If it wasn't for immigrant labor, the construction contractor would be hurting. -- Roger Liska

Labor shortages are perhaps the top challenge construction firms in North America face today. No matter what sector it specializes in, the size of the company or the reputation it has earned, contractors across the board are coping with a shortage of skilled labor, according to Roger Liska, director of the National Institute for the Improvement of Construction Management and Processes – research arm of Clemson University’s Department of Construction Science and Management in South Carolina.

“Projects have been constant, and the [industry] needs about a quarter-million in craft workers every year,” Liska notes. “That is predicated on how healthy the industry is. If there is an impact in the housing industry, that demand is going to go down, but from what I have seen, there is still strong demand for qualified construction workers.”

Challenges Lie Ahead
Liska points to five foundational challenges that employers face in either attracting or retaining employees: competitive wages and benefits, job security, safety, lack of effective management and working conditions. When compared to other industries, construction by nature can be a laborious profession, and one that is often associated with high risks and safety hazards. Sometimes monetary compensation and benefits packages are less than what’s offered in an industry such as manufacturing.

Additionally, he says, trade workers are unable to find any real sense of job security in the industry since work heavily depends on the economy. Lack of effective management or integration of new technology has also dissuaded younger generations from the field. All of these factors make recruiting new employees somewhat arduous, Liska says.  

A Broken System
At the center of the debate on how best to solve labor shortages in the industry is the role and status of foreign nationals in the work force. The construction industry is without question highly dependent on often unauthorized, mostly Hispanic workers. “If it wasn’t for the immigrant labor, the construction contractor would be hurting – from heavy highway from residential to commercial,” Liska maintains.

In 2007, statistics released by the Pew Hispanic Center revealed that total employment in the construction industry in 2006 increased by some 560,000 workers – two-thirds of which were foreign-born, Hispanic workers. Additional data from the center shows that of the 11.8 million workers in the construction industry, approximately 2.9 million were Hispanic. But as the number of Hispanic workers grows, so does the number of unauthorized workers. Of the 2.9 million Hispanic workers, 2.2 million were foreign-born and about 847,000 of that group were recent arrivals – many of whom were unauthorized.

Statistics released by the Pew Hispanic Center note that about 14 percent of all jobs within the industry are held by undocumented workers. According to VISANOW CEO Robert Meltzer, “there is great potential for there to be a work force crisis due to immigration legislation that will create significant obstacles to hiring foreign workers in the construction industry.” VISANOW is a Chicago-based immigration services provider for corporations and foreign employees.

In mid-2007, comprehensive immigration reform (CIR) fizzled in the Senate, but hasn’t disappeared from the radar. “In previous drafts of reform legislation that have been debated, CIR includes a process for the legalization of the millions of undocumented immigrants in the United States, a temporary worker program and improved verification processes for employers,” Meltzer notes.

But failure to enact any comprehensive legislation has led some federal agencies to amend the rulemaking process, which can, in turn, affect how immigration laws are enforced. “Immigration reform has been greatly debated and discussed in recent months, but we finally had a glimpse of what the future may bring following an announcement in the fall regarding the Department of Homeland Security (DHS) No Match program,” Meltzer explains.

The program would notify employers when an inconsistency is found between a Social Security number and an employee name. If the discrepancy is not resolved in 90 days, and if employment continues, U.S. Immigration and Customs Enforcement would penalize the employer, typically in the form of fines. Based on strong opposition, in October 2007, a U.S. District Court Judge in Northern California placed a temporary halt on the no match regulations. Although placed on hold, DHS’s proposed program is a sign of increasingly restrictive rules that could intensify the industry’s labor issues.

“There is a real possibility that the no match program could eventually be enforced; moreover, its progression through Congress could be a bellwether for immigration legislation to come,” Meltzer says. He says there are four critical concerns the construction should be aware of surrounding this legislation:

• Labor force disruption – Employers with workers who are undocumented with the government could have issue with a significant portion of the labor force.
• Increased need for human resource and legal staff – Any new regulations could equate to increased employer compliance, placing additional responsibilities on HR or legal staff who need to track changes.
• Increased risk – Employers could face increased fines or penalties for non-compliance, not to mention risking the organization’s reputation.
• Increased costs – Staffing and other internal resources along with application and provider fees can increase what companies shell out in a year.   

“It is incredibly important for employers in the construction industry to understand the ramifications of comprehensive immigration reform,” Meltzer states. “Ultimately, all employers should be aware of the issues because it may indirectly affect their business. Even if a company does not use foreign labor, perhaps one of their partners or subcontractors does, or maybe they will need to hire foreign workers in the future.”

For civil contractor Meridian Engineering, co-owner Mike Sutton says roughly 29 percent of Meridian’s supervisors and 62 percent of the general laborers are ethnic minorities – many of whom are legitimate foreign nationals. Although the company has a rather diverse work force, it must keep close track to make sure employees are legal.

“Our concerns [are] the same as everybody’s – that a well-intentioned, fully lawful contractor could be subject to serious sanctions in the event that there is an illegal worker on the force, even though there have been good-faith measures taken to make sure that hasn’t happened,” Sutton notes.

“The problem that we have is that people come in with authentic-looking documents and you do all the things by letter of the law, but a couple of months later, you would get a letter from the Social Security Department telling us we had a mismatch on the social security number,” he continues. 

Meridian depends largely on the government’s E-verify system to combat discrepancies. The Internet-based system is operated by the DHS in partnership with the Social Security Administration and allows participating employers to electronically verify the employment eligibility of their newly hired employees. “I think [legitimate immigrant labor] is important because it fills a gap,” Sutton notes.