DENNIS ALLEN HAS BEEN A BUILDER FOR WELL OVER 20 years. His custom building company, Allen Associates in Santa Barbara, Calif., has about 90 employees and does about $20 million a year in business. Eight years ago, this home building veteran had an eye-opening experience on what was really happening in his industry.

An immigrant employee who had been with the builder for almost nine years decided that it was time to become a U.S. citizen, so he hired an attorney to get the process started. Allen offered assistance. “My role was just for signing papers and verifying information,” he says.

Allen isn't sure what happened, but the process ground to a halt, and the state forwarded the paperwork to the U.S. Immigration and Naturalization Service (INS, now known as Immigration and Customs Enforcement). “When INS came looking for him, the worker disappeared,” says Allen. The case did not end there. After the worker disappeared, the INS opened an investigation and requested access to company documents; Allen cooperated fully, since he had social security numbers and green cards for every employee. “When they looked through our records, they found 26 workers who were illegal,” Allen says.

LABOR POOL Today, such a story is unlikely to elicit shock. The U.S. Census Bureau estimates that Hispanics account for 22 percent of the construction labor force in this country, but some builders and construction consultants claim that the number is much higher in border states such as Texas, Arizona, and California. A large portion of these Hispanic workers are undocumented, they believe.

“The overwhelming majority of Hispanics in construction are illegal, extremely young, uneducated, and transient,” says Kenneth “Skip” Guarini, president of OMI Safety Services, a construction consultant in Englewood, Colo. “They are afraid of being discovered by INS, so they move often.” He continues, “We believe that within five to seven days [of arrival in this country], a young Mexican is working on an illegal basis on a construction site.”

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Builders aren't the only ones relying on immigrant labor to sustain their livelihood. Economists have noted that while the influx of low-income workers is increasing the burden on social services, immigrants are also playing a critical role in repopulating hollow cities, perpetuating the demand for housing, and paying into the social security that will support the massive wave of retiring baby boomers. According to a study by the Harvard Joint Center for Housing Studies, the United States now has more than 5.7 million foreign-born homeowners, representing $1.2 trillion in home value and $876 billion in home equity. The University of Georgia's Selig Center for Economic Growth predicts that the purchasing power of Hispanic-American consumers will hit $926 billion by 2007. Asian Americans' purchasing power is expected to reach $454.9 billion by next year.
Builders aren't the only ones relying on immigrant labor to sustain their livelihood. Economists have noted that while the influx of low-income workers is increasing the burden on social services, immigrants are also playing a critical role in repopulating hollow cities, perpetuating the demand for housing, and paying into the social security that will support the massive wave of retiring baby boomers. According to a study by the Harvard Joint Center for Housing Studies, the United States now has more than 5.7 million foreign-born homeowners, representing $1.2 trillion in home value and $876 billion in home equity. The University of Georgia's Selig Center for Economic Growth predicts that the purchasing power of Hispanic-American consumers will hit $926 billion by 2007. Asian Americans' purchasing power is expected to reach $454.9 billion by next year.
Of the 1.6 million Hispanic-owned businesses in the United States, 13 percent are construction-related. Hispanic workers often go on to manage or own their own businesses.
Of the 1.6 million Hispanic-owned businesses in the United States, 13 percent are construction-related. Hispanic workers often go on to manage or own their own businesses.
Luis  arrived in the United States with nothing in 1994. He now supports his seven brothers and sisters in El Salvador. Two years ago, he started his own painting, drywall, and plumbing business, which is licensed and insured. Immigrants studying to become licensed contractors participate in an estimating course at CASA de Maryland, a community organization offering education, training, health, social, and legal services. CASA also maintains a formal program that connects contractors and private homeowners to day laborers and negotiates a fair wage. Participants say that it's safer than the street corner, as it's regulated.
Luis arrived in the United States with nothing in 1994. He now supports his seven brothers and sisters in El Salvador. Two years ago, he started his own painting, drywall, and plumbing business, which is licensed and insured. Immigrants studying to become licensed contractors participate in an estimating course at CASA de Maryland, a community organization offering education, training, health, social, and legal services. CASA also maintains a formal program that connects contractors and private homeowners to day laborers and negotiates a fair wage. Participants say that it's safer than the street corner, as it's regulated.

It's not surprising that illegal immigrants and home building form an interrelated, if uneasy, bond. BUILDERS need low-cost unskilled labor as much as they need skilled labor, and subcontractors requiring temporary manpower can always find illegal immigrants who are willing, if not desperate, to take these jobs.

This abundance of unskilled illegal immigrants presents a dilemma for builders, however. On the one hand, builders say that unskilled illegal immigrants have had negative consequences on home building. In our “Immigrant Worker Impact Survey,” respondents say that cheap, unskilled labor in the home building industry has resulted in substandard construction, poor workmanship, and wasted time correcting mistakes. On the other hand, there have been big pluses, too. These workers, for example, have allowed builders to fill an acute labor shortage during the recent housing boom.

“Immigrant labor has enabled us to find—through trial and error—competent and talented workers, but more importantly, workers without attitude,” says a Los Angeles–area builder who wished to remain anonymous. “We no longer have to contend with spoiled brats who need to be shown what good work habits are about or have to convince workers to do some of the more boring or mindless tasks that always need to be done.”

Immigrant workers also have been good for the bottom line. With land development costs spiraling out of control and rising material prices, labor is the only area of the construction equation where builders can apply meaningful financial controls. And one of the ways they do it is with cheaper labor. “I do think that the influx of immigrant labor has reduced direct construction costs for labor or at least kept labor prices from increasing as much as they normally would,” says a purchasing manager from Colorado, who preferred not to be named.

So how do builders utilize a labor force that might be unskilled but is willing and able to work? What types of strategies should you pursue to make use of the immigrant labor pool in a fair and ethical manner while maintaining a high level of construction quality?

Learn more about markets featured in this article: Santa Barbara, CA, Los Angeles, CA, Charlotte, NC.