The Construction Lobby Says It Can’t Find Workers. Its Own Witness Says It Won’t Pay Them.

On Oct. 7, The Washington Post reported from the Rio Grande Valley on the impact immigration enforcement is having on the construction industry.

“A sharp uptick in arrests by federal agents has taken undocumented immigrants out of local labor forces that depend on them, from construction sites in new subdivisions – building permits are down sharply across the state – to shrimping boats on the Gulf Coast.”

Businesses that have grown accustomed to illegal labor are looking for alternatives, but recruiting Americans by offering better pay doesn’t appear to be one of them.

Mario Guerrero, president of the South Texas Builders’ Association, told the paper that most U.S. citizen construction workers in the area travel north to San Antonio or Houston for jobs with higher wages. Illegal workers who were willing to work for less rushed into the industry, he said.

Without meaning to, the head of the local builders’ group had made the case against a guestworker program. The Valley’s jobs lost their workers to a better offer a few hours up the highway.

The industry wants a new visa program to fill American construction jobs with guestworkers from abroad. H.R. 5494, the Essential Workers for Economic Advancement Act, would create an H-2C visa for construction and other jobs that don’t require a college degree. It would start at 65,000 workers a year, on three-year terms that can be renewed twice, for up to nine years in the country. The Associated General Contractors, the Associated Builders and Contractors, the National Association of Home Builders and a long list of other business groups are behind it.

Some employers are asking for a visa so they won’t have to offer a raise.

Jobs Americans do

Construction is where American workers and illegal labor compete most directly. Immigrants are 29 percent of construction workers but 17 percent of the labor force, according to the Center for Immigration Studies’ analysis of Census Bureau data. Even so, more than seven in ten construction workers were born here. Pew Research Center estimates that illegal immigrants hold about 15 percent of construction jobs, and roughly a quarter of the jobs in drywall, roofing and painting. Black Americans, by comparison, are 10 percent of the labor force and 5 percent of construction workers, half the share their numbers would predict.

What happened to the pay

In January 1973, a construction worker earned 46 percent more than the average private-sector worker. This September, the gap was 21 percent. Union coverage in construction fell from about four in ten workers to little more than one in ten over the same span.

The Los Angeles Times traced that decline in 2017. Los Angeles construction went from an industry that was two-thirds white and largely union to one that is 70 percent Latino, mostly nonunion and heavily immigrant. The immigrant share of California’s construction workforce rose from 13 percent in 1980 to about 43 percent. The paper’s own data analysis found that even as homebuilding surged from 2011 to 2016, construction wages rose more slowly than pay in the rest of the private sector.

It happened again after 2020. From January of that year through this September, construction pay rose 37 percent and private-sector pay rose 36 percent. Prices rose about 30 percent over the same stretch, so inflation ate most of both raises, and construction gained almost nothing on the rest of the economy. The industry reported a labor shortage the entire time. A shortage that never pulls the wage ahead of everyone else’s is a price the employer has decided not to pay.

How it works on the payroll

Researchers at the University of Massachusetts found that labor brokers supply “mostly undocumented workers” to residential job sites in the state, paid in cash, and that cheating on the payroll can cut a contractor’s costs by up to 30 percent. Nationally, a 2020 study estimated that between 1.3 million and 2.2 million construction workers were misclassified or paid off the books in a typical month, leaving state workers’ compensation programs $1.7 billion short in a single year. A builder who hires legally and pays into the system bids against that every day.

What a visa would do

The country already runs a smaller version of this program. Under the H-2B visa, construction laborers are paid more than $4 an hour below the national average for the job, and cement masons about $8 below, according to an Economic Policy Institute analysis of Labor Department data. The Labor Department has found $847 million in stolen wages in construction alone among the industries that use H-2B workers.

H.R. 5494 would build on that model and tighten the employer’s grip. An H-2C worker would be tied to the employer who brought him in for his first year, and would have to leave the country after 45 days without a job. That is a workforce that can’t walk away. The bill also lets an employer qualify a job as an “enduring job opening” if it sits unfilled for three months at whatever wage was posted. Under one of its provisions, an employer can pay a “scarcity recruitment fee” of 5 percent of the worker’s salary instead of doing the extra recruiting of Americans the bill would otherwise require. For 5 percent of a salary, the employer gets to stop looking for an American.

The industry’s case

The home builders say immigration enforcement is costing citizen workers their jobs. The source for that claim is the association’s own friend-of-the-court brief, which offers no data. The contractors’ association ran a survey of its members this summer. Seventy-one percent reported no impact from immigration enforcement, and more than eight in ten said they were raising base pay. That is what a labor market does when the cheap option goes away.

The academic studies the industry leans on measure something else. They look at what happened to U.S.-born employment when counties began turning arrested illegal immigrants over for deportation. Deportation removes customers along with workers, so some jobs went with them. The Congressional Research Service summarized those studies in March. Employment “increased only for U.S.-born workers with a high school degree or less” in the lowest-paid occupations. In construction, “employment of U.S.-born workers increased” in the lower-skilled trades. The losses fell on managers. The American workers who compete directly with illegal labor came out ahead, even under deportation.

What the bill admits

Any employer that uses the H-2C visa would have to use E-Verify. The industry will accept the check as long as a visa comes with it. Congress should require the check and skip the visa.

Economists at the Federal Reserve Bank of Dallas studied the states that required every employer to use E-Verify. Hourly earnings of likely illegal workers fell about 8 percent. Earnings rose for U.S.-born Hispanic men and for naturalized citizens born in Mexico, the workers most likely to be competing with them for the same jobs.

H.R. 251, the Legal Workforce Act, would require every employer in the country to run new hires through E-Verify, phased in by company size. S. 4620, Sen. Katie Britt’s Mandatory E-Verify Act, would do the same in the Senate. E-Verify covers hiring on the books. The cash crews in the Massachusetts study need the labor laws enforced too. But most illegal hiring is taking place on the books, and E-Verify would level the playing field for law-abiding workers and employers.

Legal construction workers in the Rio Grande Valley are still building. They’re just doing it where it pays. Congress can bring the pay back to them, if it writes immigration law for the Americans who do the work.