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Saturday, May 13, 2006

Illegal workers an open secret
By Jon Newberry
Post staff reporter

The 80 people arrested this week at Fischer Homes work sites and charged with violating immigration laws are just the tip of an extensive underground economy of immigrant workers in the region's homebuilding industry, people in the business say.

At Fischer Homes, one of the region's largest homebuilders, at least half of the workers at its Tara subdivision job site at Plantation Pointe in Florence were illegally in the United States, according to court documents. Fischer supervisors told investigators that Fischer employed "Mexican workers'' as drywall finishers, framers and bricklayers, according to court documents. Investigators said they found illegal workers at every Fischer job site they visited, according to court documents.

Industry insiders say the practice of hiring immigrant workers is widespread in the region.

"It goes on in the construction industry to an extent that you would not believe," said Mark Galea, area organizing director for the Ohio and Vicinity Council of Carpenters, which represents 4,200 union carpenters in Southwest Ohio and Northern Kentucky.

Unscrupulous builders and general contractors get around immigration and tax laws by setting up tiers of subcontractors and brokers - "subbing to subs" - to provide a buffer between construction companies and the laborers who actually do the work, said Steve Schramm, owner of OK Interiors, a union-shop contractor based in Forest Park. The laborers are often hired as independent contractors, absolving the employer of responsibility for collecting taxes and paying premiums for workers compensation, he said.

"That's the game that's played," Schramm said.

His company works mostly in commercial construction, he said, where the practice also occurs.

"On the commercial side, I'd be stunned if it (the percentage of illegal workers) was anything less than 30 or 40 percent," he said.

The Coalition for Immigrant Rights and Dignity (CODEDI), a Cincinnati organization, estimates that there are about 50,000 Latino immigrants in the area and that a large majority of them are undocumented.

Immigrants have begun working in the area's homebuilding industry in large numbers over the past 10 years. The federal crackdown on employers of illegal immigrant could hamper production, increase costs, cut into homebuilders' profits, and push up prices for homes have to pay, although there is disagreement on that within the industry.

One local businessman in the housing construction industry said stopping the employment of illegal immigrants would be devastating to local builders and would significantly increase the cost of new homes. He did not want to be identified because he was afraid of retribution from the federal government.

"This will definitely have an effect in the homebuilding and development industry. The immigrant worker is a vital part of the industry today," he said.

"Everybody knows it's been going on. It's the running joke. There are no white roofers. I've not seen one in five years," he said.

The source said there's no practical way for employers to know if an employee is legal or not. Anyone can get a taxpayer identification number or use someone else's Social Security number, he said.

He blames the government for not coming up with policies years ago when the influx of immigrants began. Now it's too late to begin throwing people in jail or deporting them, because so many illegal workers are already here, and employers are dependent on them, he said.

"You've got people that are scared to death. It's an epidemic in the building industry."

OK Interiors' Schramm, however, said the added cost of paying good wages and benefits to construction workers wouldn't be that much. Most of it would come out of the pockets of the layers of brokers and subcontractors whose only function is to insulate builders and general contractors from legal responsibility, he said.

"It would probably bring a lot more quality and qualified people back into this business," Schramm said. "It's been driven down to where the average Joe can't support himself, much less a family."

Officials at several area homebuilders said they require subcontractors to sign documents stating they'll use only legal workers. But they can't do much beyond that, they say. Subcontractors, or subs, do 90 percent of the work on construction sites, said Dan Dressman, executive director of the Home Builders Association of Northern Kentucky.

Dennis Walker of Zicka Walker Homes Inc. said his company has been meeting with subcontractors and reviewing arrangements with them this week to make sure they're in compliance and that their subcontractors' are also in compliance.

Anne Mitchell, a spokeswoman for Drees Co., said all of its subcontractors sign such an agreement, and that's the extent of its involvement with its subcontractors' employees.

"Our subcontractors are complying with the law as far as we know," she said.

The company doesn't know enough about the investigation and arrests at Fischer to know at this point whether it will affect Drees policies or how it conducts its business, Mitchell said. Drees has not had any problems finding subcontractors able to get its projects done on time, she said.

Other area homebuilders also said the situation at Fischer had not had any immediate impact on their own work, and Fischer said this week that its operations have resumed and are proceeding on schedule.

Officials at several homebuilders said they did not have any knowledge of how many illegal immigrants are working in the industry.

Dressman said all homebuilders in the area rely heavily on immigrant labor. He declined to comment on their legal status because he said it's not something his organization keeps track of. But there's no reason employers shouldn't be able to check workers' legal status, he said.

"They have to require the paperwork. It takes a little time sometimes, but it's certainly not impossible," he said.

Dressman was in Washington, D.C., this week meeting with federal officials on immigration issues and said Sen. Jim Bunning told them that builders should call his office or other local congressional offices if they were having trouble getting background checks through the Social Security office.

The Department of Homeland Security is seeking authorization to access Social Security data to help it identify employers of illegal immigrants. Millions of workers have given employers Social Security numbers that don't match their names, and hundreds of thousands have registered "000-00-0000" as a Social Security number, the department said last month when officials unveiled its stepped-up "interior enforcement" strategy to boost border security.

George Vredeveld, a University of Cincinnati economist and director of the Greater Cincinnati Center for Economic Education at UC, said the tri-state's labor market isn't favorable for the construction industry.

"While the unemployment rate is now higher than the national average, there are areas in which we still have severe labor shortages," Vredeveld said. The construction and homebuilding industry is definitely among them, particularly for unskilled labor. "That's one area where the shortages are most severe," he said.

If companies don't have the labor supply they need, they're not going to be able to produce, so they have to increase wages to attract more workers, he said.

"If you increase compensation, you're going to attract more people ... legals and illegals," Vredeveld said.