How Immigration Reform Can Save the Construction Industry

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I have been in the construction industry my whole life.  As was my great grandfather who built the castles in Olomouc, Czech Republic but left to find the freedom offered by emigrating to America.  My Father and his brothers started our company 75 years ago with the sons of immigrant farmers from Central Texas towns like Yoakum, Hallettsville, and Shiner.  After many years of success in building a quality labor force of young men off the farm, the equation changed.  Latino workers came by the millions to fill the jobs that our growing nation provided.  President Reagan's immigration reform in 1986 offered amnesty for those already in the country but failed to create a legal way to migrate for the millions who would come after them.

Estimates are that over 30 million men and women immigrated to the U.S. in the two decades from 1986 to 2006.  Some left after a few years, but most stayed, put down roots, and tried to assimilate into their communities.  After the terrorist attacks of 9/11, the Immigration and Naturalization Service (INS) was replaced by the Department of Homeland Security (DHS), and enforcement became more of a concern for those living here without legal status.  The point that almost everyone seems to miss is that there has never been a way, under current law, for millions of people to get legal status.  That’s why it is so frustrating to hear people repeatedly ask “Why don’t they just become legal?”  They can’t.

As a consequence, industries like construction find that a large percentage of their labor force is undocumented.  A survey by the University of Texas at Austin found 50 percent of construction workers are undocumented.  As someone who has spent his entire career in construction, I assure you that number is low.  Let me explain.

Ever since the immigration reform of the 80’s, the only legal requirement we as employers have is to fill out what's called an I-9 Employment Verification Form, which includes a Social Security number and a photo ID.  Until changes to Texas law a few years ago, a driver’s license did the trick.  Everyone in our industry who followed the letter of the law never anticipated that these workers might not be authorized.  It wasn't until 2008 when DHS started offering E-Verification that employers even had a way to check.

When President Bush was in office, Homeland Security conducted a few well-placed raids to get the attention of employers and garner support for an immigration bill that never happened.  Under President Obama, the tactics changed and DHS started the practice of I-9 audits.  Agents would visit businesses asking to see their I-9's on every employee.  They would check Social Security numbers, and when problems arose, the government would give the employer a certain number of days to either have the employee get the proper documentation or the employee would have to be terminated.  Let’s be clear: the government only demanded that these workers be fired, but they were not deported.  That’s even though DHS knew these workers were not eligible to be in the United States.

Since they were kicked out of their jobs but not the country, those workers found their way into what’s called the “cash economy”, working as subcontractors and avoiding payroll taxes, overtime pay, safety training, and accident insurance.  Even though thousands of companies across the country have undergone such audits, the construction industry has seen the worst of it.

The new norm in our industry is to avoid the risk of I-9 audits and limit hourly payrolls that require documentation by hiring a subcontractor or labor broker who supposedly pays the men and follows the laws.  This does not happen in the majority of cases, but it’s rarely caught because auditors investigate payrolls instead of payables, which is where the brokers hide their crews.  Every job or project has a contractor of record who is responsible for permits, inspections, etc.  That company or individual in turn hires subcontractors to perform the bulk of the work.  In years past, that subcontracting company or individual would hire hourly employees to do the job, pay payroll taxes, etc.

Today that subcontractor or individual of record will hire another company or individual and re-sub the work to him.  The responsibility of taxes, accident insurance, overtime and safety training is pushed “down the line”.  This practice is ripe for those who are willing to exploit the undocumented, because enforcement by governmental agencies typically stops with the subcontractor of record.  The general contractor and subcontractor of record have taken themselves out of the liability trail, and are getting prices that no ethical and law-abiding contractor can compete with.

This practice discourages young men and women who could be learning a trade in lieu of college from even considering construction as an option.  It also discourages construction companies from investing in recruiting, training, and the development of career paths for future workers.  It will be the biggest challenge our industry has ever faced to give up the dependency on undocumented workers and help rebuild America's middle class.

A sensible immigration bill is step one.  Identify the workers who are here, and require their employers to pay taxes.  If that doesn't happen soon, I fear the industry my ancestors helped build will see its middle-class legacy fade away completely and become nothing but a ticket to poverty.

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