Lowering Wages and Standards

Homebuilders have a duty to make sure the contractors they hire are complying with federal and state wage and hour laws, federal labor law, federal Occupational Health and Safety Standards, and other laws that protect workers. Unfortunately, corporate homebuilders have turned a blind-eye to violations on the jobsites where their homes are built. Their inaction on work site standards and safety is a legal liability with the potential to shake the stability of the entire market in addition to having a negative impact on communities and dragging down local wages.

Read LIUNA's report: The Human Price of Building a Home

Racing to the bottom by squeezing subcontractors

The structure of the residential construction industry directly and indirectly impacts labor conditions. The largest corporate homebuilders are builders in name only, typically acting as developers who subcontract specific services such as framing, roofing, foundation, and the installation of all home components. Corporate homebuilders generally open up a competitive fixed-bid process for each of these services. But in order to maximize profits, corporate homebuilders typically demand ever-lower bids. Often after an initial round, they return to bidders to demand further price concessions until it becomes nearly impossible for subcontractors to complete work without cutting wages, benefits, safety and other core labor-related areas.

For example, Lennar reserves the right to cancel current contracts, halt scheduled work or send jobs out to be rebid - giving subcontractors a choice of either cutting their invoice prices or being shut out of bidding on Lennar projects “It’s almost like asking your employees after they’ve done the work… to take a pay cut…It’s kind of an unjust tactic to ask for retroactive concessions,” the California Professional Association of Specialty Contractors, Orange County/Inland Empire alleges, adding that Lennar’s tactics amount to “extortion.”