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 Business News | August 2007 
Immigrants Send Less Cash Home as Construction Slows
 Jenalia Moreno - Houston Chronicle
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 |  | My sense is that the construction industry has been a very important employer of Latin American workers.
- Peter Hooper, Deutsche Bank |  | |
Mexican immigrant Margarito Rodriguez hasn’t needed his white, cowboy-shaped hard hat much this summer.
After five weeks without a construction job, he finally found one in mid-July.
“There was not a lot of work,” said Rodriguez, who blamed some of the slowdown on the soggy summer but most of it on a drop in home construction.
Construction has slowed because it has gotten harder for home buyers to get credit in the wake of the meltdown in the subprime mortgage market.
| | A new report says the decline of new houses being built is hurting immigrant workers. Aug. 2, 2007. |
Illegal immigrants, in particular, are bearing the brunt of that slowdown, losing their jobs painting, laying tile and building roofs for new homes, economists said. And with less cash in their pockets, some immigrants such as Rodriguez — who is working on his legal status — are cutting back on the amount they send to relatives in Latin America. That, in turn, has contributed to the first year-over-year monthly declines in remittances to Mexico in 12 years, according to Banco de Mexico.
The percentage of Mexican migrants sending money home fell to 64 percent in the first half of 2007, down from 71 percent last year, according to a study released Aug. 8 by the Inter-American Development Bank's Multilateral Investment Fund.
Of those surveyed, 28 percent work in construction or day labor jobs.
In May, Mexican immigrants sent $2.2 billion to Mexico, a 5.8 percent drop compared with the same month in 2006, according to the Banco de Mexico. And in June, Mexicans sent $2 billion home, a 3.5 percent drop from June 2006.
While cash transfers to Mexico fell two months in a row, the number of U.S. construction jobs didn't fall as much as analysts expected.
If employment figures matched the 25 percent drop in residential construction that has occurred since early 2006, about 900,000 workers would have put down their hammers, drills and paintbrushes, according to a Deutsche Bank study released in July.
Instead, only 150,000 residential construction jobs were slashed, the bank's study said.
"That just didn't add up to the magnitude of the puzzle we're looking at here," said Peter Hooper, chief economist for Deutsche Bank and one of the study's authors.
One explanation: Employment surveys miss the flexible labor force of undocumented workers.
Hooper estimates that in the past year, 500,000 undocumented Hispanic workers have lost their jobs in construction. Still, 1.4 million have been able to hold onto their jobs, according to the report.
"My sense is that the construction industry has been a very important employer of Latin American workers," he said.
Big labor supply
That's certainly true in the Houston area.
According to Adam Aschmann, government affairs director of the Greater Houston Builders Association, immigrants make up 70 percent of the area's residential construction work force.
He added that his 2,100-member group, which represents home builders, hires only documented workers.
And according to a 2006 study by the Greater Houston Partnership, construction is the largest employer of undocumented workers in the city. In 2006, nearly 36,000 undocumented immigrants worked on Houston construction sites, where Spanish is frequently heard over the din of hammers and drills.
Another reason undocumented immigrants aren't counted in the official jobs data is that some are paid in cash off company payrolls.
"If they were never counted in the first place, then we don't count them when they lose their job," said Jim Gaines, a research economist with the Real Estate Center at Texas A&M University. "A lot of the builders don't need full-time employees. It's easier to let somebody go if they are not on the official payroll and treat them more like casual employees."
Unskilled hit hardest
Undocumented Honduran immigrant Jose Nelson Orellana said work was steady when he arrived last year but it slowed this summer.
"I came last year in August, and there was more work," said Orellana, who was surrounded by other immigrants also looking for work outside of a Home Depot store.
Unskilled workers like Orellana are the hardest hit when job shortages occur, said Will Holder, president of general contractor Trendmaker Homes.
But those with skills will keep their jobs, he said.
"If you're a highly skilled roofing installer, there's still plenty of roofs for them to put on," said Holder, who added that his company hires documented workers.
"If your job is to unload the truck, then you could be affected because you don't offer that much. The people who know how to show up at a job and get the work done, they are still in demand."
Without some of the unskilled laborers to help around the job site, builders are working with smaller crews, and some contractors are doing four jobs a week instead of five, he said.
"There's still a lot of activity out there" in Houston, compared with the rest of the nation, Holder said.
In Houston, 11,271 single-family homes were built during the second quarter of this year, compared with 13,793 units during the same period of 2006, according to Metrostudy, which evaluates the housing industry.
Local impact
The dip in U.S. home construction is affecting more than Houston's immigrant community. It's also caused a drop in the amount of money workers send to their relatives in Mexico — one of the nation's top sources of revenues, accounting for about 3 percent of its gross domestic product.
Though not a large amount on a national scale, the cutback in remittances is keenly felt on the local level.
Without work, Rodriguez sent only $50 in the month of June to his sister back in Mexico, instead of about $50 a week he usually sends.
"I have to cover my expenses here," said Rodriguez, who picked up lumber, hauled away equipment and emptied the water cooler one afternoon at a construction site near downtown.
His widowed sister, Maria Rodriguez, has had to take out credit at the grocer in the village of San Diego in the Mexican state of San Luis Potosí.
"Now that he has not worked, it also affects us here," the mother of six said.
jenalia.moreno@chron.com |
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