Undocumented Workers: Immigrants on Hold

With the president’s immigration order blocked by a Texas judge and a Senate bill all but dead, it’s time to look at the data on America’s undocumented workers.

Mark L. Johnson / May 2015

Where will the drywall industry get its future laborers?
    
The construction industry employed 7.7 million workers in 2006. But in the years that followed, the Great Recession witnessed 2.1 million construction workers lose their jobs, says industry consulting firm FMI Corporation in the publication, “Craft Labor Recruiting and Retention 2015 Survey Report.”
    
Construction employment now stands at 6.2 million, FMI says, but researchers believe most construction workers downsized during the recession will not be coming back to the industry. They left construction for oil and gas, food service and manufacturing. A few retired. Many moved away. Now, construction has jobs.

Construction employment now stands at 6.2 million, FMI says, but researchers believe most construction workers downsized during the recession will not be coming back to the industry. They left construction for oil and gas, food service and manufacturing. A few retired. Many moved away. Now, construction has jobs.
    
“As construction firms continue to expand, they will continue to have a difficult time finding enough skilled construction workers,” said Ken Simonson, chief economist at the Associated General Contractors of America.
    
Could America’s construction companies hire more workers if the law allowed it? Enter the “great immigration debate” which, among many issues, involves a pathway to legal employability.

One in 20 Workers
The number of unauthorized immigrants who live in the United States is 11.4 million, according to the Department of Homeland Security.
    
But not all undocumented foreigners work. Pew Research Center, a nonpartisan think tank in Washington, D.C., says 8.1 million unauthorized immigrants participate in the U.S. labor force—one in 20 working Americans.
    
Undocumented workers tend to concentrate in a handful of states. In 2012, six states—California, Texas, Florida, New York, New Jersey and Illinois—accounted for 60 percent of unauthorized immigrants. From 2009 to 2012, seven states—Florida, Idaho, Maryland, Nebraska, New Jersey, Pennsylvania and Virginia—saw their unauthorized immigrant numbers increase.
    
In March, the Center for Migration Studies in New York published a new database of illegal immigrants at data.cmsny.org. The site breaks down figures at national, state and sub-state levels. Click on an state, say Nebraska (or multiple states at the same time), and you’ll see the number of undocumented immigrants that fit the selection, where they come from, when they entered the country, their age, education level, the language they speak at home and more. Nebraska, for example, had 50,863 unauthorized foreigners in 2012; 34,740 came from Mexico, and 9,150 are enrolled in school.
    
How interesting that while illegal immigrants obviously want to avoid detection, data about them is plentiful. The Census Bureau’s American Community Survey, public use micro-data sample areas and the residual method for counting undocumented immigrants allows scientists to project, quite accurately, how many illegals reside here.
    
But having data about immigrants itself doesn’t set public policy. So, what do drywall company executives think should be done? Stan Marek, president and CEO of the Marek Family of Companies based in Houston, takes the view that undocumented immigrants are valuable, resourceful and needed.
    
“Even if we tried to deport them, we couldn’t round them all up,” Marek says. “So, let’s ID who’s here and let them pay taxes. Let legitimate employers like me put them to work.”
    
Many in the industry would like to see immigration laws brought up-to-date.
    
“Sweeping immigration reforms would surely raise wages for the lowest earners and might even attract more potential candidates to our industry,” wrote Association of the Wall and Ceiling Industry President Scott Casabona in his January 2015 President’s Message published in AWCI’s Construction Dimensions. Casabona is president of Sloan & Company, Inc. in West Caldwell, N.J.
    
Making workers legal could even enable drywall firms to advance their revenues.
    
“We’re turning work down—big, nice, fat, juicy jobs with good money—because we’re limited by manpower,” says Robert Aird, president of Frederick, Md.–based Robert A. Aird Inc. “If I can make a living and support my people with the number of people I have, then I’m limited to that. We won’t cut corners. My people are in-house hourly—no labor subs or pieceworkers.”

70 Percent Want Action
It’s been 50 years since the Immigration and Naturalization Act of 1965 laid down most of today’s immigration laws. The debate over immigration policy remains spirited.
    
On some issues, however, a majority view exists. Seventy percent of Americans, for example, want immigration reform. Specifically, they support a solution that provides undocumented immigrants a pathway to legal work status.
    
In February, President Barak Obama issued an executive order called DAPA, the Deferred Action for Parents of Americans. DAPA grants work authorization, Social Security eligibility and eligibility for important federal and state benefits to immigrants who have been in the United States since 2010, had a baby in this country and have not committed felonies.
    
“DAPA is a good thing,” Marek says. “ID’ing people, making them pay taxes, giving them legal work status doesn’t mean they can vote. It doesn’t mean that they can get welfare. It just takes them out of the shadows.”
    
About 5 million unauthorized immigrants would be protected from deportation under DAPA. They could receive work permits (and be subject to payroll taxes), but they would not be entitled to receive food stamps, student financial aid or subsidized health insurance through the Affordable Care Act. They could, however, become eligible for retirement and Medicare benefits if they work long enough, are old enough and are lawfully in the country.
    
However, a federal district court in Brownsville, Texas, entered an order prohibiting DAPA’s enforcement.
    
“Lincoln did the Emancipation Proclamation to free slaves. That was an executive order,” Marek says. “This is just ‘bull’ by the Republicans to block something Obama is doing.”
    
Others see it differently.
    
“They should read U.S. District Judge Andrew Hanen’s order,” says Michael W. McConnell, a former judge on the U.S. Court of Appeals for the 10th Circuit, a Stanford professor of law and a senior fellow at the Hoover Institution, writing in The Wall Street Journal. “The 123-page memorandum opinion carefully lays out the legal case against the program.”
    
The judge, a George W. Bush appointee, believes the Obama administration lacks statutory authority to change the law without congressional action and failed to follow the Administrative Procedure Act. His stay on the executive order has been referred to the 5th Circuit Court in New Orleans.
    
For now, at least, immigration reform is on hold. So, let’s switch from politics to economics. How much do undocumented immigrants cost the U.S. economy?

$12 Billion Cash Plus
Surprisingly, InvestmentNews says that 3.1 million of the 11.5 million unauthorized immigrants living in the United States in 2011 contributed a positive $12 billion to the cash flow of the Social Security program. How is that possible?
    
It’s possible because many unauthorized workers pay their payroll taxes. They may have had work authorizations at one time, or they originally presented someone else’s Social Security credentials to an employer who didn’t verify the documentation. Either way, 3.1 million undocumented workers (and their employers) pay payroll taxes, even though the benefits won’t accrue to them.
    
So, will they come out of the shadows if and when DAPA (or a future immigration bill) takes effect?
    
“If you want a driver’s license, you better come forward, and if you get picked up without a driver’s license, you can very well be deported. So, it might be worth the risk,” Marek says. “Most of these people have been here 20 to 30 years. These are good people. Some won’t come forward. But, that’s why we need an immigration bill to straighten this out.”
    
But others don’t think undocumented workers will roll out of the shadows so readily.
    
“I’m where the rubber meets the road. I’m on the street with these guys. I know what they think,” says one drywall firm executive who chose to remain anonymous. “There’s no reason for them to come out of the shadows. They’re motivated not to. They would be on somebody’s radar screen if the law ever changed, and they would take a pay cut to come out.”
    
DAPA, this drywall contractor says, applies to “an immigrant elite.”
    
“They’re part of the upper echelon of Hispanics. They have education. Some have property,” he says. “The normal, everyday construction worker has family back in Mexico. He’s not here to stay, and he wants his money in cash.”
    
Indeed, as the number of unauthorized immigrants levels off, those who remain in the country are more likely to be long-term residents who live with their children who were born in the United States. Among the nation’s 11.2 to 11.5 unauthorized adults, a shrinking share has been in the country for fewer than five years—15 percent in 2012 compared to 38 percent in 2000.
    
“The number of unauthorized immigrants living in the United States has stabilized since the end of the Great Recession and shows no sign of rising,” states a Pew Research report.
    
Marek agrees that DAPA won’t necessarily mean immigrant workers could find drywall construction jobs that pay by the hour instead of by the piece. Still, he believes it’s a good start. But to be effective, he says, immigration reform needs a workable e-verification system.
    
“If everybody is in a database, and we have a biometric ID that can’t be forged, then it would be up to the employer to e-verify his employees before he puts them to work,” Marek says. “Eventually, you’ll weed out guys who aren’t paying taxes.”
    
Can businesses afford the cost of verification?
    
“We have to fill out I-9s now,” Marek says. “I mean, we’re supposed to fill out I-9s, although many call them ‘independent subcontractors’ and piece out the work.”
    
Marek is alluding to misclassification. This is where construction companies treat an undocumented immigrant not as an employee but as a contract worker. He’s paid not through the company’s regular payroll but from accounts payable.
    
“This is the ‘safe’ way to employ an undocumented worker,” Marek says. “For the last 10 years contractors, drywall contractors especially, have said, ‘We’ll just sub it out. We’ll get labor brokers. We won’t have the taxes. We won’t have the workman’s comp.’ Legitimate contractors are getting beat 30 to 35 percent on every job.”
    
The way to stop undocumented immigration, Marek says, is through enforcement at the job site.
    
“They can’t get on the job without the proper documentation,” Marek says. “The only way you’re going to do that is to e-verify. Then, they won’t come to this country to work. Stop the jobs, and you stop illegal immigration.”

30 Million Children
“I learned the ugly side of illegal immigration from black construction workers who, for whatever local anomaly, once dominated the drywall trade in Los Angeles,” wrote a columnist for The Daily Beast. “They complained their $18-an-hour jobs had fallen to $13 an hour before vanishing entirely as the industry was taken over by a largely illegal workforce.”
    
The culprits? Shady labor brokers who paid immigrants in cash and offered little or no benefits to these workers. They ruined the wage and labor market for others.
    
“A lot of service staffing companies are doing it the right way. They’re recruiting. They’re training. They’re providing all the benefits,” Marek says. “But, many people cheat. That’s why you’ve got to have enforcement agencies. You’ve got to have an immigration bill. These workers have to have legal status, or they’re just going to stay in poverty. And that lowers the wages for everybody.”
    
That’s why drywall contractors such as Marek and Aird guard their labor assets. They give them training, benefits and decent wages. Sometimes, they need to hire specialists, and that can present a problem.
    
“I have people calling me from Italy, Puerto Rico and Mexico looking for work,” Aird says. “They say, ‘Can you get me into the country?’ The answer is no. I don’t know the system well enough or what the constraints are well enough to bring them over.”
    
Thus, Aird needs a sponsorship system that’s user-friendly—a way for the government to quickly approve, say, a plasterer from Italy.
    
“Maybe we need to educate the government,” Aird says. “These aren’t just crop pickers but people with work skill who would be a value to maintaining your government buildings.”
    
It’s not easy to get the government to move quickly. Business, however, can be nimble and respond to market dynamics. In this regard, something interesting is happening in Texas. The Construction Career Collaborative (C3) is a new 501(c)(3) organization focused on developing construction workers. C3 building owners and developers speak as one, directing general contractors to be sure every person on the job pays taxes, is qualified to receive workman’s compensation and has OSHA training.
    
“We have a lot of owners buying into it,” says Marek, whose company is part of C3. “We’re trying to model it after LEED®. We want a sustainable building, and we want a sustainable labor force.”
    
C3 building projects pay by the hour and offer safety training for workers. Eventually, Marek says, the program will specify career training and may even broker 401(k) benefits.
    
“We’re not there yet,” he says. “But we do have owners who have adopted C3, and so we’re eliminating the piecework and the nonpayment of taxes.”
    
Of course, a truly sustainable workforce has stable families and stable upbringings. Marek expects the 11 million or so undocumented immigrants here to have 30 million American-born children over the next 20 years. InvestmentNews notes that such children, all natural-born citizens, will add to the growth of the U.S. population and future payroll taxes.
    
“That’s our future workforce,” Marek says. “Thank God we’re educating them in our schools, but without parental support and parental involvement, they’re always going to be a step behind other kids. So, I think it’s critical that we give these people legal status. It’s important, but it may be an uphill battle with DAPA in a legal wrangle and market forces favoring the labor brokers.
    
“People have gotten spoiled by cheap labor. They say, ‘Nobody’s enforcing the misclassification laws and wage and hour laws, so I might as well use these labor brokers, call my workers independent subs and not have employees, workman’s comp injuries and discrimination suits. I just need workers,’” Marek says. “That’s a wonderful system if you have no scruples. The first year you might look in the mirror and say, ‘I wish I wasn’t doing this.’ But by the fifth year you say, ‘Everybody’s doing it, so let’s keep on going.’ This will never change until we get an immigration bill.”

Immigration by the Numbers

3.5 Million
The number of unauthorized immigrants who stand to benefit from DAPA. Other sources peg the figure at 5 million.
Source: Pew Research Center

15 Percent
Among the 11.2 to 11.5 million unauthorized adults who live in the United States, the percent who have been in the country for fewer than five years.
Source: Pew Research Center

12.7 Tears
The median length of residence in the United States of unauthorized immigrants in 2013.
Source: Pew Research Center

2 Million
Number of deportations for the fiscal years 2007 to 2013.
Source: Department of Homeland Security

–1 Million
Drop in unauthorized workers in the United States from Mexico dropped between 2007 and 2012. The 5.9 million undocumented Mexican immigrants continues to decline.
Source: Pew Research Center

453,000
Jobs gained by immigrant Latinos since 2009. Although Latinos gained 2.8 million jobs since the recession ended in 2009, only 453,000 jobs went to immigrants.
Source: Pew Research Center

76 Percent
Percent of construction firms who want top-priority help from Washington to prepare the next generation of skilled workers. This exceeds the percent of firms who want tax code reform (60%) or a repeal (all or in part) of the Affordable Care Act (59%).
Source: AGC of America

 

Mark L. Johnson is an industry marketing consultant and writer. He tweets at @markjohnsoncomm and connects at linkedin.com/in/markjohnsoncommunications.