The number of illegal immigrants living in the U.S. decreased by 500,000 over the last year, according to a new report by the Pew Hispanic Center, an arm of the Pew Research Center, a Washington, D.C., think tank.
A perhaps related statistic shows that between 2006 and 2007, the construction workforce lost 134,747 jobs and has continued to see monthly decreases ever since, according to the U.S. Census’ American Community Survey. In September alone, 35,000 construction jobs were lost, with the bulk of those losses coming from home building.
Illegals made up at least one-third of the residential construction workforce during the housing boom, and in trades such as framing, they made up the vast majority of the workers. They appear to be leaving the U.S. now due to lack of work.
“Builders are saying, ‘We haven’t been able to improve our cycle time because we don’t have the labor any more,’ ” says home building consultant Chuck Shinn, of Littleton, Colo.-based Shinn Consulting.
Shinn, who has been traveling the country meeting with distressed builders, says that while many cities are off 50% to 75% in new-home construction volume, there are builders who do not have the labor to build even a reduced number of houses. (New-home construction has decreased on a seasonally adjusted basis from 1.5 million units in March 2007 to 988,000 in March 2008. Total starts fell to an 817,000-unit annual pace in September.)
When asked, builders blame a labor shortage, but will not admit that the decrease in illegals is a factor, Shinn says.
“But you go and look at the jobsites, and all of a sudden the Hispanic labor force just isn’t there,” Shinn points out.
With the decline in illegal immigrants, opportunities are on the rise for legal immigrants and native workers, says Mollie Carmichael, a former executive with Lennar, Centex, and Pulte Homes, and now senior vice president of John Burns Real Estate Consulting, in Irvine, Calif.
But those legal immigrants are being forced to accept lower wages and fees for their services, Carmichael says. “That’s what allowed illegals to take opportunities to begin with. All aspects of business today are saying, ‘Gosh, I better be thankful for the work I have today, given where the economy is at.’ “
The Pew report does not address why America’s illegal immigrant population is falling, but the housing and economic recessions, combined with the federal government’s increasing crackdown on illegal immigrants, certainly plays a factor.
The relative strength of neighboring economies could also be playing a role, Shinn says. Shinn’s wife and business partner, Emma, is a native Panamanian. On a recent trip home, a family maid began peppering the Shinns about job prospects in Canada.
“Throughout Latin America, the word is spreading, ‘Go to Canada, go to Canada,’ ” Shinn says. “I thought they [immigrants in the U.S] were all going back home, and then I was up in Canada, in Calgary, and I realized, they’re not going back to Latin and Central America, they are migrating further north where the jobs are.”
As a result of the immigrant migration, a labor shortage could be looming. Looking forward to housing’s recovery, there could be severe problems for many companies.
“It’s going to be a big problem, there’s no doubt about it,” says Noelle Tarabulski, CEO of Builder Consulting Group, in Lakewood, Colo. “We’re putting a fence up, it continues to get built, and it seems to be pretty effective.”
Many builders and laborers from the baby boomer generation are approaching retirement, and without a guest worker program to allow legal migrant labor into the U.S. in large numbers, companies may be forced to pay more to would-be retirees to stay on past the age they planned to retire.
“A lot of companies aren’t going to be able to let them retire,” Tarabulski says. “They’re going to be in demand, and they’re going to end up working three days a week as consultants well into their late 60s. We don’t have enough employees.”
Learn more about markets featured in this article: Washington, DC.
