Will Trump's immigration plans exacerbate the construction labor shortage?

Dive Brief:

  • Representatives of industries that rely on undocumented workers fear that President-elect Donald Trump's promise to deport those workers will result in higher wages and a tighter labor market, according to Bloomberg.
  • Up to 20% of construction workers are undocumented, according to Hanley Wood's Chief Economist Mark Boud, and removing them from the workforce could cause wages to double in the short-term and back employers into a corner as they try to navigate an already-low unemployment rate of 2%.
  • Suggested alternatives to deportation include a guest-worker program or some other path to citizenship for those who have been living and working successfully in the U.S.

Dive Insight:

For the most part, the construction industry — as well as many other business sectors — seems to be on board with Trump's business policies of reduced regulation and lower taxes. A Construction Dive survey last week found that the majority of readers were satisfied with the results of the presidential election for their business, as they cited Trump's promised infrastructure program and tax cuts.

Some experts say a strict immigration and deportation policy would result in higher demand and higher wages for American citizens. That increase in pay would come at a time when the construction industry is already raising wages to attract skilled workers. The Associated General Contractors of America reported earlier this month that average hourly earnings in construction rose 3.2% between October 2015 and October 2016 — almost 10% higher than the average across all private sector industries.

Industry groups like the AGC have long warned that construction's skilled labor pool has been tightening and that there are not enough younger workers coming into the industry to balance out the coming wave of retiring baby boomers. To that end, the organization has supported immigration policies such as an expansion of the H-2B visa program, the creation of a new guest-worker visa program and a path to citizenship for some workers.

The Department of Labor generally limits H-2B visa issuances to 66,000 per year, with half coming available on October 1 of each year and the other half on April 1. Despite onerous paperwork and other requirements, competition between U.S. companies for these visas is ferocious.

Part of Trump's immigration policy is also the building of a border wall between the U.S. and Mexico. He has thrown out estimates of an $8 billion to $12 billion cost range for the wall, but New America Foundation Fellow Konstantin Kakaes, in a piece for the MIT Technology Review, calculated a wall built to achieve Trump's objectives would actually cost around $40 billion.

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Filed Under: Commercial Building Residential Building Economy Legal/Regulation
Top image credit: Gage Skidmore