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Drop in Immigration Fuels Labor Shortage

Monday, September 28, 2015

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A new report suggests that an immigration slowdown is contributing to the rising cost of construction and widespread labor shortages in the industry.

The report, from John Burns Real Estate Consulting Inc., a homebuilding analyst firm, states that the U.S. construction industry has lost 570,000 Mexican-born workers since 2007. Mexican-born construction workers in the U.S. accounted for 1.32 million last year compared with 1.89 million in 2007, data from the Commerce Department shows.

And, the firm says it’s not likely the experienced workers will come back.

The information in the report isn’t likely to sit well with builders, according to John Burns, chief executive, and Chris Porter, chief demographer, noting that the firm does not have an opinion on controversial immigration policy.

Workers Not Returning

The report notes that a number of factors are likely responsible for keeping the Mexican-born workers from returning to the U.S. construction industry.

Significantly higher border patrol investments and a rise in court-ordered deportation over the last seven years are among the factors keeping the workers in Mexico, according to the firm. The report notes that both legal and illegal passenger traffic across the border has also dropped in recent years.

builder
©iStock.com / kenhurst

Burns said two out of three builders have reported that they cannot find enough carpenters and framers, with half noting shortages in all other major skills, including painting.

Also, employers’ use of the E-Verify verification technology is booming, from almost nonexistent in 2001 to more than 27 million employment checks in 2014, according to the report.

Moreover, the economy in Mexico is improving, so workers are staying there because they can get jobs, the report suggests.

Labor Shortages

Meanwhile, the construction industry is facing labor shortages and, therefore, increased costs, Burns says.

In a video announcing the results of the research, Burns said two out of three builders have reported that they cannot find enough carpenters and framers, with half noting shortages in all other major skills, including painting.

“That’s what keeps me up at night,” Doug Bauer, CEO, TRI Pointe Homes, said in a statement released with the report. “Electricians, plumbers, framers—their average age is about 50.”

Moreover, a recent survey conducted by the Associated General Contractors of America found that 86 percent of contractors have difficulty filling craft and salaried jobs.

USA and Mexico border
Sgt. 1st Class Gordon Hyde / U.S. Army

There has been a 67 percent decline in immigration from Mexico since 2006, according to Chris Porter, chief demographer for John Burns Real Estate Consulting.

Additionally, in its latest builder confidence index, the National Association of Home Builders reports its members are concerned about the availability of labor despite a steady rise in confidence in the overall building market.

Education and Policy

Some say increased investment in training and education for young people as well as higher compensation can help fix the labor shortage issues.

The owner of a concrete company in Houston, TX, Roy Weatherford, of Apex Foundation, told the Wall Street Journal that training the country’s youth for jobs in construction is the answer to the shortage issue, rather than trying to get workers to return from Mexico.

"There is work in Mexico," Weatherford said. "They’ve opened plants in Mexico. Look how many car manufacturers have moved to Mexico. They can work there, and if they’re making a living, they’d all rather be home."

Others believe in luring the Mexican workers back into the U.S. with changes to immigration policy, the WSJ reports.

   

Tagged categories: Business matters; Construction; Economy; Home builders; Politics; Research; Residential Construction; Worker training; Workers

Comment from Tom Schwerdt, (9/28/2015, 8:16 AM)

And yet, construction in the USA still has a higher unemployment rate than the economy as a whole, by nearly a full percentage point. http://www.bls.gov/news.release/empsit.t14.htm


Comment from peter j grady, (9/28/2015, 9:21 AM)

This headline is a typo. A factually accurate headline would read - Drop In ILLEGAL Immigration Fuels Labor Shortage. There are no other skilled professions where en masse illegal labor would be acceptable. We need to start following basic fundamental labor laws, and of course immigration laws. Nationwide training in the trades is the solution. And we live in a supply and demand economy. For 30 yrs trades wages have actually decreased adjusted t the costs of inflation. The wages have been kept artificially low by the en masse illegal hiring of illegal aliens. Nationwide training the skilled trades is the solution. And let's face it, developers & builders will not be able to get away with paying 3rd world wage race to the bottom rates. The solution is not to go back to the failed system of breaking labor laws and immigration laws, the solution is the training and hiring en masse of young citizens in the trades. This will take planning coordination and time.


Comment from William Feliciano, (9/28/2015, 11:56 AM)

Through church I met many Mexican migrant workers, many of which were illegal. Not because I am Hispanic myself, but because I'm human - I couldn't help but befriend and admire many of them. Unlike Donald Trump's claims, I didn't meet any killers or rapists. Just humble hardworking types that were secretly hired by American landscaping companies, Apple orchard, and horse ranches. Most lived in sheds onsite, with no heat, running water, etc. Believe it or not, many lived like that with their wife AND KIDS. Most got deported, the rest left on their own. I accompanied one through the immigration deportation process. Left 3 kids behind. Many would say why not just report and deport them. That's easier said than done. They had the American dream in their eyes, and a can-do working attitude. Many are very spiritual, thanking God for a safe passage through what sounded like hell itself as they relied on sometimes cruel coyotes to get them thru the border. Many women are silent about their experience, which made me assume the worse about what they endured. Then I drive back home and pass by all the unemployed, strong-bodied dudes on the streets, American born, collecting welfare and bored just enough to cause mayhem. Hmm. I'm just shooting from the hip here, not intending to be wise or the best informed on this subject. I know immigration is a sensitive topic. However, as it relates to this article, I agree with some of the statements. There's a lot of hypocrisy in this great nation of ours. We want to limit immigration, yet here are our industries clamoring for cheap foreign labor. There are some jobs that no one wants to do (e.g. hard farm labor). Some say let immigrants do it, since they are willing and able. I must tell you, as I've seen it first hand, they ARE willing and able. However, cheap labor is just too tempting to all the other industries (aside from farming). Think about it. Major corporations move our industry and jobs to foreign shores for cheap labor. Wall Street loves it, dividends and profits are large, and it's touted as a good business thing. Well, domestic industries want a share in that too, knowing times will get tough when the cheap labor bubble pops some day. Politicians will continue to rile up the American voter against illegal immigration, but they are SILENT on the topic of the corporate thirst for foreign workers and the race to bottom rate wages, hoping to get Americans to accept the same wages paid to Chinese workers in Shanghai or the illegal Mexican farm worker. I have yet to hear any of the current candidates discuss this in earnest in any of the debates. They just demonize the illegal Mexican worker and make illegal immigration the center stage topic. As Mr. Grady points out above, which I agree with, facing up to the true problem of the lack of job training for American youth in the trades, accompanied by decent wages, would go a long way towards increasing the labor force in these critical industries. With stratospheric college costs these days, it is a prime time for the trades to lure youth of all racial backgrounds.


Comment from peter gibson, (9/28/2015, 12:44 PM)

Words,words,words. Tell us exactly how to lure/train newbies. We all know the solution...but tell us how. People want to fool around with computers; not work the trades.


Comment from William Feliciano, (9/28/2015, 3:44 PM)

When I was in college, many kids were in ROTC to have Uncle Sam pay their tuition. Then they owed Uncle Sam 6(?) yrs of military service. It worked. They joined in droves. Same thing with other initiatives. Hence, if you want kids to join something unpopular, offer them something in return. Perhaps if our youth joined and graduated from a Trades school, Uncle Sam (or the industry) can offer them something enticing. Trade groups can and should sponsor certificate programs in high schools. I went to a vocational high school in NYC where I learned aviation mechanics (along with academics) and qualified to take the FAA airframe or powerplant certificate. Afterwards I jumped up to mechanical engineering. But how many high schools are offering shop anymore? Hardly any. Why? Because the Board of Education has to pay for it, and with the budget cuts being what they are, they'd rather get rid of wood shop than the ever popular computer class. (Rings better with parents so they think). Why doesn't the industry pony up the funds for these programs? At my high school, the FAA encouraged private companies and the military to donate old planes. The Board of Ed paid $0 for those. I've toured high schools and I'd be hard pressed to find shop classes for the trades. If so, they are the BOCES program. Unfortunately, these now carry a stigma as they are for "dumb kids". It's too bad. The psyche of America has turned against the trades, and they are portrayed badly in movies (an idiot plummer, the hunk electrician, or the price gouging carpenter). I've been a Project Lead The Way (PLTW) mentor for 17 years at the local high school. We mentor kids in a 3 course sequence that includes shop classes as well as pre-engineering. The district is chomping at the bit to kill the program, and we are fighting it. Any trade not supporting such programs vociferously will see their demise in no time. The trades cannot sit idle and complain. Similar to how the private sector throws their money and lobbyist around in D.C. to get their way, such must be the case at the most local levels of education to advocate for the trades among our youth. Show it to them early, make it standard fare in the curriculum (like it used to be), and support it with $$. Offer business classes with it so students can feel like they can start their own trade business some time later after they have experience. Not all can, but some will, and it gives them hope. Cable TV can also help out by adding more trade related shows instead of Master Chef, Project Runway, and a host of other silly reality crap. Sorry. I'm off the soapbox now.


Comment from Sarah Geary, (9/28/2015, 4:30 PM)

We also don't encourage trade schools. The high school seniors are kind of pushed into higher education without knowing all of their options. I'd never even heard of a trade school until I was halfway through my B.A. degree. I'm sure we'd benefit from promoting apprenticeships and not "frowning on" technical colleges and trade schools. We get a grand promise that if we go to a four year college and get our degree, we'll end up with this excellent job...but the jobs aren't there in a lot of cases. We end up over qualified for jobs, or under qualified. If we didn't get lucky with an internship, we probably didn't even end up in our field. Perhaps we need a change of schooling options?


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