Hard work, unlawful tactics help some Hispanic builders conquer industry
January 2, 2008
By Daniel Connolly

Construction work helped Jose Nunez rise from a shack in Mexico to a middle-class lifestyle as head of a small Memphis-area crew. He said he has followed his parents' advice to work hard, and now happy clients sometimes invite him to family parties.

He also acknowledges hiring illegal immigrants and skirting workplace laws, though he sees it as helping poor people.

This mix of hard work and legal violations is not uncommon in the Memphis construction industry. Nunez's story helps explain why immigrants from Mexico and Central America now make up the vast majority of workers on local job sites.

Immigrant construction workers often put tremendous effort into a physically demanding field that many native-born workers have abandoned. Many immigrants have advanced quickly from laborers to business owners and often hire other newcomers. But some bosses -- immigrant and native-born -- amplify that advantage by using questionable business practices such as evading insurance requirements and making dubious tax decisions.

While those actions may allow them to underbid competitors and can lead to lower costs for customers, it also reduces pay and benefits for workers, a big factor in driving Americans from the profession, say unions and other critics.

For a variety of reasons, construction companies like Nunez's can straddle the line between mainstream Memphis and the informal world of unauthorized immigrants: Immigration enforcement is light, unions are weak, big contractors shield themselves from subcontractors' actions and local and state inspectors have limited resources and authority.

Nunez represents both sides of today's construction industry. He typically puts in long days during the week and a half day on Saturday. He's a fast learner who picked up English and construction skills on the job. But his business relies on shortcuts and dodges of workplace law.

One of the more serious violations is not following a state requirement to buy workers' compensation insurance to pay medical costs for injured employees. Such insurance can be expensive and drive up the price a company offers customers, making the firm less competitive. Nunez said he plans to buy a policy soon.

He said he can sympathize with contractors who feel undercut and offers explanations: He runs a small company and isn't going for big jobs. He says it's up to builders to decide if they want to subcontract work to someone who doesn't have coverage, adding that the law should make it easier for workers to enter the country legally and that most Americans want cheap labor.

"Like us, or like me, you know, I'm doing this job for maybe half the price of (another) company," he said. "But at the same time, I feel good. Because even though it's not good, as far as like I said, the law and workers' comp and all that stuff. But I'm helping somebody out who does really need (it)."

Hispanics make up as many as seven in 10 workers in local home-building jobs, said Keith Grant, past president of the Memphis Area Home Builders Association. They dominate low-skilled specialties such as drywall installation, but are also entering skilled trades such as plumbing. Most top-level general contractors here are American-born, but many immigrants occupy the subcontracting levels just below them.

The Commercial Appeal interviewed about 30 people for this article, including attorneys, large and small contractors, illegal immigrant workers and state regulators.

Several people said illegal practices are widespread in the construction industry, but stress that not all Hispanic construction contractors and workers break laws or take shortcuts.

Nunez said he's being open about his life and business because he wants the public to know that immigrants are good people. "I really don't got nothing to hide, you know," he said. "We always tell it just like it is."

Mexico to Memphis

Nunez was born in the town of Zapotiltic in Mexico's Jalisco state, one of eight children who survived to adulthood. His father loaded and unloaded trucks for a living but squandered money on alcohol, Nunez said. His mother worked in a hospital.

The family's home was open to the elements on three sides and rain sometimes blew in, said Nunez, (pronounced NOON-yez).

He's 35, about 5-4, and stocky with big forearms and a mustache. His English isn't perfect but he speaks fluently, providing a key link between workers, homeowners and contractors.

Nunez was 17 in 1990 when he dropped out of his ninth year of school, then crossed illegally into California. He worked for a car wash and other businesses in Los Angeles before following a sister who had come to Memphis for work, arriving in 1994.

Using fake documents, he quickly joined a concrete company, then switched to an electrical company and later a construction framing crew. An American contractor taught Nunez how to build a house from top to bottom.

Later, he obtained a work permit through his marriage to a legal immigrant from El Salvador. He finally received a green card this year, and he planned to drive to Mexico with his wife and three children in December -- his first trip back after nearly 18 years away.

Nunez started doing jobs on his own about 10 years ago. He has recently employed between four and six workers on his crew, which handles everything from drywall to roofing, playing a lead role in home-remodeling contracts and acting as a subcontractor on bigger home-building projects.

A reputation for solid work at a good price has kept the group busy even as the construction industry has slowed, Nunez said.

Like many immigrant contractors, he has no office. He spends most of his day driving around the area to check on projects. Friends lead Nunez to other immigrants who want work. Most are here illegally, Nunez said.

"If you try to hire some other people who are (here) legally, or American people, most of the time they don't want to do the job," Nunez said.

Critics say Americans expect good pay and benefits.

"It ain't that people don't want to do the work. They don't want to do the work for what it paid 20 years ago," said Greg Crouse, apprenticeship coordinator with Iron Workers Local 167.

He said many firms exploit illegal immigrants: "They know they can use them up and throw them away."

Some local Hispanic construction workers are legal immigrants or citizens, but research suggests that more than half of Hispanics working in Memphis construction are here illegally. Some work on big projects.

In March, federal agents arrested six suspected illegal immigrants working on a government-funded project to improve the earthquake resistance of the Hernando DeSoto bridge over the Mississippi River.

In 2003, a Mexican worker named Agustin Fernando Martinez fell to his death while helping build FedExForum. Contractors said in court documents that Martinez was here illegally. Attorney Jeffrey S. Rosenblum, who helped Martinez's family win a settlement, said it was never clear.

Nunez pays his workers $8 to $12 per hour but offers no benefits.

Nunez said he files personal tax returns on his own income -- about $60,000 annually -- and gives workers an Internal Revenue Service form 1099 each year. The form is meant for independent contractors, but the law is unclear on who counts as independent, said Danny Snow, an accountant with Thompson Dunavant PLC. Companies don't pay payroll taxes or withhold income taxes on 1099 workers, he said.

Paying workers in cash is legal and the IRS allows illegal immigrants to pay income taxes. Nunez gives workers the form so they might build a taxpaying record that could help them obtain legal status.

Nunez's crew works in a dangerous field. On July 4, three were installing flat panels on the roof of a Midtown house. They sometimes took needless risks, including balancing on narrow ledges high above the ground. There was nothing to stop a fall.

Nunez said he emphasizes safety and that no one on his crew has had a serious accident. He says that on a job site a reporter visited, the main contractor's insurance would have covered any injury.

When immigrant workers die or get hurt, some contractors disappear, said John Winkler, administrator with the Tennessee Occupational Safety and Health Administration. Investigations can be hard because workers may not know the name or address of their boss. At times there are so many layers of subcontractors at a site that it's unclear who the employer is, he said.

Workers' compensation authorities are also under pressure. Tennessee has only about 10 inspectors to ensure that thousands of businesses buy proper insurance, said workers' compensation administrator Sue Ann Head.

"I don't think the state could ever employ enough individuals that they could check every subcontractor or contractor at every company," she said.

Nunez let the crew go home early on Independence Day, and some workers drove to a large Midtown house where 10 people lived. They had sprayed green paint on some windows to cut glare on a TV screen. One man had photos of his wife and children by his bed in a room he shared with two others.

Reason to hire

Ed Grinder's spacious home seems a world away. In his living room, the energetic 82-year-old opened a box of news clippings about past projects, from City Hall to St. Jude Children's Research Hospital. He's still active as president of Grinder, Taber & Grinder Inc., and said the firm expects record revenues of $65 million this year.

He admires Hispanic construction workers. "They're the hardest-working people I guess that we have today," he said.

He served as a Navy engineer in World War II and returned to Memphis to start his construction career in the mid-1940s, when strong unions represented even unskilled laborers.

Grinder and partners launched their firm in 1968. They used union labor for years, but went nonunion in 1986 to avoid what Grinder said were strikes and pay demands he considered excessive.

Grinder's first experience with Hispanic workers came in 1995, when subcontracted immigrants worked at a church he was building.

Now, he estimates that Hispanics make up at least 50-60 percent of construction workers in Memphis and three of four workers on one of his projects. He said he will not work with bad subcontractors, but he does not ask about workers' immigration status.

"We sub out probably 95percent of our work," he said. "And it is the responsibility of the subcontractors to check the legality of them."

When the Tennessee legislature took up immigration measures last year, the construction industry successfully lobbied to shield big firms from responsibility for subcontractors who hire illegal immigrants.

"It's no different than when I hire a lawn service to cut my lawn," said Susan Ritter, executive vice president of the Home Builders Association of Tennessee. "As a homeowner, am I expected to inspect the immigration credentials of the people who are running the lawnmowers?"

Grinder, meanwhile, says immigrants who learn English have a bright future as subcontractors, if not as general contractors. He especially likes Tony Cabrera, a Mexican concrete subcontractor he calls "a smart young man."

He believes Cabrera can be a millionaire: "He's got the drive and the confidence to do that."

Playing fair?

A subcontractor in another specialty said his firm is struggling.

Standing near a forklift on a cold December day, Mohamed S. Higazy, a 40-year-old with graying hair and a walrus mustache, said he has lost contracts to companies that avoid taxes and workers' compensation on both illegal immigrants and authorized workers.

Higazy said health and pension benefits, union wages and insurance bring his hourly cost per worker to about $42, far exceeding that of some competitors.

He said his 2-year-old steel construction firm, U.S. Iron LLC, shows little profit after expenses.

The naturalized citizen from Kuwait said it's wrong to enter the country illegally and avoid taxes. "As an immigrant, I'm all for immigration, but you've got to earn your living the right way and pay your taxes at the same time," he said.

Nunez said he understands why some people feel undercut.

He recalled a recent case in which he bid $70,000 for a home-remodeling contract. He later learned competitors bid $119,000 and $210,000.

Are his actions wrong? He said it depends on point of view.

"I guess if you're asking a person, the American people, I mean, she (might) say, 'Well, I don't care if their kids got food on the table or not.' He may say that, he may not say that, but I mean me as Hispanic, I've been through really, really bad situations, go through really, really, really bad stuff, you know, like I was telling you about how we (grew up) in Mexico."

But he said he understands how competitors feel: "It is a little unfair, you know."