BRIAN PATRICK, A BUILDER BASED IN NORTHERN California, remembers that when he was growing up in Southern California in the 1960s, his uncle was a mason and always had Mexicans working for his company. The workers would be on hand during the height of the building season and then go back to Mexico in December for the holidays. While there were abuses in the industry at large, Patrick says that the Mexicans who worked for his uncle were accepted and treated fairly.
As time passed, Patrick gravitated to the framing business, but he opted to become a general contractor about 10 years ago because he couldn't compete with framing contractors who hired undocumented workers, paid low wages, and provided no workers' comp or other benefits.
“When I was a framing contractor, I tried to do everything legal,” he says. “I offered good wages, workers' comp insurance, and other benefits like health insurance, but I couldn't be competitive,” explains Patrick.
Today, as the owner of Northern Development, a builder based in Yuba City, Calif., north of Sacramento, Patrick says that he puts his subcontractors through a thorough screening before signing them on. Subcontractors have to fill out a qualification package that fully documents a sub's auto insurance, general liability insurance, workers' comp, and his overall financial standing.
But even with such strict guidelines and good faith efforts, Patrick says, it's impossible to police every jobsite—especially since his company builds 500 to 1,000 homes each year.
“I've got 100 landscapers and 400 framers working at any given time, so how do I keep track of them all?” asks Patrick. “I'll pull one of the guys aside and ask him ... if he is legal, and he'll say yes, but you can see it in his eyes that he's lying—he says yes because he doesn't want to be deported.”
Subcontractors neglecting to provide workers' comp and other benefits to undocumented workers present a serious ethical dilemma to home builders. Do they join the crowd and hire subs who use undocumented workers? Or do they try to stay completely within the law? Home builders we interviewed say that it's impossible to compete with builders who knowingly hire illegals and don't pay for workers' comp and other benefits.
The situation forces builders to make some hard choices about the kind of companies they run. After all, each builder has to be able to sleep at night. The rampant use of undocumented workers has forced some building industry people to shift gears. (BUILDER'S “Immigrant Worker Impact Survey” shows that 50 percent of the respondents admit to having at least some undocumented workers on their jobsites.)
Northern Development's Patrick became a general contractor because he couldn't compete as a framer against subs who didn't pay workers' comp insurance. He also didn't want to be forced into hiring undocumented workers.
Mike Reynolds, the owner of Melrose Building and Remodeling in Nacogdoches, Texas, says that he became a remodeler because he couldn't compete with local home builders who hired undocumented workers and didn't provide them with workers' comp. “It's hard to compete unless you're building a high-end house,” explains Reynolds. “That's why I moved to remodeling. I got cut out of the market.”
Learn more about markets featured in this article: Los Angeles, CA.