The relationship between immigration policies and construction costs is becoming increasingly significant in today’s economic landscape. According to Prologis CEO Hamid Moghadam, recent changes in U.S. immigration policy could drive up prices in the building sector. This article explores his comments and the reasoning behind them, shedding light on an underappreciated factor shaping the construction industry.
Impact of labor shortages on construction
One of the primary arguments put forth by Moghadam concerns labor availability. The construction sector, he emphasizes, is already facing workforce shortages. Many construction jobs are filled by immigrants, and restrictions or reductions in immigration can severely limit the labor pool. When fewer workers are available, competition for talent increases, leading to higher salaries and, ultimately, increased project costs.
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Economic ripple effects
Higher construction costs don’t just affect builders—they also influence the broader economy. Rising expenses for building new warehouses, homes, and infrastructure can be passed on to tenants, homeowners, and consumers. This can lead to increased rents and home prices, impacting affordability and potentially slowing down new projects. Moghadam notes that if labor remains scarce, the pace of building will slow, creating bottlenecks in supply chains and stifling economic growth.
The policy connection
Immigration policy is directly tied to the construction workforce. Simple policy changes can drastically alter the availability of skilled and unskilled laborers. Prologis and other industry leaders have urged policymakers to consider the real-world impacts of tighter restrictions. Addressing labor supply through thoughtful immigration reform, they argue, is essential for controlling costs and supporting economic development.
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Industry response and recommendations
Companies across the sector are investing in training and offering higher wages to attract domestic workers, but challenges persist. The message from Prologis and others is clear: a balanced approach that recognizes the importance of immigrants in the workforce is critical to the health of the construction industry and the broader economy.
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This article is inspired by reporting from Bisnow, a source known for its in-depth business and real estate news. The original article discusses how changes in U.S. immigration policy might cause construction costs to rise and highlights the CEO of Prologis’ thoughts on the issue.
