Why The #Immigration Deal Won’t Shortchange The Construction Industry
April 9, 2013 Leave a comment
Originally posted at on Apr 9, 2013 at 11:31 on Think Progress Blog
By Adriana Kugler, Guest Blogger and former Chief Economist at the U.S. Department of Labor
Last week, the Chamber of Commerce and the AFLCIO made important progress by reaching agreement on a visa program for non-seasonal low-skilled workers – a key issue which had been holding back the immigration proposal by the Gang of Eight.
The Business-Labor deal caps visas at 20,000 the first year, 35,000 the second year, 55,000 the third year and 75,000 the fourth year. Starting in the fifth year, the cap on W-visas for non-seasonal low skilled workers would be capped at a maximum of 200,000 visas, depending on the state of the economy. That is, the visa cap would go up to 200,000 when the economy expanded and would come down to a lower cap as the economy contracted, with construction visas capped at 15,000. This makes sense, since as the economy enters into a recession there are potentially many U.S. workers who would be available and willing to take these jobs. However, as the economy grows, the cap would need to increase as the labor market becomes tight and it becomes difficult to hire relying just on local workers. To ensure that the wages of US workers are not depressed, W-visas would require employers to pay ‘prevailing wages’ or average wages for workers in the same occupation and experience category. Finally, visa holders would be allowed to change jobs and to apply for permanent status while in the US, which is good for businesses seeking a more stable labor force.
All in all, most are happy with the deal because it offers flexibility to the business community while protecting both US workers and foreign workers coming in on W-visas. Yet, the construction industry has criticized the proposal because it argues that the 15,000 visa cap for construction is too low and would constrain the construction sector at a time when it is expanding again.
There are good reasons to believe that the construction sector’s ability to grow is unlikely to be constrained by this cap on W-visas.
1. The cap would allow the construction sector to hire 1 out of 10 workers through W-visas even during good times. While the construction sector shrank drastically during the Great Recession, this industry has added close to 280,000 since the employment trough was reached in February 2010. Moreover, over the last year, the construction sector has expanded rapidly adding 163,000 jobs. Thus, with the 15,000 visa cap, the construction sector could have hired 15% of its labor force using W-visas alone over the last three-year period and 10% of its workforce over the last year in which the sector grew most rapidly.
2. There are large numbers of US workers ready, willing and able to work in construction. In March 2012, the unemployment rate in construction was 14.7%, higher than in any other major industry group, and almost twice the average unemployment rate in all sectors. In terms of sheer numbers, there are close to 1.2 million unemployed workers whose last job was in construction. Certainly, employers in construction should be able to find experienced construction workers among the over million workers who are available and looking for work in this sector. Even if one thought that some of these workers may leave the labor force or go to other industries, this still leaves a good sizable number of workers looking for work in construction. In fact, construction workers are less likely to leave the labor force than those coming from other sectors, 15% vs. 20% overall. Also, close to 3 out of 4 workers in construction go back to work in this sector, while only 1 in 4 go to work in production, transportation, management, food preparation or other sectors. Thus, even taking out workers who leave to other sectors or out of the labor force, this still leaves 765,000 unemployed construction workers ready and available to work in this industry. Moreover, the unemployment rate for construction workers is very high in all regions of the country (with the highest in the Pacific region at 15.1% and the lowest in the West North Central Region at 9.5%), so that there aren’t specific regions of the country which would likely be faced with shortages of experienced workers in construction.
3. Average wages in construction are low suggesting that shortages are not an issue. The average weekly earnings for men working in construction in 2012 are $741 compared to $854 overall. Even this average number is increased by a few specialty occupations within construction, such as electricians, plumbers, and metal workers. The average weekly earnings are actually much lower for construction laborers ($609) and other less specialized occupations such as drywall installers ($567), roofers ($524) and painters (%559). If the construction sector was truly facing shortages of labor, we would probably see higher levels and increases in earnings in the construction sector.
While the W-visa program will support the renewed growth in the construction industry, the industry is far from facing labor shortages. It would be wrong for the construction sector to view these visas as a substitute for hiring qualified US workers simply to bring down labor costs.