Most contractor clients I speak with these days rank labor shortages as their chief concern, above supply chain issues and rising interest rates. With unemployment hovering around 2.5% at last look, New Hampshire’s available work force has been unable to meet the demand for labor, resulting in a dearth of manpower for most industries – including construction. The U.S. Chamber of Commerce reports that New Hampshire has only 44 unemployed workers for every 100 available positions – one of the lowest ratios in the country. To quote AGC’s chief economist Ken Simonson, “contractors report almost universally that they need more workers than they can find.”
Theoretically the market is supposed to self-adjust, with higher wages offered by construction companies sparking an uptick in the labor supply. It hasn’t worked that way because the workers just aren’t there. The labor pool needs to be expanded, and that means looking to foreign-born workers, both those seeking to immigrate and those already here. There is no other realistic option.
Canada gets it. On November 1 it announced plans to bring in 1.45 million immigrant workers over the next three years to ease its labor shortage.
But in the U.S., near-term prospects for bringing in more foreign-born workers appear dim. President Biden’s proposed U.S. Citizenship Act of 2021, which would have provided pathways to citizenship for an estimated 11 million undocumented immigrants, has fizzled, and his efforts to keep DACA going have taken a beating in the courts. The House is now controlled by Republicans, many of whom ran on anti-immigration platforms capitalizing on the Trump-instilled xenophobia that painted illegal immigrants as violent criminals and drug dealers. This political rhetoric has also managed to erode popular sentiment for expanding legal immigration, which has always been concerned with whether immigrant workers will displace Americans from their jobs – a non-issue in today’s economic climate.
To be sure, there are many undocumented immigrants who would like to work, including in New Hampshire. But under both federal law and state law, they cannot legally be hired. Employers are required to verify employees’ right to work in the U.S. by completing an I-9 form for each hire and examining the documents (Green Card or EAD in the case of a non-citizen) provided by would-be employees in support of the verification. Guidance on the process can be found here. Penalties for noncompliance are stiff. Knowingly hiring illegal immigrants is a crime subjecting the employer to escalating fines of up to $16,000 per employee, potential jail time, and possible debarment from federal contracts. State law penalties are $2,500 per day of violation.
While independent contractors are not subject to the same restrictions as employees, hiring illegal immigrants as independent contractors is no panacea, even if they are true independent contractors and not misclassified employees (see Blog #3). Knowingly hiring illegal aliens as independent contractors is illegal. Independent contractors must furnish a Form W-9 to prospective employers, which in turn requires them to have a social security number or tax ID number. If a vendor furnishes no W-9, the employer must withhold federal taxes from any payments, which will eventually let IRS weed out the violators. And it is foolhardy to hire an independent contractor who lacks liability insurance and workers’ compensation insurance – likewise difficult to procure without proper tax identification.
As the calendar flips to 2023 there seems to be no solution on the horizon. The work force can only be supplemented by immigrant labor if the political will to facilitate it can be found in Washington. My wish for the construction industry in the new year is that comprehensive immigration reform overcomes partisan politics and becomes a reality. When we turn on the evening news and see the mass of migrants on our southern border, we should try to see opportunity – just not the kind seen by Republican lawmakers hoping to distill political capital from the public perception that the Biden Administration is solely responsible for this chaos.
Theoretically the market is supposed to self-adjust, with higher wages offered by construction companies sparking an uptick in the labor supply. It hasn’t worked that way because the workers just aren’t there. The labor pool needs to be expanded, and that means looking to foreign-born workers, both those seeking to immigrate and those already here. There is no other realistic option.
Canada gets it. On November 1 it announced plans to bring in 1.45 million immigrant workers over the next three years to ease its labor shortage.
But in the U.S., near-term prospects for bringing in more foreign-born workers appear dim. President Biden’s proposed U.S. Citizenship Act of 2021, which would have provided pathways to citizenship for an estimated 11 million undocumented immigrants, has fizzled, and his efforts to keep DACA going have taken a beating in the courts. The House is now controlled by Republicans, many of whom ran on anti-immigration platforms capitalizing on the Trump-instilled xenophobia that painted illegal immigrants as violent criminals and drug dealers. This political rhetoric has also managed to erode popular sentiment for expanding legal immigration, which has always been concerned with whether immigrant workers will displace Americans from their jobs – a non-issue in today’s economic climate.
To be sure, there are many undocumented immigrants who would like to work, including in New Hampshire. But under both federal law and state law, they cannot legally be hired. Employers are required to verify employees’ right to work in the U.S. by completing an I-9 form for each hire and examining the documents (Green Card or EAD in the case of a non-citizen) provided by would-be employees in support of the verification. Guidance on the process can be found here. Penalties for noncompliance are stiff. Knowingly hiring illegal immigrants is a crime subjecting the employer to escalating fines of up to $16,000 per employee, potential jail time, and possible debarment from federal contracts. State law penalties are $2,500 per day of violation.
While independent contractors are not subject to the same restrictions as employees, hiring illegal immigrants as independent contractors is no panacea, even if they are true independent contractors and not misclassified employees (see Blog #3). Knowingly hiring illegal aliens as independent contractors is illegal. Independent contractors must furnish a Form W-9 to prospective employers, which in turn requires them to have a social security number or tax ID number. If a vendor furnishes no W-9, the employer must withhold federal taxes from any payments, which will eventually let IRS weed out the violators. And it is foolhardy to hire an independent contractor who lacks liability insurance and workers’ compensation insurance – likewise difficult to procure without proper tax identification.
As the calendar flips to 2023 there seems to be no solution on the horizon. The work force can only be supplemented by immigrant labor if the political will to facilitate it can be found in Washington. My wish for the construction industry in the new year is that comprehensive immigration reform overcomes partisan politics and becomes a reality. When we turn on the evening news and see the mass of migrants on our southern border, we should try to see opportunity – just not the kind seen by Republican lawmakers hoping to distill political capital from the public perception that the Biden Administration is solely responsible for this chaos.
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