The Illegal Immigration Factor

[rankandfile]

I thought I’d start a separate thread to discuss the topic of illegal immigration and it’s effects (if any) on the housing market in Southern California. Specifically, has the massive influx of illegal immigrants added to the sharply rising home prices over the past few years? And what sort of effect, if any, will they have on the decline in the housing market? Are there any other angles to consider here? For example, does the NAR support illegal immigration causes with the thinking that they will bring a short or long term increase in housing demand? This is part conspiracy theory, but it might not be as out there as you might think.

[Bugs]

There was an article in the Union-Trib today talking about poverty in Escondido. One of the things it mentioned was the increasing incidence of immigrant families doubling up in apartments because of the rents.

On the other hand, there are two sides to this coin.

My brother-in-law the construction superintendent says that most of the labor in the new subdivisions are non-English speakers. The developers commonly use workers with questionable status as a means of controlling labor costs. So maybe this low-cost labor has helped keep prices lower on new construction than it would have been otherwise. Don’t laugh, I’m being serious!!

[rankandfile]

Good point Bugs. It would be one thing if developers needed to lower labor costs in an effort to be more competitive on price. But when homes are slated to sell in a new development for $800K-$900K or more, the lower labor costs simply pad the profit margins or help to offset any potential downturns in the market…which were unthinkable until recently.

Like other industries, I imagine that developers/construction companies are in favor of continuing using cheap, illegal immigrant labor, even though they’ll never admit to it. But what sort of effect does this have on those jobs projections and figures that are affected by a housing slowdown? If many of the lost jobs are held by illegal immigrants, and we assume that many are not homeowners, then will there not be as much an impact on making those rising ARM payments? Will there instead be more of an indirect ripple effect on other businesses that depend on the consumption of the illegal immigrants?

[powayseller]

I’ve written about the benefit of cheap labor in construction, as I experienced it first hand. I know the roofers and concrete crew were illegals. The concrete guys were paid $20/hr (I paid the boss $25/hr for each guy), and they were true professionals. But it was still a low wage, and the boss didn’t have to pay 33% of wages for worker’s comp and all the other stuff. I’m sure that some bosses pay their workers even less. The labor cost and workers’ comp savings are huge. Whenever you hire a licensed contractor who does everything by the book, you are paying 33% more on labor to cover CA’s ridiculous workers’ comp taxes.

As far as the effect of them losing jobs: this has been covered before also. I wrote that 10% of labor in CA is not counted in the payroll report, because it is illegal and independent contractor labor. This is over 1 million people, 1.2 million I believe, and is the largest stealth employment labor force in the country. This figure includes contractors, realtors, and lenders who are self employed. Many of these jobs will be lost.

But there are millions of contractors who are legitimately on the payrolls. Only roofers and drywallers and concrete crew were illegals on my construction site; the others were US-born, mostly white guys.

There will be a huge fallout to this group, the group who owns homes.

[blahblahblah]

What is interesting about this is that the illegals getting $20/hr are actually probably coming close to or exceeding the median personal income in this area if they are able to work year-round. $20*2000hrs/yr = $40K/yr. If they are avoiding paying taxes (not sure if they do or not) they’re probably doing better than a lot of duh-mericans. This anecdote again proves that the problem isn’t really illegal immigration taking jobs, the problem is employers BREAKING THE FREAKING LAW. Granted, sometimes it’s hard to tell if someone is legal or illegal, so that’s easier said than done…

[carlislematthew]

Granted, sometimes it’s hard to tell if someone is legal or illegal, so that’s easier said than done…
I’m a *legal* immigrant and there’s absolutely no way I can get a job (in my field, technology) without proper documentation. I have to show my permanent resident card on the first day of employment and they’ll also do a background check on me.

My point is that it’s easy for an employer to verify correct legal status, but they actually have to give a damn.

I have sympathy with businesses that say that they *need* the labor and that “Americans just won’t do the work”, which I think is true to an extent. But if they REALLY WANTED a decent guest worker type of program they would have got it years ago. They don’t want it because ultimately it will cost them more in higher wages and taxes. If there’s one thing that’s true about government today, it’s that businesses get what they want.

What pisses me off is that they are willing for the additional cost of these illegal employees to fall on the rest of society: ER care, “under insured driver” insurance, and so on.

I suppose I should mention real-estate, so I don’t get slapped on the wrist.

SoCal is expensive.
Housing will go down.
Recession will begin.
People will lose jobs.
Etc.

[powayseller]

My friend at Nokia is here on a temporary work visa, and he is waiting several years for his green card to be completed. His hope is that the green card comes through before he is laid off. He told me that his coworkers are more concerned about their H-1 visa/green card status, than being laid off. If they are laid off, they can find another job, somewhere in the US. But it is hard to get a green card. Apparently, in the white collar jobs, employers check for immigration and work status. So here we have a high tech brilliant foreign worker, educated and coming here by airplane, who must have a green card or H-1 visa to work, whereas an uneducated worker who crawled illegally across the border and broke our immigration laws is allowed to work here forever no questions asked. Is that even fair? No f**cking way!

Instead of getting mad (although I am, for the sake of my friend), I ask myself why Bush is promoting illegal immigration of the underclass.

I think it’s because an underclass, the low cost laborers, people who squeeze 3-4 families into a 2 bedroom apartment in Escondido, benefit the rich by keeping their costs down. Bush wants to create a 2-tier society. Cheap labor for the rich, cheap labor for big business. Use them up, and then when they’re old, send them packing. They can’t get SS. How fair is that???

In the meantime, our housing construction costs are lower, landscaping costs are lower.

Hey, I just had a light go on in my head. Do you suppose we need the cheap illegal labor to reduce the inflation? Just as we have cheap goods because of low wages in China, we have cheap American services due to low wages provided by blue collar illegals. This is one way the government has successfully kept down inflation.

If we had no illegals, maybe inflation would be 1-2% higher. But the willing low wage workers kept wages from going up. Thus, flat wages in the blue collar jobs…

[picpoule]

There was an article hitting on this topic a few days back in the LA Times:
http://www.l
atimes.com/news/printedition/la-me-dream26jun26,1,3779486.story

Not all illegal immigrants are poor. There are many wealthy ones who come here from Taiwan, for example. Just look at Irvine, California, where home prices are high and probably won’t go down much. Half of China seems to be living in Irvine! Wealthy illegals can keep the housing market up in some areas, I believe.

[Bugs]

If those construction jobs are paying anywhere close to $20/hour you better believe that English would be the dominant language on the jobsite. Actual hourly wages being paid are closer to $9 or $10, not $20. Cruise by one of these subdivisions going up and you’ll see a lot of beater cars you wouldn’t put your 16-year old into. These guys work hard for what they get paid.

[Anonymous]

It is hard to say how much (if any) illegal immigration contributed to the housing boom. However, it is clear that the housing boom has contributed significantly to the increase in illegal immigration over the last 5 years. The net effect I think will be that as the housing market dies, tens or even hundreds of thousands of illegal workers (construction and related industries) will be out of work and return to Mexico. This will just exacerbate the downturn because obviously these people will no longer be spending money here, and if they did own real estate, they may sell or be foreclosed.

[powayseller]

Illegal immigrants from Taiwan? How would they get past the customs without the proper documents? Do you think they come here with papers, and then stay past their H-1 visa? Then how can they get work? The office type jobs do required a valid work permit, as far as I know.

[lindismith]

Anyone (or almost anyone) can come here on a tourist visa and just stay.

To work, they can buy a green card illegally.

Illegals pay taxes if they have fake green cards (because they pay into the account of the person who’s ss# they are using.)
They don’t pay taxes if they get paid in cash, which is what the majority of construction workers are paid in.

I agree with Bugs (always the voice of reason and rational on this forum!) that most of them will go home when the boom ends, and we don’t need them anymore.

[powayseller]

Bugs, those concrete guys were an exception. I know they were paid well. My experience is working with a small builder, and to my knowledge, only the roofers and drywallers were illegals. They were skilled laborers, so I assume they were paid good wages.

How can you get someone for $8/hr to build a house? What kind of training would that person have? If they were skilled laborers, they could command higher wages, or not? Yikes, I wonder if I want to buy a house built by someone earning $9/hour. It makes me question their qualifications/training/experience.

About the illegals, I think it is a humanitarian abuse to take their SS taxes, and not guarantee them a SS payout at retirement. What will they do at age 65? Our government is knowingly taking advantage of poor people with little prospects, just to keep our inflation down. We take advantage of their cheap labor, hard work, and when they are old and tired, let them be homeless or send them back home? There will be no social security or medicare payouts if they’ve used a wrong SS all along. And we claim to be a country that abhors atroctities? Caring for our elderly population is a necessity of a civilized society. And this is related to housing and the economy, because I see that the quest for keeping inflation low is causing us to take advantage of the poor.

[Carlsbadliving]

I used to work as a recruiter for a construction staffing company. We would just need a social security card and id from anyone applying. I’m sure in most cases the ss cards were fake but there wasn’t much we were going to do. But in that case, they were illegal but were paid legally and had taxes taken out of their check. I also think that a large majority send money back to Mexico each month so it’s not like they are contributing large sums of money to our economy. With a sharp downturn in construction I think we’ll just see less illegals risking everything to get into the country. Word will spread that times aren’t as good here and many won’t make the trip. And just as many may return to Mexico.

By the way, a house can built for extremely cheap labor. $8/hr for a laborer $12-14/hr for a good framer. And i would have no worries about buying a house built by these workers. They are just as hard (if not harder) workers than most Americans and don’t want to screw things up while they’re here. I’d much rather hire an illegal who risked his life to get here than some lazy American who’s skipping out of work early to hit the bars. Besides we still have stringent building codes and inspectors. It needs to be built right to pass inspection.

And also, I’m 29, is the government guaranteeing me a ss payout at retirement? Probably not.

[anxvariety]

I think the government pumped money into the immigration walkout so that they could guage what sort of impact the immigrants have, and also try and measure exactly how many are here.

Watch now as they slowly ween companies off immigrant predominant labor and create programs or incentives for companies to hire middle class tax payer citizens.

When I grew up I used to see the kids of middle class parents working at Taco Bell, Carls Jr, Dominos, etc… Seems like now most of those kids are in construction or don’t work at all because their parents are paying for everything for them(home equity debit card?). Maybe this isn’t reality but it sure seems that way to me…

I think those Taco Bell jobs might start getting filled by the middle class again if stuff starts to hit the fan.

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