The U.S. construction industry is preparing for a period of uncertainty, with two key shifts in policy—ramped-up immigration enforcement and heightened tariffs for construction materials—hanging over an already fragile housing marketplace. With a high level of undocumented workers, many in such critical states as Texas and California, widespread deportations could have catastrophic ramifications for workforce availability.

 On top of that, tariffs for Canadian wood could drive materials’ price, creating even more strain for housing affordability. All of these raise critical questions about future industry viability and remedy options.

 

Labor Shortages and How It Affected Building

 

A recent report by Pew Research and Harvard Joint Center for Housing Studies confirms undocumented workers’ significant contribution to U.S. construction, comprising more than 13% of workers in the national construction workforce and over 50% in such critical states as Texas and California. With stricter immigration enforcement in its midst, many perceive that the soon-to-be-created shortage of workers will slow down construction, drive salaries in a positive direction, and drive housing even more out of range.

 

Historical data validate such concerns. In a University of Utah and University of Wisconsin study, when 300,000 undocumented immigrants between 2008 and 2013 were deported, a significant number of construction jobs went unmet. Loss in workforce translated into a one-year delay in construction activity per county and a 20% rise in new housing cost. With its present housing market weakness, such a workforce shortage could have even graver repercussions.

 

undocumented workers' significant contribution to U.S. construction

 

 

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Tariffs and Higher Materials Costs

 

In addition to a lack of workers, U.S. builders are preparing for price spikes in anticipation of tariffs levied on Canadian wood. With a tariff boost to 25%, an improvement over its current 14.54%, 2 x 4 wood and engineered wood items, important construction materials, could have a significant price jump. That is a concern, with growing use of mass timber construction, a development technique that is increasingly in demand for its efficiency and environmentally friendly use in high-rising buildings.

 

The push for U.S. mass timber development has been increasingly growing, with over 2,000 projects in development at any stage of completion. Nevertheless, U.S.-based mass timber development is in its infancy, and it is not guaranteed that domestic production will develop at a pace rapid enough to mitigate added expense for imported materials. Industry professionals report that, even with added tariffs, cross-laminated timber (CLT) and glulam production could expand, but that it will involve an investment and a transition period, and in the near term, developers will have limited and high-cost availability options.

 

 

Comparing Construction Challenges with Other Industries

 

The challenges in construction have a similar character to such sectors with high immigrant workforces, such as hospitality and agricultural work, both of which have high immigrant workforces. In agricultural work, immigrant policies have generated shortages in workers, and employers have, in consequence, increased pay and automation, and in consequence, have increased food prices. In a similar manner, in construction, a similar scenario could force builders to utilize prefabrication and modular construction techniques in an attempt to mitigate shortages, but such alternatives require high initial investments.

 

construction sector, hospitality and agricultural work

 

 

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Conclusion 

 

The dual hammer of increased immigration enforcement and tariffs creates a complex challenge for America’s builders. Delayed projects and inflation in wages can occur with a shortage of workers, and added expense in materials can make housing even less affordable. Builders will have to navigate through such trials and tribulations by searching for alternative sources of workers, investing in domestic fabrication, and employing new construction techniques. 

 

As the industry gears for a transformation, policymakers, companies, and citizens have to gear for a new economy that can redefine housing and infrastructure development in a matter of years to come.

*This article is based on publicly available sources and is intended for informational purposes only. We do not claim ownership of the content used and encourage readers to refer to the original materials from their respective authors.

 

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