Trump's Crackdown on Illegal Aliens is Slowing Business But Raising Construction Wages

Trump's Crackdown on Illegal Aliens is Slowing Business But Raising Construction Wages

President Trump's tough stance on immigration may be having an unintended consequence -- higher housing costs. 

That's because builders say it's getting harder and harder for them to find workers, especially in places that rely on immigrant labor. 

"There's just not anybody you can hire out there," said Stan Marek, CEO of Marek Construction. 

Just how bad is it? According to the National Association of Home Builders, more than 56 percent of developers nationwide are reporting labor shortages. 

NAHB says the problems started when the recession hit and domestic construction workers dropped out of the market to find other jobs. At the same time, immigrant workers went back to their home countries. But as the economy has picked up and the construction industry has heated up, those workers have remained missing. 

The problem is compounded in hot real estate markets where more and more housing projects are finding fewer and fewer workers. In places like North Texas, recently, it's been a triple whammy. 

"Half of the workers in construction in Texas are undocumented," Marek said. "We do hear that there are a lot of undocumented workers that are leaving the state, going to other states that don't have the anti-immigrant sentiment and many of them are going back to Mexico." 

Ted Wilson with Residential Strategies, Inc. has run the numbers. 

"We've seen direct construction costs climb by over 30 percent," Wilson said, "and a lot of that is directly attributed to what builders are having to pay their subs and trades in wages." 

Meaning, with so few workers out there, construction companies have had to pay more to attract them, which adds to the cost of a home. 

"You know, when you figure that 60 percent of the cost of a job is labor," Marek said, "that's a lot of money." 

Wilson said companies have had to get by with fewer workers, so in addition to paying more for a house, you'll likely have to wait longer for it to get built.

"Instead of 12 guys coming out to frame your house, you get four guys," he said. 

Wilson claims that sort of shortage can add a month or two to the time it takes to build a home. 

The big business lobby and CEOs have long criticized Trump’s immigration crackdown, primarily because their businesses have a direct interest in keeping the pipeline of low-skilled foreign workers coming to the U.S. to drive down the cost of American wages.

Trump’s most recent endorsement of Sen. Tom Cotton (R-AK) and Sen. David Perdue (R-GA) RAISE Act, which would cut legal immigration in half in order to drive up the wages of U.S. workers, has shown a renewed commitment to the economic nationalist agenda that propelled his election.

Under the RAISE Act, overall legal immigration in the first year would be reduced by 41 percent and in 10 years, immigration would be reduced to 50 percent. It would also prioritize legal immigrants who can speak English and have skills needed for the current U.S. economy.

 

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