Housing slump, job losses conflict - Immigrant workers often go uncounted

Housing slump, job losses conflict - Immigrant workers often go uncounted
By Bob Willis, Bloomberg News: Alexandre Tanzi in Washington and Valerie Rota in Mexico City contributed to this story
Copyright © 2007, Chicago Tribune and Bloomberg News
Published June 4, 2007

The slump in home building, the deepest since 1990, has taken only a modest toll on the U.S. job market. Workers like Francisco Leon may be part of the explanation.

Two years ago, Leon, an undocumented immigrant from Guatemala, had little trouble finding construction work five days a week in northern Virginia. Nowadays, the 22-year-old mainly does odd jobs, often only two days a week.

As Congress debates whether to provide a path to citizenship for undocumented immigrants, workers like Leon, hired off the books for day labor, are among the first to lose their jobs as home building falters. Such workers often go uncounted as well, meaning official labor statistics don't fully reflect the decline in construction-related jobs.

"There have been cuts already; we just haven't seen them in the official statistics," said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. "We've already done half of the adjustment. The other half will be more visible."

Credit Suisse Holdings Inc. estimates that about 173,000 housing-related payroll jobs, including builders, painters and construction materials-makers, have been shed in the past year. As many as 250,000 more may be lost, said Jay Feldman, senior economist at Credit Suisse in New York.

Housing-related jobs peaked at about 8 million in April 2006, representing almost 6 percent of the U.S. workforce, according to a tabulation of such jobs compiled from the Labor Department's establishment surveys for a Credit Suisse report that Feldman helped write.

Such jobs represented about 18 percent of the growth in payrolls between 2003 and 2006, the report said. In the past year, they have declined only about 2 percent at a time when housing starts were off by about a third. Building permits in April slumped to the lowest in a decade.

"Immigrants might be bearing the brunt of the slowdown" for now, Feldman said.

Leon is certain of it.

"It was much better two years ago," he said, glancing around him at several dozen Spanish-speaking men waiting to be offered day-labor jobs outside a 7-Eleven store about 25 miles south of Washington, D.C. "There was more work. The money flowed then."

Bartley Mullohan, general manager of Construction Databases Inc. in Miamisburg, Ohio, said he is seeing fewer immigrants on work sites in Ohio and other parts of the Midwest where his company does business providing pricing information to builders and contractors.

'Changing of the guard'

"It seems like there is a definite changing of the guard," Mullohan said. "Driving to some job site six months ago, you would see a lot of Mexicans out framing, doing drywall, interior trim. Now you see fewer of them, and builders have to go back to the traditional workers, the local guys that have always been here."

Just as government labor statistics don't count many of the estimated 12 million undocumented immigrants, they miss many independent contractors, whether foreign-born or not, said Daniel Jester, an economist at Moody's Economy.com in West Chester, Penn.

The Labor Department's establishment survey, which covers companies larger than 1,000 employees and a random sampling of smaller firms, fails to capture independent contractors who make up more than 20 percent of all workers in construction, Jester wrote in an April research paper.

What is more, those self-employed contractors are not picked up by the government's weekly figures on filings for unemployment claims.

"Both the establishment survey and claims data may be missing out on a significant portion of the construction workforce," Jester said in his study. "It is these employees who are likely the first to be let go once a construction project is complete."

That is one reason jobless claims have been relatively low, even as job growth slows. Weekly claims, which usually decline as payrolls increase, have averaged 320,000 this year, only slightly above last year's average of 313,000.

Report: Payrolls increase

Meanwhile, monthly payroll growth this year has averaged 130,000, compared with 189,000 in 2006.

Payrolls increased last month by 157,000, more than economists predicted, after a gain of 80,000 in April, the Labor Department said Friday. The jobless rate stayed at 4.5 percent.

"Anyone who's not working legally in the country, chances are there is no unemployment insurance paid, and, therefore, they are ineligible to file for insurance," said Christopher Low, chief economist at FTN Financial in New York.

At the same time, the Labor Department's household survey, from which the unemployment rate is derived, also may pass over undocumented immigrants.

"If you have a U.S. government survey taker calling you, and you are an illegal immigrant, you are certainly less likely to talk," said Marisa Di Natale, an economist at Moody's Economy.com, who worked for two years at the Bureau of Labor Statistics.

The unemployment rate is near a five-year low.

Further pointing to the falloff in jobs for immigrants, workers from Mexico are sending less money home this year. That is consistent with a drop in hiring and hours worked among immigrants, said Alonso Cervera, head of Latin American research at Credit Suisse.

Remittances grew at a 0.6 percent annual pace in March, down from a 27 percent rate in March 2006, according to the most recent Mexican central bank data.