Study: Immigrant Labor Flow Tied Closely to New Home Construction

Originally published by: NAHBJanuary 16, 2015

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New NAHB research that estimates the immigrant labor flow into the construction industry over the housing boom and bust years shows that the number of immigrant workers in the residential housing sector is largely in sync with the construction business cycle. In other words, as housing demand picks up, there is a greater need for immigrant workers to fill the number of construction openings.

More than 135,000 immigrant workers entered the U.S. construction industry at the height of the housing boom in 2005. By 2011 with the housing downturn well into its third year, the construction immigrant flow plummeted to a low of 23,000. The foreign-born labor pool registered a modest uptick in 2012, in line with the nascent housing recovery and closely tracking the home building business cycle, as highlighted in Figure 1 below:

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The NAHB research reveals that the annual flow of immigrant workers is most highly correlated with measures of new home construction, especially new single-family home construction. And the response of immigration is quite rapid, occurring in the same year as a change in single-family construction activity.

Moreover, the 2013 American Community Survey shows that the construction industry continues to rely heavily on immigrant labor with foreign born workers accounting for 23% of the U.S. construction labor force, and their share exceeding a quarter of the construction work force in some states. As the housing recovery picks up steam, there will be a need for more foreign-born workers to ensure that builders have enough labor to meet rising demand.

Indeed, recent builder surveys show that shortages of labor and subcontractors have become substantially more widespread since 2013. The incidence of reported shortages is now surprisingly high relative to the current state of new home construction, which has only very partially recovered from its 2008 downturn. The shortages are also particularly acute for workers with basic skills like carpentry, who are needed in substantial numbers for the construction of any home.

This year, NAHB will be urging the White House and Congress to work together in a bipartisan fashion to enact comprehensive immigration reform that will safeguard our borders and create a market-based visa system that will allow more immigrants to legally enter the construction workforce as the housing industry gains momentum and the demand for workers increases.

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