East End Employers Say Immigrant Workers Pay Taxes, Provide Foundation For Local Economy

Mar 2, 2017 8:13 AM

Business owners across East End trades this week said that if newly aggressive federal deportation policies targeting undocumented immigrants overreach, the effect on the local workforce could threaten their businesses’ ability to operate—and could even drag down the local economy as a whole over time.

Owners and employees of a cross-section of medium-sized businesses in the residential development industry—construction, landscaping and residential painting companies with between 15 and 40 full-time employees—all of whom live in Southampton or East Hampton, spoke this week about their concerns.

None would speak on the record by name, for fear of both legal fallout and becoming the focus of public anger in such a volatile climate, but said that the view of the immigrant community’s importance to the local community is often misunderstood or underestimated by others.

Each of the business owners said that the bulk of their employees are Latino immigrants. Some acknowledged that they are often not certain about a worker’s status, since New York State does not require an employer to verify legal residency of an employee when they file W-2 or 1099 forms linked to a tax identification number. Others said they are aware the majority of their workforce are not legal residents.

But all said that every employee on their crew, documented or not, has a tax ID number or state-issued work permit and pays the full complement of state and federal taxes that any legal resident would pay, and are covered by workmen’s compensation insurance. They said that most other medium or large local companies like theirs have similar arrangements with their employees.

Each also said that, apart from the economic firestorm that would consume their industry if large numbers of immigrants were taken from, or left, the local community, they see most of their employees as upstanding members of the local community: family men, homeowners, devout church-goers and consumers.

Most, but not all, of the business owners spoken to said they support Donald Trump and his tough stance on immigration enforcement. They do so in large part because they say they see the impact of companies that, unlike theirs, employ undocumented workers off the books—making it difficult to compete with them in the marketplace.

Those who said they support the president’s approach are confident—or at least hopeful—that the administration’s policies would not cost them the most critical components to their business.

“As a business owner, I see both sides of it,” a Southampton-based painting company owner said. “I do the right thing in terms of taxes and insurance, so I have a certain amount of animus toward the guys I see who aren’t doing the right thing and are charging much less and taking business from me.

“But I also see the need,” he added, with a slight sigh. “We created what we have here, and now we need [immigrant workers] to sustain it. It’s hard for me to say what should be done. Except, I guess, I know what needs to be done: The guys who want to work and are paying their taxes and keeping out of trouble, they should be allowed to stay. But they should definitely go after the bad guys.”

Another business owner echoed the sentiment that tougher immigration enforcement should apply only to violent or repeat criminals, not law-abiding people, and said his immigrant employees do, too.

“These are honest, hard-working guys—that is not who they’re going to go after,” a Southampton landscape company owner said of his impression of federal immigration authorities. “They’re only going after the ones who are killing, and the gang members. My guys understand that what the president is talking about is the criminals. And they want the criminals out too.”

The most recent directives from the Department of Homeland Security set the bar for deportation far lower than the multiple felony convictions that have been the standard trigger for a deportation warrant for the last decade.

Asked why their crews are made up of mostly, if not entirely, immigrant workers, every employer offered a slight variation of the same sentiment: Not because they are cheaper, but because they are the best workers.

“White guys, especially the young ones, don’t really want to work all that hard, and when there’s waves they don’t want to work at all, so they just don’t show up,” said one. “I’ve had white guys, black guys, Spanish guys, Russian guys, Polish guys, Irish guys. The Spanish guys show up to work every day, and they work hard. They would work 60 or 70 hours a week, seven days, if they could.”

Each told a series of very similar anecdotes about their travails as employers in finding and hiring non-immigrant workers.

“I started banging nails as soon as I got out of college, and I’d hire my buddies from high school,” recalled a high-end construction company owner based in East Hampton Town. “They’d be smoking pot in the port-a-potties, doing blow in the office trailer, or they wouldn’t show up. Then, one year, I hired two Colombian guys. They showed up for work, they didn’t drink—and eventually my all-American crew became an all-immigrant crew.”

“I remember my dad’s workers when I was a kid: They were all white, and even then I could tell they were the bottom of the barrel—but that was all you could get back then,” said the painting company owner. “I’ve had two American guys work for me, and they weren’t worth a darn. I get five or 10 Spanish guys looking for jobs every day—nobody of any other race or color has even called for a job.”

A fourth business owner, who is a general contractor based in Hampton Bays, said: “The thing is that out here, the American guys who banged nails or mowed lawns when they were in high school, they go and start their own company instead of working for someone else. So now they need guys working for them. Would I have to pay a white guy more to work for me, yes, but only because he could go do his own thing—or thinks he could.”

Immigrant workers are more than just an expedient business solution to the need for more and more labor in the local economy, one of the businessmen said. They were the foundation that allowed it to rise to a new labor-intensive stratosphere of elegance, ornateness and complexity.

The painting company owner offered that, in the last two decades, the immigrant labor market, particularly among companies not following costly taxation and workman’s comp requirements, allowed the residential development market to grow at an exponentially faster rate and evolve in more labor-dependent ways than it would have otherwise.

“The spec house market was completely dependent on that,” he said of companies staffed by off-the-books immigrant employees. “You take the standard 6,000-square-foot spec house: I have to charge $100,000 to paint that house. But [a spec builder] gets them done for $40,000, because he uses the guys that are paying off the books. If that wasn’t there, all that spec building in Bridgehampton and Water Mill, and all over, that would never have happened … because they wouldn’t be able to make any money.”

Going a step further, the painter said that if the robust supply of immigrant workers were removed or substantially diminished, the demands of the current market could not be met, and that attempts to keep up would likely, over the years, force economic contraction, as services like caring for intricately sculpted landscapes and seemingly endless renovations and expansions of existing homes become more and more expensive, and fewer and fewer homeowners see them as financially worthwhile.

“Eventually,” he said, “even the rich people are going to say it’s not worth it.”

The employers labored to cast aside a common misconception about undocumented workers: that they are paid substantially less than legal residents and citizens for the same jobs, and that they do not pay taxes.

Each said their immigrant workers typically make the standard wage for the jobs they do. They acknowledged that there are companies dodging the system but said that most of the recognizable names in the development-related trades in this region are following the letter of the law in regard to employees whose immigration status is clouded.

“These guys take deep pride in paying taxes,” a construction company owner said of his employees. “They want to play by the rules, desperately. If they could pay $10,000 or $15,000 to be able to apply [for legal residency] tomorrow, they would do it in a second. They would buy health insurance in a second—if they could. And they are strong and healthy, they eat well, they work hard and are in shape—they would be paying into the system, not taking from it.”

In 2013, the Social Security Administration issued a report on “unauthorized immigrants” that estimated undocumented but on-the-books workers were paying about $12 billion a year into the Social Security program alone. The report pointed out that the vast majority of those workers would never be eligible to receive the benefits of the program later in life like citizens who paid the same amount in taxes would. Additionally, undocumented residents get no tax refunds if they overpay taxes on their wages.

Three employees of one of the business owners who sat in the company’s office on a recent Friday to explain how they came to be part of the massive undocumented workforce, for their part, said that they are happy to pay taxes and would be willing to pay fines or fees for their past immigration violations if it would give them a path to legal residency. Two said they have already spent many thousands trying to find such a path, and in some cases lost tens of thousands more to unscrupulous attorneys who took their payments up front, in cash, and then vanished.

“I tried to come here legally first,” said Jose, a construction worker. “My brother got here by applying. My seven brothers, we all applied. Only one got a visa.”

Jose, who is 29 and a native of Ecuador, said that in his hometown he could work for his father’s masonry business—making about $35 a month. “I make more than that in an hour now,” he said.

Another of the workers, an Ecuadorian immigrant named Gallo, said that he pays more than $20,000 a year in taxes and workman’s comp insurance. In 2006, after being arrested by immigration agents while visiting Niagara Falls, he paid an attorney $35,000 to help him apply for legal residency. The man simply never filed the application and vanished with his money.

Since then Gallo has reported annually to an immigration court judge to show that he is fully employed and paying taxes. He worries now, however, that if he reports to the court again, he could be seized and deported.

“It’s a Catch-22,” said his boss, who said several employees fear they are in a similar bind. “They’re scared to go to the immigration court like they’ve been doing, to show that they’re doing things properly. But if they don’t go, then they’ll get a deportation warrant put on them. So they could get deported if they don’t go—but if they do go, they could still get deported.”

Two of the three men own homes and have young children who are U.S. citizens. They say that in recent weeks they have grown scared of their future in the United States, even though they have seen no actual evidence of deportations from the community.

One, named John, a former Colombian national soccer team member, said that he worries that if he or he and his wife were to be deported, their mortgage would go into default and be seized by a bank—the tens or hundreds of thousands of dollars already invested in it simply lost.

His son is an American citizen. When he was 3 he was diagnosed with leukemia and relies on medicines now that he could likely not get if the family left the United States together.

“He has to stay here because he has to keep getting his medicine—if I had to leave, what would become of him,” John said. “My son, he is 10. He tells me all the time, ‘Daddy, be careful.’”