Time after time, we see that the Republicans’ hostility toward immigration backfires on the United States. The construction industry is just the most recent example.
In October 2024, representatives of the construction industry warned presidential candidate Donald Trump that his talk of mass deportations would harm building in America. Jim Tobin, CEO of the National Association of Home Builders, said, “It would be detrimental to the construction industry and our labor supply and exacerbate our housing affordability problems.” Foreign nationals have become key players in construction, an important part of the construction and according to NBC News, they fill approximately 30 percent of such crucial jobs as carpentry, plastering, and masonry, regardless of immigration status.
That prediction didn’t deter Trump, whose antipathy for immigration has become one of the signature characteristics of his second term. The stories of immigration actions have become national news, creating an atmosphere of fear. On May 14, officers from Immigration and Customs Enforcement (ICE) raided a job site in Wildwood, Florida and arrested 33 undocumented migrants.
As Jim Tobin pointed out, construction relies on foreign labor. As of 2023, more than three million immigrants worked in the construction industry, and at that point more than 28 percent of people working in construction were immigrants, the highest percentage in any field. In Texas and California, approximately 40 percent of construction workers are foreign nationals. Reduce that labor supply at the results are predictable.
According to the National Association of Home Builders, new housing starts decreased 11.4 percent in March. “Constrained housing affordability conditions due to elevated interest rates, rising construction costs and labor shortages led to a reduction in housing production in March,” Danushka Nanayakkara-Skillington wrote.
The theory is often that American workers can do these jobs, and while that is technically true, it hasn’t proven to be the case. According the economic advisory and management company KPMG, the U.S. “needs to add roughly 740,000 construction workers per year for the next few years to keep up with demand. The native-born workforce alone is not growing fast enough to meet this demand; the median age of a construction worker is 42 years old, one year older than the median worker in the general workforce.”
“Younger Americans have been less inclined to enter construction trades. Gen Z, the youngest generation in the workforce today, makes up only 16.8 percent of construction workers.”
The decline in home starts means the shortage of affordable housing will continue. According to the U.S. Chamber of Commerce, the U.S. has a shortage of 4.5 million houses, which has caused the cost of a house to almost double in the last decade. The average cost of a house jumped from approximately $250,000 to $355,000 since 2021 as a direct result of inflation, rising production costs, and the housing shortage.
The housing shortage translates to a decrease in economic activity and lost economic possibilities. In 2021, a study by the National Association of Realtors observed that
- The total economic impact of building 550,000 additional new homes per year for the next 10 years would support an estimated 2.8 million new jobs, spread across numerous sectors in the economy, and generate approximately $411 billion per year in additional economic activity (including direct, indirect and induced measures).
- This additional new residential construction would also be expected to generate more than $53 billion dollars in new annual tax revenue, including $18 billion in state and local taxes and $35 billion in federal taxes, reflecting a wide range of activity, including considerable new federal income taxes related to the new job creation.
As we have seen again and again, the current administration’s obsession with immigration is counterproductive and not in the best interests of the U.S.
Photo by Josh Olalde on Unsplash.
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