Immigration and Construction: Analysis of the Impact of Immigration on Construction Project Costs

Abstract

There are an estimated 11 million illegal immigrants currently residing in the United States. Of this population, research shows that approximately 19% work in the construction industry, comprising around 14% of all construction workforces. The main objectives of this research are to (1) to predict possible effects of immigration and immigration reform legislation on worker wages and (2) to assess the likely wage increase due to decreased supply of immigrant labor. In the Washington, D.C. metropolitan region, the construction workforces for low-skilled trades such as concrete, masonry, drywall, painting, flooring, and roofing are comprised of approximately 55% illegal immigrant. Based on four factors evaluated in this research (1) prevailing wage provision in legislation; (2) forced tax compliance of the workforce; (3) market correction from currently depressed wages due to immigrant penetration into the workforce; and (4) a labor shortage resulting from a depleted supply of immigrant labor, proposed legislation could increase the cost of trade labor up to almost 70% in the Washington, D.C. metropolitan area. Overall labor costs for projects could increase by almost 18%, and total project costs could rise almost 12% in the Washington, D.C. metropolitan region.