Let’s get one thing straight: Immigration has always fed the U.S. labor supply. Throughout the history of our country and industry, people from every corner of the globe have fled poverty, violence, and oppression to seek opportunities for a better life in America, with jobs that others were unwilling or unable to perform awaiting them. Much of what has been built here was done so by those who crossed our borders to work.
For most of our history, an immigration system that functioned properly made progress and prosperity a possibility for all. Unfortunately, that system has been broken since the 1980s and '90s, when leaders of both political parties agreed the complexity of the immigration system forced undocumented immigrants to remain in the shadows. Since the terrorist attacks of Sept. 11, 2001, when federal immigration reform was put on hold, the issue has become increasingly divisive and left unrepaired as a result of political polarization.
The current political stalemate on immigration reform should be considered an existential threat to anyone working in the home building industry. Put simply, the inability to reform immigration policy cripples our ability to produce the homes all Americans need.
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How Immigration Intersects With Homeownership
As a humanitarian crisis along our southern border rages on, let’s look at how that story intersects with housing and homeownership in our country. Here are the facts:
- The U.S. faces a shortage of 1.5 million homes, which—as a matter of supply and demand—forces rents and home prices higher across most markets nationwide. As the latest Construction Labor Market Report from the Home Builders Institute (HBI) shows, the construction industry currently needs approximately 723,000 new workers each year to meet demand (residential construction currently represents 3.2 million, or 33%, of the total U.S. construction payroll employment of 7.9 million workers).
- The number of open jobs in the construction sector currently averages between 300,000 to 400,000 every month. At least 90% of single-family builders responding to survey by the National Association of Home Builders (NAHB) reported a shortage of carpenters, and 80% to 85% reported a shortage of subcontractors in six other trades. Among remodelers, more than 80% reported a shortage of subcontractors in 11 of the 16 trades listed in the survey.
- The share of Americans who choose to stay out of the labor force is at a historical low. The labor force participation rate for people aged between 25 and 54 is 83.1%. The share of construction workers aged 25 to 54 dropped by 6% over the past seven years.
- The construction labor force, including both native- and foreign-born workers, was back to pre-pandemic levels by 2021 … while single-family housing starts increased 27% between 2019 and 2021. That dynamic illustrates how incredibly tight the construction labor market was at that time, exacerbated by the fact that, by 2021, the annual flow of new immigrant workers into construction slowed to the lowest levels in a decade.This trend has continued despite good-paying jobs that are available to anyone willing to learn new skills and work hard. Hourly wages in construction are higher than in other industries. The average hourly earnings in construction have increased 5.4% since last year to approach $36 per hour. (For context, the average hourly wage in manufacturing is $31.80; in trade, transportation, and utilities it's $27.67, and in the overall private sector, $33.20.)
- Immigrants already account for more than 30% of all workers across the nation’s construction trades. Concentration of immigrants is even higher in some of the trades needed to build a home, such as plasterers and stucco masons (56%), drywall/ceiling tile installers (52%), roofers (48%), painters (47%), carpet/floor/tile installers (43%) and construction laborers (38%). These trades require less formal education but consistently register some of the highest shortages in available workers.
To make matters worse, the country has experienced a surprising drop in the number of new immigrants in construction despite steady gains in housing demand. Pandemic-triggered lockdowns and restrictions on travel and border crossings drastically interrupted flow of new immigrant workers and further eroded the construction workforce in the U.S., as well as other sectors of the economy. In fact, while the share of immigrants in the labor force stabilized at record high levels in 2018, it has shown no further gains in recent years, despite very tight labor market conditions.
The vast majority of economists would agree that there is a direct link between the nation’s housing shortage and its construction labor shortage, both of which greatly hamper the availability and affordability of the homes millions of Americans need.
With proper guardrails and legal stipulations, a solution exists to legally allow more non-native construction workers into the U.S. to shore up housing’s labor shortage. That is why anyone in the housing ecosystem must recharge their support for immigration reform proposals designed to produce the next generation of New Americans seeking opportunity here.
It’s good business, good policy, and good for everyone seeking a decent place to call home.
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