From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...
Nov. 17 — Removing undocumented workers from the construction industry would ultimately decrease industry GDP by about 8 percent, a research group estimates.
If the construction industry excluded undocumented workers, it would face a short-run drop in its gross domestic product of $30.9 billion (about 5 percent) and a long-run decrease of $47.6 billion from the industry’s GDP in 2013 of $619.87 billion, according to a working paper released Nov. 14 by the National Bureau of Economic Research, a nonpartisan group that distributes research findings among academics, public policy makers and business professionals.
If undocumented workers gained legal status it would cause a short-run increase in the construction industry’s GDP of 1.2 percent ($7.7 billion annually) and a long-run increase of 1.9 percent ($12.1 billion annually), the report calculated.
Wholescale legalization and mass deportation are both “extreme scenarios” that are unlikely to occur in the foreseeable future, Randy Capps, director of research for U.S. programs at the Migration Policy Institute, told Bloomberg BNA Nov. 16. The Migration Policy Institute is a think tank that says it favors “fair, smart, transparent, and rights-based immigration and refugee policies.”
The report goes a “little bit further than some of the past research” and importantly focuses on industry-specific productivity effects of immigration policy, Capps said.
But the notions either that legalizing undocumented workers would give industry GDP a major boost or that removing them would cause a major productivity decrease deserve skepticism, Ira Mehlman, a spokesman for the Federation for American Immigration Reform, which advocates for lower immigration levels, told Bloomberg BNA Nov. 15.
The report’s researchers, economics professors Ryan Edwards and Francesc Ortega at Queens College in New York, said their distinction between short- and long-run effects is whether the capital stock is assumed to remain fixed or adjusts over time following workforce changes.
With respect to a homebuilder, for instance, an immediate loss of labor power would translate into a short-term reduction in the number of houses the company can build, Capps said.
“But over the longer term, you’re going to have to pay workers more,” he said. “That’s going to make your houses more expensive to build, and that’s going to affect the planning of how many you can afford to build, and that’s going to mean some construction firms leave the industry. That’s where capital adjustment comes into play.”
The report’s findings linked to the theoretical removal of undocumented workers should be taken with a grain of salt, Mehlman said. He downplayed the report’s estimated hit to construction industry GDP caused by undocumented workers’ removal.
“You have millions of people here who are unemployed or marginally employed,” Mehlman said. “There’s no reason to believe that they wouldn’t fill whatever vacuum is left by enforcing laws against illegal aliens.”
Meanwhile, the legalization of undocumented workers would provide a “better matching of workers with their skills” and unlock higher paying jobs and construction trade certification opportunities for some workers, Capp said.
On the other hand, many workers would use their newfound labor market mobility to leave behind physically demanding jobs with low pay, Mehlman said. He pointed to the 1986 enactment of the Immigration Reform and Control Act, which made more than 1 million undocumented seasonal agricultural workers eligible for legal status. Many of those workers left the agricultural sector, he said.
There were about 1.1 million undocumented workers in the construction industry for the 2011-2013 period, making up a 13 percent share of the industry workforce, Edwards and Ortega found.
Most of the paper’s analysis stems from data for the years 2011-2013 from the Census Bureau’s American Community Survey as processed by the Center for Migration Studies.
The researchers’ methodology took into account the skill distribution of undocumented workers, their relative productivity and their substitutability in terms of both native and documented foreign-born workers, the report said.
To contact the reporter on this story: Elliott T. Dube in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Jo-el J. Meyer at email@example.com
The NBER working paper is available for purchase at http://www.nber.org/papers/w22834.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)