22.9% $2,348 -25.7% $1,325 -22.4% $1,200 -22.9% $1,550 -22.9% $2,191 -25.7% $1,649 -22.9% $994 -17.6% $1,059 -20.1% $1,452 -22.9%
Kansas $2,114 -28.4% $1,464 -22.9% $2,705 -25.7% $1,367 -22.4% $1,144 -22.9% $1,568 -22.9% $2,118 -25.7% $1,272 -22.9% $838 -17.6% $1,086 -20.1% $1,281 -22.9%
Kentucky $2,021 -26.0% $1,212 -20.5% $2,212 -23.1% $1,016 -19.9% $1,044 -20.5% $1,281 -20.5% $1,944 -23.1% $962 -20.5% $882 -15.2% $905 -17.9% $1,087 -20.5%
Louisiana $1,817 -24.9% $1,154 -19.3% $1,822 -22.1% $753 -18.9% $778 -19.3% $990 -19.3% $1,746 -22.1% $787 -19.3% $610 -14.1% $799 -16.7% $956 -19.3%
Maine $2,233 -28.1% $1,368 -22.2% $2,140 -25.3% $1,334 -21.8% $1,393 -22.2% $1,745 -22.2% $2,163 -25.3% $1,392 -22.2% $1,926 -16.7% $1,144 -19.0% $1,488 -22.2%
Maryland $2,230 -26.1% $1,419 -20.7% $2,340 -23.7% $1,241 -20.5% $1,274 -20.7% $1,386 -20.7% $2,033 -23.7% $1,092 -20.7% $927 -16.0% $1,045 -18.3% $1,386 -20.7%
Massachusetts $3,220 -28.1% $1,714 -22.2% $2,533 -25.3% $1,415 -21.8% $1,386 -22.2% $1,792 -22.2% $2,206 -25.3% $1,430 -22.2% $913 -16.7% $1,159 -19.0% $1,538 -22.2%
Michigan $2,455 -28.0% $1,450 -22.4% $2,297 -25.3% $1,250 -22.0% $1,236 -22.4% $1,463 -22.4% $2,089 -25.3% $1,342 -22.4% $915 -17.1% $1,074 -19.5% $1,376 -22.4%
Minnesota $3,029 -28.4% $1,616 -22.9% $2,756 -25.7% $1,430 -22.4% $1,504 -22.9% $1,862 -22.9% $2,240 -25.7% $1,481 -22.9% $1,061 -17.6% $1,235 -20.1% $1,734 -22.9%
Mississippi $1,712 -26.0% $1,158 -20.5% $2,317 -23.1% $867 -19.9% $813 -20.5% $1,093 -20.5% $1,857 -23.1% $822 -20.5% $876 -15.2% $853 -17.9% $974 -20.5%
Missouri $2,623 -28.4% $1,466 -22.9% $2,417 -25.7% $1,336 -22.4% $1,197 -22.9% $1,486 -22.9% $2,078 -25.7% $1,241 -22.9% $989 -17.6% $1,079 -20.1% $1,531 -22.9%
Montana $2,542 -28.2% $1,393 -22.8% $2,719 -25.5% $1,290 -22.4% $1,484 -22.8% $1,621 -22.8% $2,299 -25.5% $1,823 -22.8% $790 -17.8% $1,209 -20.4% $1,396 -22.8%
Nebraska $2,379 -28.4% $1,433 -22.9% $2,760 -25.7% $1,326 -22.4% $1,196 -22.9% $1,574 -22.9% $2,139 -25.7% $1,146 -22.9% $1,055 -20.1% $1,471 -22.9%
Nevada $2,538 -28.2% $1,512 -22.8% $2,669 -25.5% $1,182 -22.4% $1,174 -22.8% $1,488 -22.8% $2,083 -25.5% $1,322 -22.8% $1,037 -17.8% $1,173 -20.4% $1,460 -22.8%
New Hampshire $2,332 -28.1% $1,428 -22.2% $2,542 -25.3% $1,359 -21.8% $1,380 -22.2% $1,673 -22.2% $2,005 -25.3% $1,232 -22.2% $799 -16.7% $1,122 -19.0% $1,713 -22.2%
New Jersey $3,284 -28.5% $1,717 -23.3% $2,964 -26.3% $1,518 -23.2% $1,449 -23.3% $1,801 -23.3% $2,134 -26.3% $1,496 -23.3% $985 -18.8% $1,271 -20.8% $1,538 -23.3%
New Mexico $2,004 -28.2% $1,498 -22.8% $2,129 -25.5% $1,145 -22.4% $1,171 -22.8% $1,493 -22.8% $2,076 -25.5% $1,191 -22.8% $1,363 -17.8% $1,090 -20.4% $1,296 -22.8%
New York $3,073 -28.5% $1,762 -23.3% $2,704 -26.3% $1,461 -23.2% $1,511 -23.3% $1,617 -23.3% $2,146 -26.3% $1,596 -23.3% $1,059 -18.8% $1,325 -20.8% $1,573 -23.3%
North Carolina $1,846 -26.1% $1,267 -20.7% $2,151 -23.7% $1,037 -20.5% $1,008 -20.7% $1,293 -20.7% $1,867 -23.7% $993 -20.7% $773 -16.0% $938 -18.3% $1,103 -20.7%
North Dakota $2,501 -28.4% $1,257 -22.9% $2,797 -25.7% $1,515 -22.4% $1,429 -22.9% $1,813 -22.9% $2,223 -25.7% $1,455 -22.9% $1,213 -20.1% $1,470 -22.9%
Ohio $2,581 -28.0% $1,427 -22.4% $2,496 -25.3% $1,172 -22.0% $1,170 -22.4% $1,423 -22.4% $2,013 -25.3% $1,159 -22.4% $1,022 -17.1% $1,022 -19.5% $1,195 -22.4%
Oklahoma $1,703 -24.9% $1,219 -19.3% $1,980 -22.1% $795 -18.9% $966 -19.3% $1,189 -19.3% $1,777 -22.1% $884 -19.3% $609 -14.1% $820 -16.7% $924 -19.3%
Oregon $2,874 -30.5% $1,800 -25.2% $3,167 -28.1% $1,703 -24.9% $1,652 -25.2% $2,004 -25.2% $2,409 -28.1% $1,759 -25.2% $1,210 -20.4% $1,439 -22.7% $1,777 -25.2%
Pennsylvania $2,589 -28.5% $1,466 -23.3% $2,739 -26.3% $1,435 -23.2% $1,290 -23.3% $1,542 -23.3% $2,158 -26.3% $1,259 -23.3% $862 -18.8% $1,106 -20.8% $1,484 -23.3%
Rhode Island $2,848 -28.1% $1,423 -22.2% $2,618 -25.3% $1,421 -21.8% $1,350 -22.2% $1,697 -22.2% $2,156 -25.3% $1,480 -22.2% $980 -16.7% $1,112 -19.0% $1,461 -22.2%
South Carolina $1,829 -26.1% $1,276 -20.7% $2,229 -23.7% $1,034 -20.5% $996 -20.7% $1,292 -20.7% $1,842 -23.7% $1,079 -20.7% $725 -16.0% $907 -18.3% $1,118 -20.7%
South Dakota $2,113 -28.4% $1,337 -22.9% $2,787 -25.7% $1,398 -22.4% $1,249 -22.9% $1,446 -22.9% $2,210 -25.7% $1,823 -22.9% $1,149 -17.6% $1,170 -20.1% $1,450 -22.9%
Tennessee $1,913 -26.0% $1,276 -20.5% $2,340 -23.1% $1,020 -19.9% $1,037 -20.5% $1,341 -20.5% $1,948 -23.1% $1,185 -20.5% $705 -15.2% $917 -17.9% $1,114 -20.5%
Texas $1,673 -24.9% $1,214 -19.3% $2,024 -22.1% $877 -18.9% $943 -19.3% $1,179 -19.3% $1,811 -22.1% $1,015 -19.3% $788 -14.1% $837 -16.7% $984 -19.3%
Utah $2,481 -28.2% $1,536 -22.8% $2,694 -25.5% $1,385 -22.4% $1,208 -22.8% $1,603 -22.8% $2,006 -25.5% $1,501 -22.8% $893 -17.8% $1,192 -20.4% $1,537 -22.8%
Vermont $2,230 -28.1% $1,410 -22.2% $2,247 -25.3% $1,300 -21.8% $1,384 -22.2% $1,790 -22.2% $2,621 -25.3% $1,496 -22.2% $916 -16.7% $1,155 -19.0% $1,495 -22.2%
Virginia $1,808 -26.1% $1,285 -20.7% $2,332 -23.7% $1,174 -20.5% $1,076 -20.7% $1,371 -20.7% $1,994 -23.7% $1,177 -20.7% $951 -16.0% $984 -18.3% $1,380 -20.7%
Washington $3,248 -30.5% $1,943 -25.2% $3,095 -28.1% $1,806 -24.9% $1,713 -25.2% $2,122 -25.2% $2,618 -28.1% $1,816 -25.2% $1,623 -20.4% $1,523 -22.7% $2,069 -25.2%
West Virginia $1,814 -26.1% $1,233 -20.7% $1,943 -23.7% $1,011 -20.5% $969 -20.7% $1,047 -20.7% $1,889 -23.7% $906 -20.7% $992 -16.0% $876 -18.3% $997 -20.7%
Wisconsin $2,571 -28.0% $1,454 -22.4% $2,512 -25.3% $1,320 -22.0% $1,292 -22.4% $1,574 -22.4% $2,124 -25.3% $1,235 -22.4% $869 -17.1% $1,061 -19.5% $1,425 -22.4%
Wyoming $2,217 -28.2% $1,516 -22.8% $2,759 -25.5% $1,156 -22.4% $1,208 -22.8% $1,552 -22.8% $2,115 -25.5% $2,160 -22.8% $1,081 -20.4% $1,421 -22.8%

Source: EPI analysis of data from the Bureau of Labor Statistics' Employer Cost for Employee Compensation (ECEC) 2024Q2 and Occupational Employment and Wage Statistics (OEWS) Research Estimates by State and Industry May 2023 data.

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Recommendations

Policymakers at the federal, state, and local levels should act to curb misclassification and enforce the rights to which all workers should be entitled. Policymakers should:

  • Establish or expand the use of a strong, uniform protective legal test for determining employee status, such as the ABC test;8
  • Pass the Protecting the Right to Organize (PRO) Act,9 which would make it harder for employers to misclassify employees in order to prevent them from forming a union and bargaining collectively;
  • Strengthen enforcement of wage theft and misclassification, and fully fund the federal and state agencies responsible for enforcing workers’ wage and hour rights;
  • Require employers to provide workers with transparent statements of their employment status and a justification for their classification;
  • Extend basic wage and hour protections, workplace health and safety protections, paid sick leave, and other protections to independent contractors to discourage misclassification as a “race to the bottom” for worker rights; and
  • Improve coordination among state and federal tax and labor enforcement agencies by establishing interagency misclassification task forces with dedicated resources and staff and strong co-enforcement partnerships capable of effectively cracking down on misclassification in targeted industries.10 

Methodology

Since there is no private or public data on workers misclassified as independent contractors, we apply a methodology that makes use of available employee total compensation and earnings data to estimate the costs of misclassification. For each of the 11 occupations included in our analysis, we begin with the average compensation profile drawn from the Bureau of Labor Statistics’ (BLS) Employer Costs for Employee Compensation (ECEC) database. This profile provides a breakdown of average employer costs for employee compensation in the private sector. As an example, Table 3 presents the average hourly compensation profile for construction workers broken into its component parts. We take the ratio of the individual compensation components to regular pay—which includes wages, salaries, supplemental pay, vacation, holiday, sick, and personal leave—to estimate the ratio of compensation to pay.

Table 3

Average compensation profile for construction workers, 2024

Compensation component  Cost per hour worked  Ratio of compensation to pay 
Pay (wages, salaries, supplemental pay, vacation, holiday, sick, personal)  $37.45  100% 
          Wages and salaries  $32.89  87.8% 
         Supplemental pay (e.g., overtime)  $2.34  6.2% 
         Paid leave (vacation, holiday, sick, personal)  $2.22  5.9% 
Insurance benefits and retirement benefits  $5.73  15.3% 
Legally required benefits (Social Security, Medicare, federal and state unemployment insurance, and Workers’ Compensation)  $4.11  11.0% 
Total Compensation  $47.29  126.2% 

Note: Totals may not sum exactly due to rounding. 

Source: Bureau of Labor Statistics, Employer Costs for Employee Compensation, "Table 4. Employer Costs for Employee Compensation for private industry workers by occupational and industry group," June 2024. 

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Next, we apply the ratios of compensation to pay to median annual earnings obtained from the BLS’ Occupational Employment and Wage Statistics data (OEWS). This gives us estimates of the regular pay, supplemental pay, paid leave, and insurance and retirement benefits for a W-2 employee. We then calculate the net value to the worker as an employee based on the sum of all pay, paid leave, insurance and benefits, minus Social Security and Medicare taxes.

From here, we model two possible ways that net value to a worker can change if the employee is misclassified as an independent contractor.

  1. In the first case, we assume that workers classified as independent contractors lose their supplemental pay, their paid leave, and their health insurance and retirement benefits.
  2. In the second case, we assume that employers pay independent contractors their regular pay and fully compensate them for the cost of health insurance and retirement benefits that employers would have paid to the same worker working as an employee. 

We make a few assumptions of additional costs incurred by workers hired as independent contractors that substantially reduce the value of the job relative to the value of the same job when performed as an employee. The largest cost is the independent contractor’s responsibility for paying both the employee and the employer contributions to Social Security and Medicare. We also assume independent contractors incur paperwork costs, including invoicing, bookkeeping, and small business tax filings. We calculate paperwork costs by updating the methodology used in  2020 comments on independent contractor status under the Fair Labor Standards Act.11

State estimates

Estimates of the cost of misclassification by state and occupational group are produced similarly to national estimates, using compensation data from the BLS’ Employer Costs ECEC data and state earnings data from the BLS’ OEWS data.

A compensation profile for each of the 11 occupational groups (see Table 1) obtained from the ECEC details the total hourly cost of compensating a worker, including the share of total compensation derived from regular pay, insurance and retirement benefits, and legally required benefits. A ratio of compensation to pay is calculated by dividing each compensation component by regular pay. 

BLS does not produce ECEC data for occupational groups at the state level. Thus, we construct these data by combining national, occupation, and census division ECEC data. Table 4 illustrates this procedure using construction workers in New England as an example. First, we create compensation to pay ratios for private-sector workers at the national level, for each occupational group (e.g. construction workers) and for each census division (e.g. New England). Next, we divide the occupation-specific ratio by the national ratio and multiply this quotient by the census division ratio. This yields a unique compensation to pay ratio for New England construction workers, which is then mapped onto all states within this respective census division. This procedure is followed for all occupational groups and census divisions to produce compensation to pay ratios for all 50 states and the District of Columbia.

Table 4

Procedure for creating ECEC compensation to pay ratios for occupational groups, by state

a b c d
Compensation component ratio National (all workers) Construction workers (nationally) New England (all workers)  New England Construction workers
Pay (wages, salaries, supplemental pay, vacation, holiday, sick, personal) 100.0%  100.0%  100.0%  100.0% 
Wages and salaries 85.9%  87.8%  83.4%  85.1% 
Supplemental pay (e.g., overtime) 4.9%  6.2%  6.7%  8.6% 
Paid leave (vacation, holiday, sick, personal) 9.2%  5.9%  9.8%  6.3% 
Insurance benefits and retirement benefits 13.2%  15.3%  14.2%  16.5% 
Legally required benefits (Social Security, Medicare, federal and state unemployment insurance, and Workers’ Compensation) 9.0%  11.0%  8.5%  10.5% 
Total Compensation 122.2%  126.3%  122.8%  126.9% 
= (b ÷ a) × c

Notes: Pay is calculated as the sum of wages and salaries, supplemental pay, and paid leave; The components of pay are normalized, and forced to equal 100%, by dividing each by their sum. Total compensation is calculated as the wages and salaries, supplemental pay, paid leave, insurance and retirement benefits, and legally required benefits.

Source: EPI analysis Bureau of Labor Statistics' Employer Cost for Employee Compensation (ECEC) 2024Q2 data.

 

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We apply the state- and occupation-specific compensation to pay ratios to state and occupation median annual earnings obtained from BLS’ OEWS data. This gives us estimates of total compensation that comes from regular pay, supplemental pay, paid leave, and insurance and retirement benefits for W-2 employees across all states and occupations.

As in the national estimates, the cost of misclassification to both workers and to social insurance funds is calculated by comparing the net value of a job for a W-2 employee to that of an independent contractor under two scenarios: with and without compensation for health and retirement benefits. Appendix Tables 1–4 provide detailed breakdowns of these costs in both net dollar amounts and percentage differences relative to W-2 employees.


Notes

1. National Employment Law ProjectIndependent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, October 2020.

2. Government Accountability Office, Employee Misclassification: Improved Coordination, Outreach, and Targeting Could Better Ensure Detection and Prevention, GAO-09–717, August 2009.

3. Meghan Racklin, Molly Weston Williamson, and Dina Bakst, “State Leadership on Anti-Discrimination Protections for Independent Contractors,” Future of Work Blog (A Better Balance), April 22, 2020.

4. Margaret Poydock, Lynn Rhinehart, and Celine McNicholas, Flexible Work: What Workers, Especially Low-Wage Workers, Really Want And How Best To Provide It, Economic Policy Institute, July 2024.

5. Françoise Carré, (In)dependent Contractor Misclassification, Economic Policy Institute, June 2015; Government Accountability Office, Employee Misclassification: Improved Coordination, Outreach, and Targeting Could Better Ensure Detection and Prevention, GAO-09–717, August 2009.

6. For discussions of occupations where workers are particularly vulnerable to misclassification as independent contractors, see Annette Bernhardt, Sarah Thomason, Chris Campos, Allen Prohofsky, Aparna Ramesh, and Jesse Rothstein, Independent Contracting in California: An Analysis of Trends and Characteristics Using Tax Data, UC Berkeley Labor Center and California Policy Lab, March 2022; Françoise Carré, (In)dependent Contractor Misclassification, Economic Policy Institute, June 2015; National Employment Law Project, Independent Contractor Misclassification Imposes Huge Costs on Workers and Federal and State Treasuries, October 2020; and Lisa Xu and Mark Erlich, Economic Consequences of Misclassification in the State of Washington, Harvard Labor and Worklife Program, December 2019.

7. When workers are employees, they pay the employee share of Social Security and Medicare (7.65% of W-2 earnings). Their employers also make identical payments to Social Security and Medicare.

8. Lynne Rhinehart et al. Misclassification, the ABC Test, and Employee Status, Economic Policy Institute, June 2021.

9. Celine McNicholas, Margaret Poydock, and Lynne Rhinehart, Why Workers Need the Protecting the Right to Organize Act, Economic Policy Institute, February 2021.

10. For more on interagency misclassification task forces, see Rebecca Smith, Public Task Forces Take on Employee Misclassification: Best Practices (policy brief), National Employment Law Projectupdated August 2020. For more on co-enforcement partnerships, see Janice Fine, Daniel Galvin, Jenn Round, and Hana Sheperd, “Strategic Enforcement and Co-enforcement of U.S. Labor Standards Are Needed to Protect Workers Through the Coronavirus Recession,” Boosting Wages for U.S. Workers in the New Economy seriesWashington Center for Equitable Growth, January 2021.

11. Heidi Shierholz, “EPI comments on independent contractor status under the Fair Labor Standards Act,” comments submitted on behalf of the Economic Policy Institute to Division of Regulations, Legislation, and Interpretation (Wage and Hour Division) Director Amy DeBisschop, October 26, 2020.

The IRS estimates that business taxpayers spend 13 more hours than nonbusiness taxpayers doing their taxes. If we conservatively assume that independent contractors spend 30 minutes per week on other (non-tax) paperwork costs that they wouldn’t have to spend if they were a payroll employee, that, plus the additional 13 hours spent on taxes, is an additional 39 hours of paperwork per year. This is equivalent to 1.8% of pay, or $880 annually for an independent contractor who earns $48,887 in regular pay annually. 

Additionally, we estimate these paperwork costs as the annual purchase of basic bookkeeping software ($114 on the lowest end, using FreshBooks, see https://www.freshbooks.com/pricing, accessed October 16, 2024), self-employed tax filing software for federal taxes ($129, using TurboTax, https://turbotax.intuit.com/personal-taxes/online/live/, accessed October 16, 2024) and state taxes ($64, using TurboTax).

Data appendix

Appendix Table 1

The cost of misclassification to workers, low and high estimates, net difference relative to W-2 workers, 2024 dollars

  Construction workers Customer service reps/call center workers Heavy and Tractor-Trailer Truck Drivers Home health and personal care aides Janitors and cleaners Landscaping workers Light truck delivery drivers Housekeeping cleaners Manicurists and pedicurists Retail sales workers Security guards
State Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate
Alabama $7,852 $12,242 $6,181 $8,696 $12,656 $21,146 $4,838 $6,816 $5,350 $7,510 $6,933 $9,771 $10,495 $17,498 $5,291 $7,426 $5,677 $8,323 $5,165 $7,153 $5,675 $7,974
Alaska $11,990 $18,764 $7,954 $11,198 $14,860 $24,691 $7,846 $11,074 $7,734 $10,885 $9,474 $13,364 $12,848 $21,320 $6,920 $9,726 $9,234 $13,531 $6,830 $9,473 $9,919 $13,997
Arizona $9,834 $15,249 $7,524 $10,523 $10,936 $18,008 $7,225 $10,135 $6,384 $8,909 $7,348 $10,273 $11,290 $18,598 $6,859 $9,581 $6,941 $10,077 $6,131 $8,431 $7,135 $9,971
Arkansas $8,043 $12,251 $6,989 $9,657 $11,505 $18,684 $5,913 $8,187 $5,673 $7,816 $7,211 $9,968 $10,623 $17,237 $5,975 $8,238 $5,740 $8,231 $5,384 $7,323 $7,207 $9,963
California $13,124 $20,554 $9,285 $13,094 $13,959 $23,181 $8,119 $11,463 $7,657 $10,776 $8,259 $11,633 $11,274 $18,683 $8,101 $11,408 $7,285 $10,644 $6,830 $9,473 $8,178 $11,518
Colorado $10,049 $15,586 $8,180 $11,450 $13,088 $21,592 $7,122 $9,953 $8,780 $12,300 $10,548 $17,363 $7,547 $10,555 $11,276 $16,461 $6,369 $8,763 $7,862 $11,001
Connecticut $12,478 $19,439 $8,661 $12,221 $14,673 $24,450 $8,854 $12,573 $7,823 $11,026 $10,283 $14,534 $12,364 $20,569 $8,725 $12,312 $6,762 $9,975 $6,968 $9,730 $8,385 $11,827
Delaware $10,421 $15,951 $7,484 $10,335 $12,915 $20,915 $7,111 $9,831 $6,373 $8,783 $7,492 $10,346 $10,955 $17,712 $6,169 $8,497 $5,818 $8,285 $5,768 $7,827 $6,334 $8,729
District of Columbia $10,309 $15,779 $10,081 $13,964 $14,002 $22,691 $7,594 $10,508 $7,628 $10,536 $9,225 $12,768 $7,643 $10,558 $6,868 $9,805 $6,779 $9,220 $10,250 $14,201
Florida $8,462 $12,920 $7,577 $10,466 $12,619 $20,431 $6,672 $9,217 $5,853 $8,057 $7,231 $9,982 $10,119 $16,345 $6,239 $8,595 $6,872 $9,811 $5,668 $7,690 $6,375 $8,786
Georgia $8,297 $12,666 $7,104 $9,805 $13,645 $22,108 $6,232 $8,600 $5,943 $8,182 $7,377 $10,186 $10,657 $17,225 $6,029 $8,302 $5,612 $7,987 $5,337 $7,234 $6,879 $9,490
Hawaii $14,200 $22,254 $7,764 $10,928 $13,394 $22,235 $7,724 $10,899 $7,300 $10,267 $8,006 $11,273 $8,287 $11,673 $5,348 $7,775 $6,688 $9,273 $7,936 $11,173
Idaho $9,272 $14,368 $7,084 $9,899 $12,003 $19,785 $6,383 $8,939 $6,787 $9,479 $7,836 $10,964 $10,986 $18,092 $5,811 $8,097 $7,060 $10,252 $5,639 $7,745 $6,622 $9,245
Illinois $14,641 $23,594 $8,176 $11,820 $14,659 $25,240 $7,816 $11,356 $7,612 $10,995 $9,641 $13,964 $13,740 $23,644 $8,289 $11,986 $7,955 $12,044 $6,520 $9,294 $7,858 $11,355
Indiana $11,439 $18,392 $7,459 $10,772 $14,375 $24,747 $7,026 $10,194 $6,725 $9,697 $8,004 $11,569 $11,400 $19,577 $6,764 $9,754 $5,907 $8,902 $5,773 $8,213 $8,037 $11,617
Iowa $10,719 $17,352 $7,634 $11,090 $12,396 $21,470 $7,435 $10,855 $6,320 $9,156 $8,076 $11,740 $11,588 $20,056 $8,574 $12,473 $7,062 $10,731 $5,676 $8,110 $7,584 $11,016
Kansas $9,193 $14,854 $7,642 $11,102 $14,235 $24,689 $7,662 $11,191 $6,042 $8,748 $8,167 $11,874 $11,213 $19,399 $6,684 $9,693 $5,998 $9,089 $5,810 $8,306 $6,725 $9,752
Kentucky $9,129 $14,263 $6,789 $9,565 $12,276 $20,504 $6,163 $8,718 $5,888 $8,278 $7,155 $10,089 $10,827 $18,058 $5,453 $7,657 $6,936 $10,203 $5,262 $7,289 $6,122 $8,612
Louisiana $8,958 $13,664 $7,147 $9,878 $11,071 $17,972 $5,112 $7,061 $4,919 $6,761 $6,175 $8,519 $10,626 $17,241 $4,972 $6,835 $5,481 $7,852 $5,226 $7,105 $5,969 $8,230
Maine $10,995 $17,108 $8,192 $11,552 $12,754 $21,225 $8,521 $12,095 $8,335 $11,755 $10,362 $14,646 $12,889 $21,452 $8,326 $11,743 $15,516 $23,085 $7,102 $9,920 $8,883 $12,537
Maryland $10,155 $15,540 $7,994 $11,047 $13,075 $21,177 $7,533 $10,422 $7,206 $9,946 $7,815 $10,797 $11,401 $18,440 $6,221 $8,571 $7,258 $10,370 $6,111 $8,300 $7,816 $10,800
Massachusetts $15,717 $24,530 $10,184 $14,393 $15,040 $25,066 $9,019 $12,811 $8,295 $11,699 $10,632 $15,031 $13,134 $21,863 $8,547 $12,059 $7,515 $11,102 $7,192 $10,048 $9,168 $12,944
Michigan $11,112 $17,861 $7,957 $11,500 $12,684 $21,809 $7,375 $10,707 $6,824 $9,842 $8,023 $11,596 $11,561 $19,857 $7,383 $10,660 $6,893 $10,415 $6,072 $8,645 $7,565 $10,926
Minnesota $13,040 $21,151 $8,408 $12,229 $14,497 $25,148 $8,000 $11,691 $7,847 $11,403 $9,639 $14,041 $11,841 $20,498 $7,729 $11,230 $7,519 $11,436 $6,569 $9,408 $8,995 $13,093
Mississippi $7,781 $12,130 $6,500 $9,152 $12,843 $21,461 $5,307 $7,488 $4,655 $6,517 $6,154 $8,658 $10,354 $17,261 $4,704 $6,587 $6,891 $10,136 $4,976 $6,886 $5,515 $7,746
Missouri $11,330 $18,352 $7,653 $11,117 $12,752 $22,094 $7,496 $10,945 $6,306 $9,135 $7,756 $11,269 $11,005 $19,035 $6,524 $9,457 $7,026 $10,675 $5,776 $8,256 $7,979 $11,597
Montana $10,167 $15,772 $6,787 $9,479 $13,273 $21,900 $6,769 $9,488 $7,213 $10,082 $7,849 $10,982 $11,270 $18,565 $8,788 $12,311 $5,277 $7,627 $5,971 $8,208 $6,800 $9,498
Nebraska $10,308 $16,678 $7,488 $10,876 $14,516 $25,181 $7,441 $10,864 $6,302 $9,129 $8,197 $11,919 $11,322 $19,589 $6,051 $8,760 $5,656 $8,082 $7,681 $11,159
Nevada $10,151 $15,746 $7,340 $10,262 $13,033 $21,500 $6,227 $8,717 $5,769 $8,038 $7,232 $10,108 $10,240 $16,850 $6,460 $9,017 $6,835 $9,920 $5,806 $7,977 $7,099 $9,920
New Hampshire $11,468 $17,851 $8,536 $12,043 $15,091 $25,152 $8,677 $12,319 $8,256 $11,643 $9,945 $14,052 $11,969 $19,905 $7,404 $10,429 $6,617 $9,758 $6,973 $9,738 $10,175 $14,380
New Jersey $13,808 $22,442 $8,726 $12,643 $15,272 $26,253 $8,301 $12,022 $7,414 $10,721 $9,141 $13,250 $11,083 $18,990 $7,646 $11,060 $6,771 $10,126 $6,604 $9,383 $7,849 $11,357
New Mexico $8,079 $12,496 $7,277 $10,173 $10,460 $17,216 $6,043 $8,455 $5,758 $8,022 $7,255 $10,141 $10,205 $16,791 $5,851 $8,154 $8,887 $12,943 $5,415 $7,432 $6,337 $8,842
New York $12,940 $21,018 $8,952 $12,973 $13,958 $23,976 $7,999 $11,580 $7,717 $11,164 $8,239 $11,929 $11,145 $19,098 $8,133 $11,774 $7,259 $10,866 $6,868 $9,764 $8,024 $11,613
North Carolina $8,460 $12,917 $7,171 $9,897 $12,045 $19,493 $6,344 $8,757 $5,770 $7,940 $7,311 $10,093 $10,494 $16,959 $5,686 $7,823 $6,102 $8,696 $5,517 $7,481 $6,283 $8,658
North Dakota $10,818 $17,513 $6,607 $9,579 $14,707 $25,516 $8,456 $12,366 $7,468 $10,846 $9,394 $13,680 $11,751 $20,341 $7,598 $11,037 $6,458 $9,246 $7,675 $11,150
Ohio $11,665 $18,759 $7,831 $11,315 $13,757 $23,673 $6,939 $10,065 $6,477 $9,334 $7,810 $11,285 $11,152 $19,147 $6,419 $9,250 $7,665 $11,598 $5,795 $8,245 $6,609 $9,528
Oklahoma $8,416 $12,827 $7,528 $10,412 $12,007 $19,508 $5,379 $7,437 $6,029 $8,314 $7,349 $10,161 $10,808 $17,540 $5,542 $7,633 $5,465 $7,830 $5,354 $7,282 $5,782 $7,968
Oregon $11,062 $17,297 $8,231 $11,593 $14,730 $24,474 $8,351 $11,795 $7,578 $10,664 $9,127 $12,869 $11,276 $18,687 $8,051 $11,337 $7,307 $10,677 $6,630 $9,192 $8,130 $11,449
Pennsylvania $10,949 $17,755 $7,498 $10,843 $14,135 $24,282 $7,860 $11,376 $6,633 $9,575 $7,871 $11,390 $11,204 $19,201 $6,482 $9,355 $5,966 $8,902 $5,786 $8,205 $7,587 $10,974
Rhode Island $13,934 $21,728 $8,506 $11,999 $15,532 $25,893 $9,058 $12,866 $8,084 $11,399 $10,085 $14,252 $12,846 $21,379 $8,833 $12,465 $8,044 $11,894 $6,914 $9,654 $8,727 $12,315
South Carolina $8,384 $12,800 $7,217 $9,963 $12,470 $20,187 $6,325 $8,731 $5,704 $7,848 $7,307 $10,088 $10,357 $16,733 $6,149 $8,470 $5,747 $8,183 $5,347 $7,248 $6,365 $8,772
South Dakota $9,187 $14,843 $7,006 $10,166 $14,658 $25,429 $7,830 $11,439 $6,567 $9,520 $7,555 $10,974 $11,688 $20,230 $9,443 $13,752 $8,112 $12,351 $6,241 $8,931 $7,576 $11,004
Tennessee $8,659 $13,520 $7,131 $10,053 $12,966 $21,668 $6,187 $8,752 $5,854 $8,229 $7,480 $10,553 $10,846 $18,091 $6,642 $9,356 $5,607 $8,219 $5,330 $7,384 $6,266 $8,818
Texas $8,274 $12,607 $7,501 $10,374 $12,266 $19,932 $5,899 $8,167 $5,895 $8,126 $7,293 $10,082 $11,006 $17,865 $6,321 $8,723 $6,990 $10,053 $5,460 $7,428 $6,134 $8,461
Utah $9,929 $15,398 $7,454 $10,423 $13,152 $21,698 $7,243 $10,160 $5,927 $8,261 $7,766 $10,864 $9,873 $16,238 $7,293 $10,195 $5,931 $8,589 $5,894 $8,101 $7,460 $10,431
Vermont $10,978 $17,081 $8,433 $11,896 $13,373 $22,265 $8,312 $11,795 $8,284 $11,683 $10,623 $15,019 $15,549 $25,923 $8,927 $12,600 $7,536 $11,134 $7,169 $10,015 $8,920 $12,591
Virginia $8,289 $12,653 $7,268 $10,033 $13,030 $21,103 $7,146 $9,879 $6,136 $8,451 $7,731 $10,680 $11,188 $18,093 $6,682 $9,215 $7,444 $10,639 $5,771 $7,832 $7,781 $10,751
Washington $12,462 $19,509 $8,861 $12,490 $14,399 $23,918 $8,835 $12,485 $7,847 $11,046 $9,646 $13,609 $12,227 $20,279 $8,299 $11,690 $9,698 $14,219 $6,999 $9,711 $9,412 $13,275
West Virginia $8,316 $12,695 $6,984 $9,636 $10,910 $17,638 $6,197 $8,552 $5,556 $7,641 $5,978 $8,231 $10,614 $17,154 $5,215 $7,165 $7,745 $11,076 $5,173 $7,008 $5,708 $7,853
Wisconsin $11,622 $18,688 $7,978 $11,530 $13,844 $23,823 $7,775 $11,296 $7,123 $10,280 $8,611 $12,457 $11,753 $20,192 $6,822 $9,839 $6,559 $9,901 $6,003 $8,545 $7,823 $11,303
Wyoming $8,905 $13,793 $7,359 $10,289 $13,462 $22,215 $6,098 $8,534 $5,928 $8,264 $7,526 $10,525 $10,392 $17,103 $10,355 $14,529 $5,374 $7,375 $6,918 $9,665

Notes: Estimates represent the difference between a value job to a W-2 employee compared to an independent contractor under two models. The low estimates refer to the difference when an independent contractor receives full compensation for health and retirement benefits. The high estimate is calculated as the difference when the independent contractor receives no compensation for health and retirement benefits.

Source: EPI analysis of data from the Bureau of Labor Statistics' Employer Cost for Employee Compensation (ECEC) 2024Q2 Occupational Employment and Wage Statistics (OEWS) Research Estimates by State and Industry May 2023 data.

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Appendix Table 2

The cost of misclassification to workers, low and high estimates, percent difference relative to W-2 workers

Construction workers Customer service reps/call center workers Heavy and Tractor-Trailer Truck Drivers Home health and personal care aides Janitors and cleaners Landscaping workers Light truck delivery drivers Housekeeping cleaners Manicurists and pedicurists Retail sales workers Security guards
State Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate
Alabama -20.4% -31.7% -19.6% -27.6% -20.4% -34.1% -20.5% -28.9% -19.8% -27.8% -19.5% -27.5% -20.5% -34.2% -19.8% -27.8% -19.2% -28.1% -17.9% -24.8% -19.7% -27.7%
Alaska -21.1% -33.0% -20.5% -28.9% -21.6% -35.9% -21.3% -30.1% -20.5% -28.9% -20.4% -28.7% -21.7% -36.0% -20.6% -29.0% -20.1% -29.5% -18.7% -25.9% -20.3% -28.7%
Arizona -20.1% -31.2% -19.5% -27.2% -20.7% -34.0% -20.2% -28.4% -19.6% -27.4% -19.5% -27.3% -20.6% -34.0% -19.6% -27.3% -19.3% -28.0% -17.8% -24.5% -19.5% -27.3%
Arkansas -20.9% -31.9% -20.1% -27.7% -21.1% -34.3% -20.9% -28.9% -20.3% -27.9% -20.0% -27.7% -21.2% -34.4% -20.2% -27.9% -19.8% -28.4% -18.3% -24.9% -20.0% -27.7%
California -21.0% -32.9% -20.4% -28.7% -21.7% -36.0% -21.3% -30.1% -20.5% -28.9% -20.5% -28.8% -21.8% -36.1% -20.5% -28.8% -20.3% -29.7% -18.7% -25.9% -20.5% -28.8%
Colorado -20.1% -31.2% -19.4% -27.2% -20.6% -33.9% -19.5% -27.3% -19.4% -27.1% -20.7% -34.0% -19.5% -27.2% -18.9% -27.6% -17.8% -24.5% -19.4% -27.2%
Connecticut -23.0% -35.8% -22.0% -31.0% -23.1% -38.4% -22.6% -32.1% -22.1% -31.1% -21.9% -30.9% -23.2% -38.5% -22.0% -31.0% -21.3% -31.4% -19.7% -27.5% -22.0% -31.1%
Delaware -20.5% -31.4% -20.0% -27.6% -21.2% -34.3% -20.9% -28.9% -20.1% -27.8% -20.0% -27.6% -21.3% -34.4% -20.2% -27.8% -20.1% -28.7% -18.4% -25.0% -20.1% -27.8%
District of Columbia -20.5% -31.4% -19.8% -27.4% -21.1% -34.3% -20.8% -28.8% -20.0% -27.6% -19.8% -27.4% -20.0% -27.6% -20.0% -28.5% -18.2% -24.8% -19.8% -27.4%
Florida -20.7% -31.5% -20.0% -27.6% -21.2% -34.3% -21.0% -29.0% -20.2% -27.8% -20.0% -27.6% -21.3% -34.4% -20.2% -27.8% -20.0% -28.5% -18.4% -25.0% -20.1% -27.8%
Georgia -20.7% -31.6% -20.0% -27.7% -21.2% -34.3% -21.0% -29.0% -20.2% -27.8% -20.0% -27.6% -21.3% -34.4% -20.2% -27.8% -20.2% -28.7% -18.5% -25.1% -20.1% -27.7%
Hawaii -21.0% -32.9% -20.5% -28.9% -21.7% -36.0% -21.3% -30.1% -20.6% -28.9% -20.5% -28.9% -20.5% -28.8% -20.6% -30.0% -18.7% -25.9% -20.5% -28.9%
Idaho -20.2% -31.3% -19.5% -27.3% -20.6% -34.0% -20.4% -28.5% -19.6% -27.3% -19.4% -27.2% -20.6% -34.0% -19.7% -27.5% -19.2% -27.9% -17.9% -24.6% -19.6% -27.4%
Illinois -21.4% -34.4% -20.7% -29.9% -21.7% -37.3% -21.4% -31.0% -20.8% -30.0% -20.6% -29.8% -21.7% -37.4% -20.7% -29.9% -20.1% -30.4% -18.8% -26.7% -20.7% -30.0%
Indiana -21.5% -34.6% -20.8% -30.0% -21.7% -37.4% -21.5% -31.1% -20.9% -30.1% -20.7% -29.9% -21.8% -37.5% -20.9% -30.1% -20.4% -30.7% -18.9% -26.9% -20.7% -29.9%
Iowa -21.1% -34.2% -20.4% -29.6% -21.4% -37.0% -21.0% -30.7% -20.5% -29.8% -20.3% -29.5% -21.4% -37.1% -20.3% -29.5% -19.8% -30.2% -18.6% -26.6% -20.4% -29.6%
Kansas -21.2% -34.3% -20.4% -29.6% -21.3% -36.9% -21.0% -30.7% -20.6% -29.8% -20.3% -29.5% -21.4% -37.1% -20.5% -29.7% -20.0% -30.3% -18.6% -26.5% -20.5% -29.7%
Kentucky -20.2% -31.6% -19.5% -27.5% -20.4% -34.2% -20.2% -28.6% -19.7% -27.6% -19.5% -27.5% -20.5% -34.2% -19.7% -27.7% -19.0% -27.9% -17.9% -24.8% -19.6% -27.6%
Louisiana -20.8% -31.8% -20.0% -27.7% -21.2% -34.3% -21.1% -29.1% -20.5% -28.1% -20.2% -27.8% -21.2% -34.4% -20.4% -28.1% -19.8% -28.4% -18.4% -25.0% -20.2% -27.9%
Maine -23.1% -35.9% -22.0% -31.1% -23.1% -38.5% -22.6% -32.1% -22.0% -31.1% -21.9% -30.9% -23.1% -38.5% -22.0% -31.1% -20.7% -30.9% -19.7% -27.5% -22.0% -31.0%
Maryland -20.5% -31.4% -19.9% -27.6% -21.2% -34.3% -20.9% -28.9% -20.0% -27.6% -20.0% -27.6% -21.3% -34.4% -20.2% -27.8% -19.9% -28.5% -18.3% -24.9% -20.0% -27.6%
Massachusetts -22.9% -35.7% -21.9% -30.9% -23.1% -38.4% -22.6% -32.1% -22.0% -31.1% -21.9% -30.9% -23.1% -38.5% -22.0% -31.1% -21.2% -31.3% -19.7% -27.5% -22.0% -31.0%
Michigan -21.5% -34.6% -20.7% -29.9% -21.8% -37.4% -21.4% -31.1% -20.9% -30.1% -20.7% -29.9% -21.8% -37.5% -20.8% -30.0% -20.2% -30.5% -18.8% -26.8% -20.8% -30.0%
Minnesota -21.0% -34.0% -20.3% -29.5% -21.3% -36.9% -21.0% -30.6% -20.3% -29.6% -20.2% -29.4% -21.4% -37.0% -20.4% -29.6% -19.8% -30.1% -18.4% -26.4% -20.2% -29.5%
Mississippi -20.4% -31.7% -19.6% -27.5% -20.4% -34.1% -20.4% -28.8% -20.0% -27.9% -19.6% -27.6% -20.5% -34.3% -19.9% -27.9% -19.0% -27.9% -17.9% -24.8% -19.7% -27.7%
Missouri -21.1% -34.1% -20.4% -29.6% -21.4% -37.0% -21.0% -30.7% -20.5% -29.8% -20.3% -29.6% -21.4% -37.1% -20.5% -29.7% -19.9% -30.2% -18.6% -26.5% -20.3% -29.5%
Montana -20.1% -31.2% -19.6% -27.3% -20.5% -33.9% -20.3% -28.4% -19.5% -27.3% -19.4% -27.2% -20.6% -34.0% -19.4% -27.1% -19.5% -28.2% -17.9% -24.6% -19.6% -27.3%
Nebraska -21.1% -34.2% -20.4% -29.6% -21.3% -36.9% -21.0% -30.7% -20.5% -29.8% -20.3% -29.5% -21.4% -37.1% -20.6% -29.8% -18.6% -26.6% -20.4% -29.6%
Nevada -20.1% -31.2% -19.5% -27.3% -20.6% -33.9% -20.4% -28.5% -19.7% -27.5% -19.5% -27.3% -20.7% -34.0% -19.6% -27.4% -19.3% -28.0% -17.9% -24.6% -19.5% -27.3%
New Hampshire -23.0% -35.8% -22.0% -31.1% -23.1% -38.4% -22.6% -32.1% -22.0% -31.1% -21.9% -30.9% -23.2% -38.6% -22.1% -31.2% -21.3% -31.4% -19.7% -27.5% -21.9% -30.9%
New Jersey -20.7% -33.6% -20.3% -29.5% -21.6% -37.1% -21.4% -30.9% -20.5% -29.6% -20.3% -29.4% -21.7% -37.2% -20.4% -29.6% -20.6% -30.8% -18.8% -26.6% -20.4% -29.5%
New Mexico -20.3% -31.4% -19.5% -27.3% -20.7% -34.0% -20.4% -28.6% -19.7% -27.5% -19.5% -27.3% -20.7% -34.0% -19.7% -27.5% -19.1% -27.8% -18.0% -24.7% -19.6% -27.4%
New York -20.7% -33.6% -20.3% -29.4% -21.6% -37.1% -21.4% -31.0% -20.4% -29.6% -20.4% -29.5% -21.7% -37.2% -20.4% -29.5% -20.5% -30.8% -18.7% -26.6% -20.4% -29.5%
North Carolina -20.7% -31.5% -20.0% -27.6% -21.2% -34.3% -21.0% -29.0% -20.2% -27.9% -20.0% -27.6% -21.3% -34.4% -20.3% -27.9% -20.1% -28.6% -18.4% -25.0% -20.2% -27.8%
North Dakota -21.1% -34.2% -20.5% -29.7% -21.3% -36.9% -20.9% -30.6% -20.4% -29.6% -20.2% -29.4% -21.4% -37.0% -20.4% -29.6% -18.5% -26.4% -20.4% -29.6%
Ohio -21.5% -34.5% -20.7% -30.0% -21.7% -37.4% -21.5% -31.2% -20.9% -30.1% -20.7% -30.0% -21.8% -37.5% -20.9% -30.1% -20.1% -30.4% -18.9% -26.8% -20.9% -30.1%
Oklahoma -20.9% -31.8% -20.0% -27.6% -21.1% -34.3% -21.0% -29.1% -20.2% -27.9% -20.0% -27.7% -21.2% -34.4% -20.3% -28.0% -19.8% -28.4% -18.3% -24.9% -20.3% -27.9%
Oregon -21.1% -33.0% -20.5% -28.8% -21.6% -35.9% -21.3% -30.1% -20.5% -28.9% -20.4% -28.8% -21.8% -36.1% -20.5% -28.8% -20.3% -29.7% -18.7% -25.9% -20.5% -28.8%
Pennsylvania -20.8% -33.7% -20.5% -29.6% -21.6% -37.1% -21.4% -31.0% -20.6% -29.7% -20.4% -29.5% -21.7% -37.2% -20.6% -29.7% -20.7% -31.0% -18.9% -26.8% -20.4% -29.6%
Rhode Island -22.9% -35.7% -22.0% -31.1% -23.0% -38.4% -22.6% -32.1% -22.1% -31.1% -21.9% -30.9% -23.1% -38.5% -22.0% -31.0% -21.1% -31.3% -19.7% -27.5% -22.0% -31.0%
South Carolina -20.7% -31.5% -20.0% -27.6% -21.2% -34.3% -21.0% -29.0% -20.3% -27.9% -20.0% -27.6% -21.3% -34.4% -20.2% -27.8% -20.2% -28.7% -18.5% -25.1% -20.1% -27.8%
South Dakota -21.2% -34.3% -20.4% -29.7% -21.3% -36.9% -21.0% -30.6% -20.5% -29.7% -20.4% -29.6% -21.4% -37.1% -20.2% -29.4% -19.7% -30.0% -18.5% -26.5% -20.4% -29.6%
Tennessee -20.3% -31.7% -19.5% -27.5% -20.4% -34.1% -20.2% -28.6% -19.7% -27.7% -19.4% -27.4% -20.5% -34.2% -19.5% -27.5% -19.2% -28.1% -17.9% -24.8% -19.6% -27.6%
Texas -20.9% -31.8% -20.0% -27.7% -21.1% -34.3% -20.9% -28.9% -20.2% -27.9% -20.0% -27.7% -21.2% -34.3% -20.2% -27.8% -19.6% -28.2% -18.3% -24.9% -20.2% -27.8%
Utah -20.1% -31.2% -19.5% -27.3% -20.6% -33.9% -20.2% -28.4% -19.7% -27.5% -19.5% -27.2% -20.7% -34.1% -19.5% -27.3% -19.4% -28.1% -17.9% -24.6% -19.5% -27.3%
Vermont -23.1% -35.9% -22.0% -31.1% -23.1% -38.5% -22.6% -32.1% -22.0% -31.1% -21.9% -30.9% -23.0% -38.4% -22.0% -31.0% -21.2% -31.3% -19.7% -27.5% -22.0% -31.0%
Virginia -20.7% -31.6% -20.0% -27.6% -21.2% -34.3% -20.9% -28.9% -20.2% -27.8% -20.0% -27.6% -21.3% -34.4% -20.1% -27.7% -19.9% -28.4% -18.4% -25.0% -20.0% -27.6%
Washington -21.0% -32.9% -20.4% -28.8% -21.6% -35.9% -21.2% -30.0% -20.5% -28.9% -20.4% -28.7% -21.7% -36.0% -20.5% -28.8% -20.1% -29.5% -18.6% -25.9% -20.4% -28.7%
West Virginia -20.7% -31.6% -20.1% -27.7% -21.3% -34.4% -21.0% -29.0% -20.3% -27.9% -20.2% -27.8% -21.3% -34.4% -20.4% -28.0% -19.9% -28.4% -18.5% -25.1% -20.3% -27.9%
Wisconsin -21.5% -34.5% -20.7% -29.9% -21.7% -37.4% -21.4% -31.0% -20.8% -30.0% -20.7% -29.9% -21.8% -37.5% -20.9% -30.1% -20.2% -30.6% -18.8% -26.8% -20.7% -30.0%
Wyoming -20.2% -31.3% -19.5% -27.3% -20.5% -33.9% -20.4% -28.6% -19.7% -27.5% -19.5% -27.2% -20.7% -34.0% -19.3% -27.0% -18.0% -24.7% -19.6% -27.3%

Notes: Estimates represent the percentage difference in the value of a job to a W-2 employee compared to an independent contractor under two models. The low estimate reflects the percentage difference when the independent contractor receives full compensation for health and retirement benefits. The high estimate reflects the percentage difference when the independent contractor receives no compensation for health and retirement benefits.

Source: EPI analysis of data from the Bureau of Labor Statistics' Employer Cost for Employee Compensation (ECEC) 2024Q2 Occupational Employment and Wage Statistics (OEWS) Research Estimates by State and Industry May 2023 data.

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Appendix Table 3

The cost of misclassification to social insurance funds, low and high estimates, net difference relative to W-2 workers, 2024 dollars

Construction workers Customer service reps/call center workers Heavy and Tractor-Trailer Truck Drivers Home health and personal care aides Janitors and cleaners Landscaping workers Light truck delivery drivers Housekeeping cleaners Manicurists and pedicurists Retail sales workers Security guards
State Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate
Alabama $935 $1,728 $644 $1,098 $749 $2,282 $429 $786 $553 $943 $726 $1,239 $618 $1,883 $546 $932 $236 $714 $528 $887 $589 $1,004
Alaska $1,899 $3,122 $1,151 $1,737 $1,420 $3,196 $1,013 $1,596 $1,118 $1,687 $1,380 $2,083 $1,224 $2,754 $996 $1,503 $767 $1,543 $1,007 $1,485 $1,447 $2,184
Arizona $1,478 $2,456 $1,010 $1,551 $951 $2,229 $856 $1,381 $850 $1,306 $985 $1,513 $983 $2,303 $917 $1,408 $487 $1,054 $827 $1,243 $955 $1,467
Arkansas $865 $1,625 $646 $1,128 $598 $1,895 $468 $879 $519 $906 $667 $1,165 $551 $1,746 $548 $957 $191 $641 $474 $825 $667 $1,165
California $2,083 $3,425 $1,352 $2,040 $1,332 $2,998 $1,050 $1,654 $1,107 $1,670 $1,197 $1,807 $1,070 $2,408 $1,174 $1,771 $599 $1,206 $1,007 $1,485 $1,185 $1,788
Colorado $1,511 $2,512 $1,101 $1,692 $1,144 $2,680 $953 $1,465 $1,185 $1,821 $917 $2,148 $1,013 $1,556 $806 $1,743 $861 $1,294 $1,057 $1,624
Connecticut $1,286 $2,543 $807 $1,450 $704 $2,470 $716 $1,388 $726 $1,305 $964 $1,731 $591 $2,073 $813 $1,461 $237 $818 $622 $1,121 $780 $1,402
Delaware $1,292 $2,291 $810 $1,325 $865 $2,311 $677 $1,168 $684 $1,120 $811 $1,326 $731 $1,952 $661 $1,082 $289 $735 $611 $983 $680 $1,113
District of Columbia $1,277 $2,265 $1,103 $1,804 $940 $2,510 $725 $1,251 $826 $1,351 $1,006 $1,646 $828 $1,354 $344 $875 $724 $1,165 $1,122 $1,836
Florida $1,041 $1,847 $820 $1,342 $845 $2,256 $633 $1,093 $626 $1,024 $781 $1,278 $674 $1,798 $669 $1,095 $344 $875 $600 $965 $685 $1,120
Georgia $1,020 $1,810 $767 $1,255 $916 $2,444 $590 $1,017 $636 $1,040 $798 $1,305 $711 $1,897 $646 $1,056 $278 $707 $563 $906 $742 $1,213
Hawaii $2,258 $3,713 $1,123 $1,694 $1,277 $2,874 $997 $1,570 $1,053 $1,589 $1,159 $1,749 $1,201 $1,813 $433 $871 $985 $1,452 $1,149 $1,733
Idaho $1,391 $2,311 $948 $1,456 $1,047 $2,453 $751 $1,213 $906 $1,393 $1,053 $1,618 $956 $2,240 $770 $1,183 $496 $1,073 $757 $1,138 $883 $1,357
Illinois $1,640 $3,257 $834 $1,492 $752 $2,664 $688 $1,327 $774 $1,385 $989 $1,770 $704 $2,493 $846 $1,513 $324 $1,063 $656 $1,157 $800 $1,432
Indiana $1,273 $2,529 $758 $1,356 $737 $2,611 $616 $1,188 $680 $1,217 $815 $1,459 $581 $2,059 $684 $1,224 $237 $778 $577 $1,018 $819 $1,466
Iowa $1,279 $2,477 $838 $1,462 $709 $2,348 $707 $1,325 $687 $1,200 $888 $1,550 $661 $2,191 $945 $1,649 $332 $994 $619 $1,059 $832 $1,452
Kansas $1,092 $2,114 $839 $1,464 $817 $2,705 $730 $1,367 $656 $1,144 $899 $1,568 $639 $2,118 $729 $1,272 $279 $838 $635 $1,086 $734 $1,281
Kentucky $1,094 $2,021 $711 $1,212 $726 $2,212 $554 $1,016 $612 $1,044 $751 $1,281 $638 $1,944 $564 $962 $292 $882 $539 $905 $637 $1,087
Louisiana $967 $1,817 $661 $1,154 $575 $1,822 $401 $753 $446 $778 $567 $990 $551 $1,746 $451 $787 $182 $610 $460 $799 $547 $956
Maine $1,129 $2,233 $762 $1,368 $610 $2,140 $688 $1,334 $775 $1,393 $971 $1,745 $617 $2,163 $774 $1,392 $559 $1,926 $635 $1,144 $828 $1,488
Maryland $1,258 $2,230 $867 $1,419 $877 $2,340 $719 $1,241 $778 $1,274 $847 $1,386 $762 $2,033 $667 $1,092 $365 $927 $650 $1,045 $847 $1,386
Massachusetts $1,628 $3,220 $954 $1,714 $722 $2,533 $730 $1,415 $772 $1,386 $997 $1,792 $629 $2,206 $796 $1,430 $265 $913 $643 $1,159 $856 $1,538
Michigan $1,236 $2,455 $810 $1,450 $649 $2,297 $648 $1,250 $690 $1,236 $817 $1,463 $590 $2,089 $750 $1,342 $279 $915 $609 $1,074 $769 $1,376
Minnesota $1,564 $3,029 $926 $1,616 $832 $2,756 $763 $1,430 $862 $1,504 $1,067 $1,862 $676 $2,240 $849 $1,481 $354 $1,061 $722 $1,235 $993 $1,734
Mississippi $926 $1,712 $679 $1,158 $760 $2,317 $473 $867 $477 $813 $641 $1,093 $609 $1,857 $482 $822 $290 $876 $508 $853 $571 $974
Missouri $1,354 $2,623 $840 $1,466 $730 $2,417 $713 $1,336 $686 $1,197 $852 $1,486 $627 $2,078 $711 $1,241 $330 $989 $631 $1,079 $877 $1,531
Montana $1,530 $2,542 $906 $1,393 $1,161 $2,719 $799 $1,290 $966 $1,484 $1,055 $1,621 $981 $2,299 $1,186 $1,823 $365 $790 $805 $1,209 $908 $1,396
Nebraska $1,229 $2,379 $821 $1,433 $833 $2,760 $708 $1,326 $685 $1,196 $902 $1,574 $646 $2,139 $657 $1,146 $617 $1,055 $843 $1,471
Nevada $1,527 $2,538 $984 $1,512 $1,139 $2,669 $732 $1,182 $764 $1,174 $969 $1,488 $889 $2,083 $861 $1,322 $480 $1,037 $781 $1,173 $950 $1,460
New Hampshire $1,179 $2,332 $795 $1,428 $725 $2,542 $701 $1,359 $768 $1,380 $931 $1,673 $572 $2,005 $685 $1,232 $232 $799 $623 $1,122 $953 $1,713
New Jersey $1,725 $3,284 $1,009 $1,717 $980 $2,964 $846 $1,518 $852 $1,449 $1,059 $1,801 $706 $2,134 $880 $1,496 $379 $985 $769 $1,271 $904 $1,538
New Mexico $1,206 $2,004 $975 $1,498 $909 $2,129 $709 $1,145 $762 $1,171 $972 $1,493 $886 $2,076 $775 $1,191 $630 $1,363 $726 $1,090 $843 $1,296
New York $1,614 $3,073 $1,036 $1,762 $894 $2,704 $814 $1,461 $888 $1,511 $951 $1,617 $710 $2,146 $938 $1,596 $408 $1,059 $801 $1,325 $925 $1,573
North Carolina $1,041 $1,846 $774 $1,267 $806 $2,151 $601 $1,037 $616 $1,008 $790 $1,293 $699 $1,867 $607 $993 $304 $773 $583 $938 $674 $1,103
North Dakota $1,291 $2,501 $720 $1,257 $844 $2,797 $808 $1,515 $819 $1,429 $1,039 $1,813 $671 $2,223 $833 $1,455 $709 $1,213 $842 $1,470
Ohio $1,299 $2,581 $797 $1,427 $705 $2,496 $608 $1,172 $654 $1,170 $795 $1,423 $569 $2,013 $648 $1,159 $312 $1,022 $580 $1,022 $668 $1,195
Oklahoma $906 $1,703 $698 $1,219 $625 $1,980 $423 $795 $553 $966 $681 $1,189 $561 $1,777 $506 $884 $181 $609 $472 $820 $529 $924
Oregon $1,748 $2,874 $1,193 $1,800 $1,407 $3,167 $1,081 $1,703 $1,095 $1,652 $1,328 $2,004 $1,070 $2,409 $1,166 $1,759 $601 $1,210 $976 $1,439 $1,178 $1,777
Pennsylvania $1,360 $2,589 $862 $1,466 $906 $2,739 $799 $1,435 $758 $1,290 $907 $1,542 $714 $2,158 $740 $1,259 $332 $862 $669 $1,106 $873 $1,484
Rhode Island $1,440 $2,848 $792 $1,423 $746 $2,618 $733 $1,421 $751 $1,350 $944 $1,697 $615 $2,156 $823 $1,480 $284 $980 $617 $1,112 $813 $1,461
South Carolina $1,031 $1,829 $780 $1,276 $835 $2,229 $599 $1,034 $609 $996 $790 $1,292 $690 $1,842 $659 $1,079 $285 $725 $564 $907 $684 $1,118
South Dakota $1,091 $2,113 $766 $1,337 $841 $2,787 $746 $1,398 $716 $1,249 $829 $1,446 $667 $2,210 $1,044 $1,823 $383 $1,149 $684 $1,170 $831 $1,450
Tennessee $1,035 $1,913 $748 $1,276 $768 $2,340 $557 $1,020 $608 $1,037 $786 $1,341 $639 $1,948 $695 $1,185 $233 $705 $546 $917 $653 $1,114
Texas $890 $1,673 $695 $1,214 $639 $2,024 $467 $877 $540 $943 $675 $1,179 $572 $1,811 $581 $1,015 $235 $788 $481 $837 $563 $984
Utah $1,493 $2,481 $1,000 $1,536 $1,150 $2,694 $858 $1,385 $786 $1,208 $1,043 $1,603 $856 $2,006 $977 $1,501 $413 $893 $794 $1,192 $1,001 $1,537
Vermont $1,127 $2,230 $785 $1,410 $640 $2,247 $671 $1,300 $770 $1,384 $996 $1,790 $747 $2,621 $833 $1,496 $266 $916 $641 $1,155 $832 $1,495
Virginia $1,019 $1,808 $785 $1,285 $873 $2,332 $681 $1,174 $658 $1,076 $838 $1,371 $747 $1,994 $719 $1,177 $374 $951 $611 $984 $843 $1,380
Washington $1,975 $3,248 $1,288 $1,943 $1,375 $3,095 $1,146 $1,806 $1,135 $1,713 $1,406 $2,122 $1,163 $2,618 $1,203 $1,816 $807 $1,623 $1,033 $1,523 $1,371 $2,069
West Virginia $1,023 $1,814 $753 $1,233 $728 $1,943 $586 $1,011 $592 $969 $640 $1,047 $708 $1,889 $554 $906 $390 $992 $545 $876 $609 $997
Wisconsin $1,294 $2,571 $813 $1,454 $710 $2,512 $684 $1,320 $722 $1,292 $880 $1,574 $600 $2,124 $690 $1,235 $265 $869 $602 $1,061 $796 $1,425
Wyoming $1,334 $2,217 $986 $1,516 $1,178 $2,759 $716 $1,156 $786 $1,208 $1,010 $1,552 $903 $2,115 $1,405 $2,160 $720 $1,081 $925 $1,421

Notes: Estimates represent the difference in contributions to social insurance funds—Social Security, Medicare, federal and state Unemployment Insurance, and Workers' Compensation—between a W-2 employee and an independent contractor under two models. The low estimate reflects the difference when the independent contractor receives full compensation for health and retirement benefits. The high estimate reflects the difference when the independent contractor receives no compensation for health and retirement benefits.

Source: EPI analysis of data from the Bureau of Labor Statistics' Employer Cost for Employee Compensation (ECEC) 2024Q2 Occupational Employment and Wage Statistics (OEWS) Research Estimates by State and Industry May 2023 data.

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Appendix Table 4

The cost of misclassification to social insurance funds, low and high estimates, percent difference relative to W-2 workers

  Construction workers Customer service reps/call center workers Heavy and Tractor-Trailer Truck Drivers Home health and personal care aides Janitors and cleaners Landscaping workers Light truck delivery drivers Housekeeping cleaners Manicurists and pedicurists Retail sales workers Security guards
State Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate Low estimate High estimate
Alabama -14.1% -26.0% -12.0% -20.5% -7.6% -23.1% -10.9% -19.9% -12.0% -20.5% -12.0% -20.5% -7.6% -23.1% -12.0% -20.5% -5.0% -15.2% -10.7% -17.9% -12.0% -20.5%
Alaska -18.6% -30.5% -16.7% -25.2% -12.5% -28.1% -15.8% -24.9% -16.7% -25.2% -16.7% -25.2% -12.5% -28.1% -16.7% -25.2% -10.1% -20.4% -15.4% -22.7% -16.7% -25.2%
Arizona -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -13.9% -22.4% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -8.3% -17.8% -13.6% -20.4% -14.8% -22.8%
Arkansas -13.3% -24.9% -11.1% -19.3% -7.0% -22.1% -10.1% -18.9% -11.1% -19.3% -11.1% -19.3% -7.0% -22.1% -11.1% -19.3% -4.2% -14.1% -9.6% -16.7% -11.1% -19.3%
California -18.6% -30.5% -16.7% -25.2% -12.5% -28.1% -15.8% -24.9% -16.7% -25.2% -16.7% -25.2% -12.5% -28.1% -16.7% -25.2% -10.1% -20.4% -15.4% -22.7% -16.7% -25.2%
Colorado -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -8.3% -17.8% -13.6% -20.4% -14.8% -22.8%
Connecticut -14.2% -28.1% -12.4% -22.2% -7.2% -25.3% -11.3% -21.8% -12.4% -22.2% -12.4% -22.2% -7.2% -25.3% -12.4% -22.2% -4.8% -16.7% -10.5% -19.0% -12.4% -22.2%
Delaware -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
District of Columbia -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
Florida -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
Georgia -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
Hawaii -18.6% -30.5% -16.7% -25.2% -12.5% -28.1% -15.8% -24.9% -16.7% -25.2% -16.7% -25.2% -16.7% -25.2% -10.1% -20.4% -15.4% -22.7% -16.7% -25.2%
Idaho -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -13.9% -22.4% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -8.3% -17.8% -13.6% -20.4% -14.8% -22.8%
Illinois -14.1% -28.0% -12.5% -22.4% -7.1% -25.3% -11.4% -22.0% -12.5% -22.4% -12.5% -22.4% -7.1% -25.3% -12.5% -22.4% -5.2% -17.1% -11.1% -19.5% -12.5% -22.4%
Indiana -14.1% -28.0% -12.5% -22.4% -7.1% -25.3% -11.4% -22.0% -12.5% -22.4% -12.5% -22.4% -7.1% -25.3% -12.5% -22.4% -5.2% -17.1% -11.1% -19.5% -12.5% -22.4%
Iowa -14.7% -28.4% -13.1% -22.9% -7.7% -25.7% -12.0% -22.4% -13.1% -22.9% -13.1% -22.9% -7.7% -25.7% -13.1% -22.9% -5.9% -17.6% -11.8% -20.1% -13.1% -22.9%
Kansas -14.7% -28.4% -13.1% -22.9% -7.7% -25.7% -12.0% -22.4% -13.1% -22.9% -13.1% -22.9% -7.7% -25.7% -13.1% -22.9% -5.9% -17.6% -11.8% -20.1% -13.1% -22.9%
Kentucky -14.1% -26.0% -12.0% -20.5% -7.6% -23.1% -10.9% -19.9% -12.0% -20.5% -12.0% -20.5% -7.6% -23.1% -12.0% -20.5% -5.0% -15.2% -10.7% -17.9% -12.0% -20.5%
Louisiana -13.3% -24.9% -11.1% -19.3% -7.0% -22.1% -10.1% -18.9% -11.1% -19.3% -11.1% -19.3% -7.0% -22.1% -11.1% -19.3% -4.2% -14.1% -9.6% -16.7% -11.1% -19.3%
Maine -14.2% -28.1% -12.4% -22.2% -7.2% -25.3% -11.3% -21.8% -12.4% -22.2% -12.4% -22.2% -7.2% -25.3% -12.4% -22.2% -4.8% -16.7% -10.5% -19.0% -12.4% -22.2%
Maryland -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
Massachusetts -14.2% -28.1% -12.4% -22.2% -7.2% -25.3% -11.3% -21.8% -12.4% -22.2% -12.4% -22.2% -7.2% -25.3% -12.4% -22.2% -4.8% -16.7% -10.5% -19.0% -12.4% -22.2%
Michigan -14.1% -28.0% -12.5% -22.4% -7.1% -25.3% -11.4% -22.0% -12.5% -22.4% -12.5% -22.4% -7.1% -25.3% -12.5% -22.4% -5.2% -17.1% -11.1% -19.5% -12.5% -22.4%
Minnesota -14.7% -28.4% -13.1% -22.9% -7.7% -25.7% -12.0% -22.4% -13.1% -22.9% -13.1% -22.9% -7.7% -25.7% -13.1% -22.9% -5.9% -17.6% -11.8% -20.1% -13.1% -22.9%
Mississippi -14.1% -26.0% -12.0% -20.5% -7.6% -23.1% -10.9% -19.9% -12.0% -20.5% -12.0% -20.5% -7.6% -23.1% -12.0% -20.5% -5.0% -15.2% -10.7% -17.9% -12.0% -20.5%
Missouri -14.7% -28.4% -13.1% -22.9% -7.7% -25.7% -12.0% -22.4% -13.1% -22.9% -13.1% -22.9% -7.7% -25.7% -13.1% -22.9% -5.9% -17.6% -11.8% -20.1% -13.1% -22.9%
Montana -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -13.9% -22.4% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -8.3% -17.8% -13.6% -20.4% -14.8% -22.8%
Nebraska -14.7% -28.4% -13.1% -22.9% -7.7% -25.7% -12.0% -22.4% -13.1% -22.9% -13.1% -22.9% -7.7% -25.7% -13.1% -22.9% -11.8% -20.1% -13.1% -22.9%
Nevada -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -13.9% -22.4% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -8.3% -17.8% -13.6% -20.4% -14.8% -22.8%
New Hampshire -14.2% -28.1% -12.4% -22.2% -7.2% -25.3% -11.3% -21.8% -12.4% -22.2% -12.4% -22.2% -7.2% -25.3% -12.4% -22.2% -4.8% -16.7% -10.5% -19.0% -12.4% -22.2%
New Jersey -15.0% -28.5% -13.7% -23.3% -8.7% -26.3% -13.0% -23.2% -13.7% -23.3% -13.7% -23.3% -8.7% -26.3% -13.7% -23.3% -7.2% -18.8% -12.6% -20.8% -13.7% -23.3%
New Mexico -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -13.9% -22.4% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -8.3% -17.8% -13.6% -20.4% -14.8% -22.8%
New York -15.0% -28.5% -13.7% -23.3% -8.7% -26.3% -13.0% -23.2% -13.7% -23.3% -13.7% -23.3% -8.7% -26.3% -13.7% -23.3% -7.2% -18.8% -12.6% -20.8% -13.7% -23.3%
North Carolina -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
North Dakota -14.7% -28.4% -13.1% -22.9% -7.7% -25.7% -12.0% -22.4% -13.1% -22.9% -13.1% -22.9% -7.7% -25.7% -13.1% -22.9% -11.8% -20.1% -13.1% -22.9%
Ohio -14.1% -28.0% -12.5% -22.4% -7.1% -25.3% -11.4% -22.0% -12.5% -22.4% -12.5% -22.4% -7.1% -25.3% -12.5% -22.4% -5.2% -17.1% -11.1% -19.5% -12.5% -22.4%
Oklahoma -13.3% -24.9% -11.1% -19.3% -7.0% -22.1% -10.1% -18.9% -11.1% -19.3% -11.1% -19.3% -7.0% -22.1% -11.1% -19.3% -4.2% -14.1% -9.6% -16.7% -11.1% -19.3%
Oregon -18.6% -30.5% -16.7% -25.2% -12.5% -28.1% -15.8% -24.9% -16.7% -25.2% -16.7% -25.2% -12.5% -28.1% -16.7% -25.2% -10.1% -20.4% -15.4% -22.7% -16.7% -25.2%
Pennsylvania -15.0% -28.5% -13.7% -23.3% -8.7% -26.3% -13.0% -23.2% -13.7% -23.3% -13.7% -23.3% -8.7% -26.3% -13.7% -23.3% -7.2% -18.8% -12.6% -20.8% -13.7% -23.3%
Rhode Island -14.2% -28.1% -12.4% -22.2% -7.2% -25.3% -11.3% -21.8% -12.4% -22.2% -12.4% -22.2% -7.2% -25.3% -12.4% -22.2% -4.8% -16.7% -10.5% -19.0% -12.4% -22.2%
South Carolina -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
South Dakota -14.7% -28.4% -13.1% -22.9% -7.7% -25.7% -12.0% -22.4% -13.1% -22.9% -13.1% -22.9% -7.7% -25.7% -13.1% -22.9% -5.9% -17.6% -11.8% -20.1% -13.1% -22.9%
Tennessee -14.1% -26.0% -12.0% -20.5% -7.6% -23.1% -10.9% -19.9% -12.0% -20.5% -12.0% -20.5% -7.6% -23.1% -12.0% -20.5% -5.0% -15.2% -10.7% -17.9% -12.0% -20.5%
Texas -13.3% -24.9% -11.1% -19.3% -7.0% -22.1% -10.1% -18.9% -11.1% -19.3% -11.1% -19.3% -7.0% -22.1% -11.1% -19.3% -4.2% -14.1% -9.6% -16.7% -11.1% -19.3%
Utah -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -13.9% -22.4% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -8.3% -17.8% -13.6% -20.4% -14.8% -22.8%
Vermont -14.2% -28.1% -12.4% -22.2% -7.2% -25.3% -11.3% -21.8% -12.4% -22.2% -12.4% -22.2% -7.2% -25.3% -12.4% -22.2% -4.8% -16.7% -10.5% -19.0% -12.4% -22.2%
Virginia -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
Washington -18.6% -30.5% -16.7% -25.2% -12.5% -28.1% -15.8% -24.9% -16.7% -25.2% -16.7% -25.2% -12.5% -28.1% -16.7% -25.2% -10.1% -20.4% -15.4% -22.7% -16.7% -25.2%
West Virginia -14.7% -26.1% -12.7% -20.7% -8.9% -23.7% -11.9% -20.5% -12.7% -20.7% -12.7% -20.7% -8.9% -23.7% -12.7% -20.7% -6.3% -16.0% -11.3% -18.3% -12.7% -20.7%
Wisconsin -14.1% -28.0% -12.5% -22.4% -7.1% -25.3% -11.4% -22.0% -12.5% -22.4% -12.5% -22.4% -7.1% -25.3% -12.5% -22.4% -5.2% -17.1% -11.1% -19.5% -12.5% -22.4%
Wyoming -16.9% -28.2% -14.8% -22.8% -10.9% -25.5% -13.9% -22.4% -14.8% -22.8% -14.8% -22.8% -10.9% -25.5% -14.8% -22.8% -13.6% -20.4% -14.8% -22.8%

Notes: Estimates show the percentage difference in contributions to social insurance funds—Social Security, Medicare, federal and state Unemployment Insurance, and Workers' Compensation—between a W-2 employee and an independent contractor under two models. The low estimate reflects the percentage difference when the independent contractor receives full compensation for health and retirement benefits. The high estimate reflects the percentage difference when the independent contractor receives no compensation for health and retirement benefits.

Source: EPI analysis of data from the Bureau of Labor Statistics' Employer Cost for Employee Compensation (ECEC) 2024Q2 Occupational Employment and Wage Statistics (OEWS) Research Estimates by State and Industry May 2023 data.

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