Monday, March 10, 2014
By ALANA SEMUELS and ALEJANDRO LAZO Los Angeles Times
The real estate bust idled hundreds of thousands of construction workers. Now, with housing on the mend, builders are hiring again.
FANNIE MAE POSTS
Bailed-out housing finance giant Fannie Mae said Thursday it would pay the U.S. government $59.4 billion after posting a record profit for the first three months of the year.
The fortunes of the company, which is 80 percent owned by taxpayers after being seized in 2008, have been lifted by the recovery in the housing market.
Fannie Mae reported an $8.1 billion profit for the January-March period, the best performance in its history, compared with a $2.7 billion profit a year earlier.
As the value of the mortgages it owns or backs has increased, Fannie Mae's bottom line has improved. Last month the company reported a record $17.2 billion annual profit for 2012.
Fannie Mae also has been able to recalculate the tax write-downs it can take on its assets, which have added to the company's value. Under the bailout agreement, Fannie Mae must pay dividends to the U.S. Treasury based on its net worth.
As of March 30, the company had received about $117 billion in taxpayer money. With the $59.4 billion payment, to be made by June 30, Fannie Mae will have paid the Treasury $95 billion in dividends.
Under terms of the bailout, the dividend payments do not pay down what Fannie Mae owes. But the money helps offset the cost of the rescue and could help delay when the nation must raise the debt limit.
Sibling housing-finance firm Freddie Mac also was seized in 2008 and its finances have rebounded as well. On Wednesday, the company reported a $4.6 billion first-quarter profit, the second-best in its history.
Freddie Mac said it would pay $7 billion in required dividends to the Treasury next month and could make a larger payment based on its own recalculation of tax write-downs.
Freddie Mac has received about $72 billion in bailout money and with the upcoming dividend payment will have sent about $37 billion back to taxpayers.
- Los Angeles Times
Trouble is, many workers aren't coming back.
Years of sporadic employment drove many from the industry. Incomes aren't what they used to be. Laid-off workers remember the sting of lost livelihoods; some have had enough of boom and bust.
Former house painter Alan Schaffer has hung up his paintbrush to pursue a degree in business administration. The Riverside County, Calif., resident says he's looking for a livelihood that's stable.
"I love construction. I love building," said Schaffer, 45. "But I can't have a job that pays me $50,000 one year and zip the next. I need to be more financially secure."
With home prices surging across the country, builders are again seeing big opportunities. Housing starts and new-home sales are up. But even with high unemployment, construction companies say they're struggling to find enough qualified workers to keep up with demand for new homes.
"We're starting to see spot shortages of labor," said John Nunan, president of Unger Construction, a commercial building contractor that does work in Northern California.
Many experienced union workers retired during the slowdown, he said. Others found new careers. Now, many contractors can't find all the workers they need.
Part of the problem is pay. Workers' earnings in the construction industry fell more sharply -- and are now recovering more slowly -- than those in many other industries. Hourly pay for construction workers, adjusted for inflation, was $11.22 in 2012, down 3.1 percent from 2009.
Normally, worker shortages push up wages. But builders say they can't match what they paid before the recession. Costs for building materials are rising. So are land prices in many areas.
Many laborers are grateful just to be working again. Still, hard hats such as Danny Fregoso, a supervisor at Joseph Holt Plastering Inc. of Corona, can't help but miss the fat paychecks that accompanied the housing bubble.
During the best of times, Fregoso said he made about $26 an hour, while entry-level workers were making about $17 or $18. These days, he's earning about $16 an hour.
Stagnant wages aren't helping lure workers to job sites in Arizona's brutal desert heat, said Brett Jones, vice president of operations at the Arizona Construction Association.
Arizona's tough new immigration laws, passed in 2010, aren't helping matters either, advocates contend. The U.S. Supreme Court later found parts of that legislation unconstitutional. Still, thousands of Latinos have left the state.
Meanwhile, the flow of migrants north from Mexico and Central America has slowed substantially, in part because of tougher enforcement along the U.S.-Mexico border.
The U.S. construction industry depends heavily on Latino labor. At the height of the boom, Latinos made up one-quarter of the U.S. construction labor force; most of them were foreign-born, according to the Pew Hispanic Center in Washington.
"The work force has gone somewhere else," said Richard Usher, who runs an insurance company for construction firms and is also co-founder of Arizona Employers for Immigration Reform. "They had to feed their families."