Construction estimates are highly time consuming and require a high level of accuracy. Stick estimating is one of the most popular methods for determining total costs, but it can be inaccurate when not done correctly.
Some studies suggest that immigrant workers compete with native-born Americans in lower skilled occupations, but others show that immigrants tend to complement native-born citizens.
1. Increased Labor Supply
Immigration reform is a hotly debated issue with advocates on both sides of the spectrum. Opponents of the proposal claim it will increase national security threats and depress wages for native-born workers, while proponents argue it provides economic opportunity and helps balance demographic challenges. The debate largely centers on the role of immigrants in the construction industry.
Immigrants are a vital component of the industry, particularly in areas with limited labor market flexibility and in high-demand trades. The current regime of immigration laws imposes a series of compliance and management challenges for contractors. Contractors rely on the labor pool to complete their projects and may be required to verify work authorization or to investigate if a worker has been exploited by an unscrupulous employer. Many contractors also struggle to find seasonal visas for workers needed to fill positions in the construction industry, particularly in the fields of agriculture and landscaping.
Various studies have examined the impact of immigration on native wages. Generally, these studies have examined the effect of immigration on average wage levels and the relative supply of different types of workers. A recent study found that, on average, immigrants do not compete with low-skilled natives (Hypothesis 1). However, they do lower the wages of high-skilled natives at the top end of the pay scale.
Immigrants have a much greater impact on the economy at the bottom of the pay scale, where the average wage is significantly lower. Moreover, higher-skilled natives are likely to complement the immigrant workforce, but the effect is less clear at the highest level of the wage distribution.
2. Increased Costs
While the immigrant workforce benefits cities and the construction industry, it also imposes some costs on native residents. For example, immigrants tend to have larger families, requiring more per-student spending on public education. They may also pay higher property taxes. Over time, however, the upward economic mobility and taxpaying life of second generation immigrants more than offsets these initial costs.
In addition, cities have a financial burden to meet in the wake of the COVID-19 pandemic and the wind-down of federal relief funding. Many have already spent billions on housing migrants and local workers displaced by a surge in new arrivals. The wind-down of supplemental income support programs further exacerbates the issue. Cities are also struggling to cope with an increase in homelessness. In New York, for instance, city officials began giving some single adult migrants 60 days to leave migrant shelters in July and ramping up casework assistance to help them find housing.
Amid these challenges, it has become even harder to attract construction workers, especially those who are undocumented. As NAHB has reported, the number of new immigrant workers entering the construction sector correlates closely with housing starts and has dropped precipitously since 2017.
The plight of undocumented workers is an ongoing concern for AGC members across the country. AGC has called for reforms that provide legal pathways to work, allowing the industry to fill the labor gap.
3. Increased Risk
Like all economic change, immigration has a cost. For construction, this cost reflects the inability of market forces to funnel resources to their best uses. This is exacerbated by the current patchwork of state and federal laws that create compliance and management challenges for general contractors who depend on undocumented workers.
Immigration is a sensitive political issue with strong and conflicting advocates on all sides. Those who oppose reform claim it will increase security risks, while supporters argue that it will improve the economy and provide jobs to Americans. The issue is a proxy for America’s hopes, fears, and aspirations.
The Trump administration has taken a hard stance on immigration. The result has been a sharp rise in border and interior enforcement. As a consequence, more illegal entrants are apprehended and the number of legal immigrants declines. The increased number of apprehensions fuels public fear and conservatism, creating an unsustainable circle of law enforcement and anti-immigration policies.
While the number of undocumented migrants increases, their contribution to gross tax revenues decreases. This is due to their low wage levels and the fact that they are disproportionately young and likely to have many working years ahead of them. As a result, they do not increase the cost of Social Security or Medicare. On the other hand, if they gain legal status, payroll and income taxes will increase as they shift from informal to formal employment.
4. Increased Time
Inaccurate construction estimates are one of the main reasons that construction projects go over budget. Over the course of twenty studies conducted in 20 countries, McKinsey found that 85% of projects experienced cost overruns. Companies that can accurately estimate project costs will have a significant advantage over their competitors. To improve accuracy, it is helpful to look at historical data on past projects. However, it is also important to take into account local economic conditions and fluctuations in labor rates and prices.
In addition to identifying patterns of inefficiency and productivity, accurate time tracking can help contractors refine their estimating processes. This process can help them make more informed decisions about resource allocation, task sequencing, and optimizing workflows. It can also improve communication between clients and contractors, reducing miscommunications and misunderstandings.
While the political debate on immigration continues, there is growing evidence that immigrants have a positive effect on their host country’s economies. This effect is especially pronounced in countries with an ageing population, where the number of people ages 65 and over is increasing relative to the size of the working-age population.
It is also worth noting that the effects of immigration on GDP per capita are largely driven by increases in labour productivity. This is especially true for high-skilled migrants, as demonstrated in the findings of a recent paper which finds that a 1 percentage point increase in the share of migrants is associated with an average of 2 percent growth in OECD GDP per capita.