The housing market has greatly changed the last year in the Twin Cities and around the country. Ethically speaking it is getting quite murky as national housing builders as some local builders are having to lower the prices of their homes to sell them. Economists say this is a good thing being that housing was getting out of hand, which I agree, being the average house in the area is approaching $250,000.
This year it is projected in the Twin Cities that the average house will devalue by 1-3%, something unheard of in an economy that for the last 10 years has seen double digit percentage increases in housing. The market is flooded with homes for sale and affordable housing is hard to find. Needless to say house flipping is not a good avenue right now to be in, but if you have some cash buying foreclosures is a good bet. They are up 67% nationwide.
So builders are lowering prices to meet demand, and contractors are hiring sub-crews to do this work. Most of these sub crews are illegal immigrants.
Last week a national builder that we have worked for for 18 years called us to let us know that they would be giving a project that we had been working on in Stillwater to another painting contractor due to the fact he was 30% lower in pricing then we were.
On average, if all goes well we might make 20% profit on a house after all labor, benefits and materials are paid for.
The pinch is this employees want increased wages as the cost of living is increasing, & builders want decreases,and we are in the middle trying to please both sides.
The problem is that illegal labor will do the work at a fraction of the cost, the builders, local and national government look the other way for the sake of the economy or funding.
Even the painters union which is more strictly monitored by OSHA & Immigration are dealing with a flux of contractors hiring illegal labor.
We want to pay our labor a decent wage, we have scaled back our business in every way possible, trying to sell our office, cheaper phone plans, phasing out problem vehicles, selling off vehicles, and trying to control cost in every way.
We are unwilling to knowingly hire illegal labor, and that is forcing us to different markets(custom home painting, specialty painting & faux finishing, remodeling painting) but it seems that at the end of the day it all comes down to who can do it for less and sooner or later it will hit all the areas of construction.
That's really what the vast majority of builders and homeowners care about, how cheap can we get this done for.
I cannot get employees to do their jobs for minimum wage or anywhere near it, and they shouldn't have to in my opinion. For many families it is impossible to live on minimum wage in this area. The problem arises though when there are plenty of illegal workers who will do this work for that or less, and their are many contractors that see exploiting this labor as the best option to keep their pockets lined with cash.
Even the painters union which is more strictly monitored by OSHA & Immigration are dealing with a flux of contractors hiring illegal labor.
We want to pay our labor a decent wage, we have scaled back our business in every way possible, trying to sell our office, cheaper phone plans, phasing out problem vehicles, selling off vehicles, and trying to control cost in every way.
We are unwilling to knowingly hire illegal labor, and that is forcing us to different markets(custom home painting, specialty painting & faux finishing, remodeling painting) but it seems that at the end of the day it all comes down to who can do it for less and sooner or later it will hit all the areas of construction.
That's really what the vast majority of builders and homeowners care about, how cheap can we get this done for.
I cannot get employees to do their jobs for minimum wage or anywhere near it, and they shouldn't have to in my opinion. For many families it is impossible to live on minimum wage in this area. The problem arises though when there are plenty of illegal workers who will do this work for that or less, and their are many contractors that see exploiting this labor as the best option to keep their pockets lined with cash.
A framing contractor we work with has lowered wages of it's employees by 10-15% because they are dealing with the same issues.
The exploiting of illegal labor's end is no where in sight, so my questions is what do we do as believers who live and abide under the laws of this land?
Do we just give up and look for other work? Do we fight for tougher restrictions in local government?
Do we just give up and look for other work? Do we fight for tougher restrictions in local government?
I have not many answers just a lot of questions.
I want to honor God in my work, and I want my work to be for more than just making money, but to make money so that orphans and widows can be aided, and so that the spread of the gospel can go forth to all nations.
Maybe it would be easier just to move to Darfur?
If you have any thoughts or comments let me know.
2 comments:
Seth - great integration of biblical faith, business, and real life.
Not to defuse your main point (in fact, I think this will reinforce it) but a 20% profit is really good. From your description I assume you must mean 20% gross profit. After you account for your office overhead and other fixed costs, your net profit is probably in the neighborhood of 2-3%, and that is not really good at all. If your company has to cut profits to compete, you don't have much room.
I agree, you are in a tough business, especially affected by illegal workers.
Great post!
Yes, that profit is before any office salary, office expense, gas allowances,vehicle repairs and payments cell phones,normal phones, copy machine expenses, health insurance & workers comp insurance,just to name a few. So yes it is alot less, and we rarely make 20%, so at the end of the day there is very little left to work with. To cut 10% is tough to cut 30% is unbelievable.
I have friends in Phoenix and we've done the Denver Colorado thing. Now it's here in full force.
In Phoenix the paint stores have said it's rare if the work is not done by illegal workers, and it's being pushed by national builders who have stockholders to answer to.
Post a Comment