Homeland Security Reconsiders "No Match"
The Department of Homeland Security is taking its proposed "no
match" rule back to the drawing board. Under the August 2007
measure, employers who received a letter from the government
informing them that an employee's Social Security number (as
reported on W2 forms) did not match the Social Security
Administration's records would have had 90 days to either
correct the discrepancy or fire the worker. Failure to respond
to the notice — known as a no-match letter —
could be interpreted by the department as "constructive
knowledge" that the worker in question was illegal, leaving the
employer open to prosecution for violating immigration
From the beginning, the rule generated strong opposition;
critics pointed out that the Social Security Administration's
records are riddled with misspellings, typographical errors,
and unreported name changes, all of which could lead to an
innocent discrepancy. According to a December 2006 report by
the Social Security Administration's inspector general, an
estimated 12.7 million of the 17.8 million such discrepancies
in the agency's records involve native-born U.S.
Soon after the rule was announced, a coalition of business,
labor, and civil liberties organizations — including
the U.S. Chamber of Commerce, the AFL-CIO, and the American
Civil Liberties Union — filed suit to permanently
block its enforcement. A federal judge issued an order
temporarily blocking the measure, and in October U.S. District
Judge Charles R. Breyer extended the ban, noting that the rule
as written "would result in irreparable harm to innocent
workers and employers."
The lawsuit itself had been expected to come to trial as early
as this month, but in November the Department of Homeland
Security asked the court to postpone the trial at least until
March; the department had previously announced its intention to
draw up a revised rule that it hoped would withstand legal
No matter how the rule is revamped, it will have to overcome
widespread skepticism throughout the building industry and
elsewhere. According to NAHB director of legal research David
Crump, enforcing the measure may well net some illegal workers
— but it would also draw employers into a bureaucratic
maze. "The problem with all these attempts is that they hold
employers hostage," Crump says. "Builders are being whipsawn.
They're told they can't discriminate when hiring workers
— but they're responsible for making sure [the
workers] are legal. And if you make a mistake in hiring, you
stand to be prosecuted for it."
Crump scoffs at the claim that legitimate employees snared by
the program will have 90 days to correct their records before
being fired. "Ninety days?" he asks. "Try to do anything with
any bureaucratic agency in 90 days." — Jon
• Traditionally, Canada has supplied the U.S.
construction industry with a large proportion of the softwood
lumber it uses. Now, for the first time in many years, lumber
from U.S. mills is showing up in Canadian markets, reports the
Vancouver Sun. The paper attributes the unusual market
condition to a strong Canadian dollar, an imploded U.S. housing
market, and robust construction activity north of the border.
"It's something I've never seen in my career before," one
Canadian lumber wholesaler is quoted as saying. "This is as
tough as it gets."
• The discovery last November of a WW II-era
fragmentation bomb in an Orlando, Fla., subdivision located at
the edge of an old Army bombing range has angered area
homeowners and put the developer on the hot seat. According to
the Orlando Sentinel, representatives of the Army Corps of
Engineers had met with residents five weeks earlier and assured
them that the area was bomb-free. It has since been learned
that soil excavated from the bombing range itself had been used
as fill on local roads and perhaps elsewhere in the
neighborhood. "There could very well be bomb material all over
the place, anywhere out here," said Vista Lakes Homeowners
Association president Ron Cumello.
• A recent federal bill aims to encourage the
estimated 28 states currently lacking mandatory statewide
building codes to change their ways. The Safe Building Codes
Act of 2007 would provide financial benefits to states that
adopt and enforce construction standards meant to protect
against natural disasters, including a 4 percent increase in
disaster-relief funds and access to predisaster mitigation
• Six major home builders — Pulte Homes, KB
Home, Beazer Homes, Ryland Homes, Meritage Homes, and Tousa
— have agreed to pay a total of $1.4 million to settle
a federal investigation into whether they took kickbacks from
insurers when selling homes. Earlier investigations conducted
by a number of states had found that the companies made
referral payments to real estate agents, developers, lenders,
and builders that resulted in higher closing costs for
• The producers of ABC's Extreme Makeover: Home
Edition are learning that even though many hands make light
work, too many can make big trouble. The Boston Globe reports
that Bill Martin, a Vermont man who was seriously injured in a
30-foot fall from the roof of a home he was helping build in
Wells, Maine, is suing the show's production company and the
manufacturer of the log home. Martin's lawyer has reportedly
expressed surprise that more people weren't injured or even
killed as hundreds of workers crowded the site to build the
house in a matter of days.
• The nonprofit U.S. Green Building Council released
its new LEED rating system for green homes in November, setting
the stage for a final showdown with NAHB, which expects to
issue the final version of its own green standard by February.
Although the two organizations have not conflicted openly, NAHB
has been critical of the council's approach to green
certification, calling it costly and impractical. Time will
tell which of the competing standards — if either
— finds broadest acceptance in the marketplace.
Remodeling Outlook: Better Days
What's ahead for the remodeling industry in 2008? Kermit
Baker, project director of the Remodeling Futures Program at
Harvard's Joint Center for Housing Studies, predicts that the
market will improve modestly over the course of the year, with
stronger growth following in 2009.
In Baker's view, the industry is currently reinventing itself
in the wake of some extremely unusual market conditions.
Homeowners who sold their homes in 2002 and 2003, for example,
stood to recover as much as 85 percent to 90 percent of the
money they'd invested in remodeling. "We'd never seen that rate
of appreciation before," Baker says. "When the return is that
high, people say to themselves ‘Why not do it
But with returns on remodeling costs subsiding to a more
typical 65 percent-to-70 percent range, today's homeowners are
increasingly likely to limit remodeling spending to routine
replacements and upgrades. "Don't expect to see many
quarter-million-dollar room additions," Baker says. "As we work
our way into the next recovery, remodeling will probably be
organized more around smaller projects toward the middle part
of the market."
Two other conditions also bode well for the industry as a
whole, says Baker, if not for every individual remodeler.
First, because remodeling is what he calls an "easy-in,
easy-out" business, it responds readily to the amount of work
available. For instance, between 2002 and 2003 — when
the market was very active — not quite 13 percent of
all remodeling contractors went out of business. Baker expects
that number to be much higher for 2007, with most of the
fallout taking place among newer and smaller companies: "If 20
or 30 percent of [remodelers] go out of business, you don't
have too many companies chasing too few projects."
Second, the emphasis on high-end projects over the past few
years has created a "highly concentrated" industry, Baker says.
In 2005, he notes, 5 percent of all remodeling projects
— the most expensive ones — accounted for 60
percent of remodeling spending. He foresees that figure falling
to a more typical 40 percent or so in the years ahead
— a "healthy" development, in his opinion.
"When remodeling gets too concentrated," he says, "it's
vulnerable to a downturn if just a small share of projects
disappears. A broader base of activity should produce more
stable spending in the long run." —