A Solid Footing

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.

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.

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.

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?

The first thing builders need to do is deal with the problem of illegal workers on the jobsite, industry experts say. NAHB CEO Jerry Howard says that his association reinforces to its members the importance of verifying that workers have a driver's license, a social security card, and a green card before they are hired. This is not necessarily a guarantee that the workers will be legal, but it is a basic step that all builders must take. The NAHB also supported the McCain-Kennedy immigration bill in Congress because, among other things, “It has a very practical guest worker provision and does not put the burden on builders or small business owners to be INS agents,” Howard says.

“I think a guest worker program where someone can work for 18 months and then be eligible to apply for citizenship is the best idea,” Guarini says. “What we are saying to these people is that if you keep your nose clean, learn English, [and] go to school or get training, you are the kind of people we want here. What's wrong with that?”

Nothing, says José Amaya, a Venezuelan-born immigrant who came to the United States in 1982 on a student visa and ended up staying. “At that time, the law allowed a one-year work permit after graduation,” says Amaya, a senior project manager at JE Dunn Construction in Colorado.

His story turned out well: Amaya found a job as a field engineer with a construction company in Alabama; he worked hard, got promoted, and his company started the process that allowed him to stay in the country permanently. Today, Amaya is the president of the Hispanic Contractors of Colorado, a nonprofit association.

Creating an atmosphere in which immigrants can legally seek work would be one of the most important developments in U.S. immigration policy because it would have ripple effects. It would allow laborers to stay on a job long enough to receive the training they need. “We are making [Hispanic workers] so paranoid that they never get trained because they don't stay in one place long enough,” says Guarini.

“It does not matter what country the person comes from,” the Colorado purchasing manager argues. “What does matter is that unlike in generations past, where an immigrant would learn a trade and work up a ladder of experience, there seems to be much less training in companies.” He continues, “I have seen many companies expand greatly—taking on huge amounts of work—with an apprentice-level workforce of immigrant labor. Many companies do not have training programs that detail what quality work is. Consequently, builder superintendents spend an increasing level of their time calling trades' foremen back to redo work and clean up.”

Setting up a system where workers can receive the proper training has been extremely successful for Allen Associates, whose 90 employees include about 40 workers of Hispanic background. Allen has a simple process: He uses his workers to recruit good people, and then he trains them well.

“Everyone has an uncle or a nephew who is looking for work,” he explains. “Since we started using our own network to recruit employees, many years ago now, our batting average has increased significantly. Employees, trade contractors, suppliers, and friends make up this network, but the best component is our employees. They know what we are looking for and perform a type of prescreening for us.” Allen cautions that builders may have to take the initiative to approach their workers about training because most of the time, the workers never ask. “I think it's a cultural thing,” he says. “The culture is such that they are timid about asking. It is a major thing that we have to be sensitive about.”

There are exceptions, of course. Arturo Gonzalez, a longtime employee at Allen Associates, took the initiative and asked his supervisors for additional training. “I started as a laborer doing the dirty work,” says the Mexican-born immigrant. “Now I am a finish carpenter in charge of small projects: molding, window and door trim, casing, cabinets.”

Guarini says that this is what happens when builders get it. “Some builders have figured out that training these guys and giving them respect works best for everybody, but the majority of builders are in the Stone Age,” he notes, adding, “They don't care about anything except getting the houses built and cashing the checks.”

Builders also should offer training to bridge the language gap, one of the biggest obstacles facing a crew of English- and Spanish-speaking workers. “We try to solve the communication problem, so we offer in-house Spanish classes for English speakers,” Allen explains. “It has been popular, so we now have a program for Spanish-speaking workers, too.”

“Learning English as a second language helped me,” Amaya believes. “Communication is the key. Everything goes along with it, and if the person understands, it helps. I have gotten workers to attend [English-as-second-language classes], and they like it so much they want to take more.”

Builders also have come up with innovative ways to build homes with a Spanish-speaking labor force that still knows very little, if any, English. “We go to the extent of hiring superintendents who speak Spanish,” says Charles Elliott, with Dewey Commercial in Wayne, Pa. “We build more mock-ups to better illustrate what we want built, try to use fewer skilled-labor–requiring products, and require an English-speaking foreman on their crews to deal with these issues.” Other builders are giving their workers more detailed drawings and fewer written notes.

Manufacturers are doing their part as well by developing tools and resources to accommodate the Hispanics in construction. Earlier this year, Charlotte, N.C.–based National Gypsum launched a Spanish-language version of its Web site so that Hispanic construction professionals will be able to locate and read information about the company's products and resources.

More recently, Atlanta-based Georgia-Pacific Corp. created an integrated marketing program designed to address the needs of the nation's 2.5 million Spanish-speaking construction professionals. The program pulls together a variety of communication and media elements, including a new dedicated Web site, a toll-free technical assistance line, and materials that provide information in Spanish about Georgia-Pacific products and resources.

While all of these recommendations help, builders must still face the new realities of the industry: You can't use only unskilled labor and expect to build quality houses. You can't hire workers with no training and then turn a blind eye in the event of a jobsite accident or fatality. Unfortunately, the Colorado purchasing manager asserts, the industry has not shown that it has an interest in policing itself. “From a political standpoint, I'm all about less government control. However, what I'm seeing in this matter is that it may be necessary for government to look at policies to penalize the industry for hiring illegal immigrants.”

Mass deportation is also unlikely to benefit anyone, since immigrants play a vital role in the home construction industry. “If you eliminate Hispanic workers in the construction industry, you will destroy the U.S. economy in 30 days,” Guarini argues. “Not only will residential construction be damaged, but ancillary economies will be hurt as well, such as the appliance industry, carpet industry, moving industry, etc.” According to one respondent in our survey, union-built houses would cost up to 20 percent more, and entry-level housing could all but disappear.

“My message to our trades is to incorporate process improvement into their culture—and training programs for their labor force,” the Colorado purchasing manager says. “We have awarded trade contracts that were not the lowest bid, but were the highest quality; and conversely, we will discontinue doing business with a trade partner if we have exhausted our efforts to make improvements but the quality does not improve.”

As Gonzalez puts it, training is the best way to go. “If [immigrant workers] get the proper training and a [legal] opportunity to work, it will be good for everybody,” he says. “Everyone benefits: [The workers] will pay their taxes, and builders will get good workers.”

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