Back in the mid-1990s I interviewed for an information technology position with one of the nation’s largest home builders. In the course of the interviews, one of the company’s executives told me — almost as a boast — that the company didn’t own so much as a single hammer. The company had positioned itself as a project management firm, he said. All the actual work was performed by subcontractors.
Actually, it went beyond that. Some of the subcontractors in turn engaged sub-subcontractors to perform work for their part of the project.
There is, of course, nothing new in using subcontractors in construction projects. Home builders have always subcontracted specialized work, like plumbing and electrical, to firms that have the requisite licenses and skills. But subcontracting all the work is a relatively recent development.
For a big company operating in a free labor market this would not seem to make a lot of economic sense. Why not hire the workers directly and cut out the middleman?
The answer is that, in today’s economy, the most important service offered by a subcontractor is not supplying workers, but providing a legal buffer between those who do the work and the company for which the work is being done.
Having employees is expensive. An employer has to pay, not only their wages — which cannot fall below a legal minimum — but their payroll taxes as well and, in addition, must make contributions on their behalf to the state’s unemployment and workmen’s compensation insurance funds. In addition, if he fires, or fails to promote, or declines to hire a member of a protected class, he faces potential discrimination lawsuits and legal action.
Undocumented — i.e., illegal — workers don’t bring these problems with them. You don’t have to withhold their income taxes, or pay their payroll taxes, or pay their unemployment and workmen’s comp premiums. And they won’t sue you for work-related issues or file employment discrimination complaints. Of course, there’s always the danger of getting caught. This is where subcontractors come in.
As the workers’ primary employer, a subcontractor is responsible for complying with all the laws regulating their employment. But subcontractors do not display as high an economic profile as the larger firms that contract with them. This makes it easier for them to fly under the legal radar. If they get caught, the firm that hired them is off the hook.
This is why former President Bush was being disingenuous when said that illegals “do the jobs Americans won’t do.” No, they do the jobs Americans can’t get because the total cost of hiring legal workers is much higher than the cost of hiring illegals.
I am personally acquainted with three college-educated men who lost their managerial positions in the Bush 41 recession and had to take jobs as construction workers — two of them hanging drywall. A few years later, they wouldn’t have been able to get those jobs. How can a legitimate construction firm compete with a subcontractor who keeps no records, pays his workers in cash each day, and whose only assets are a pickup truck and a cell phone?
And there is your answer to the question that is puzzling so many people. The American people have indicated their willingness to consider amnesty for illegal immigrants (or, to use the favorite phrase of the pro-amnesty crowd, “a path to citizenship”) if the Federal government will act to stem the flow of illegal immigrants. Yet, the government, in defiance of the law and under Republican as well as Democrat administrations, has stubbornly refused to do so.
Not only that, but when a state (Arizona) finally acts to do what the Federal government is supposed to do, the response is to threaten legal action and boycotts.
So, why won’t the Federal government secure the borders? The answer is, because it doesn’t want to. American corporations are addicted to cheap labor, and halting illegal immigration will raise their labor costs.
And it’s not just big business. The affluent elites like their undocumented nannies, housekeepers and gardeners just as much as big home building firms like their undocumented drywall-hangers.
Which is why only a grassroots rebellion like the Tea Party movement can force the government to do what the law requires it to do.