The home building industry is notably reliant on migrant workers who are unskilled when they enter the country. Wages for unskilled migrant workers in this sector are lower than those for the skilled workers. Reliance on unskilled labor has multifaceted effects in that the costs of home building may be kept lower, to the advantage of the home builders. On the other hand, wage inequality and reports of exploitation of immigrant workers by some home builders may expose the industry to closer scrutiny over wage issues.
Looking at wage inequality in the country as a whole combined with the economic recession, the home construction industry has been affected the most. As a result of contracting wages among home buyers and the decline in homes being constructed for sale, home builders have had to reduce the numbers of their workers. According to "USA Today," the home building industry lost approximately 5 percent of its jobs. Before the economy fully recovers and wages peak among home buyers, the home builders may still have to cut more jobs in the sector.
The decline in people buying houses compounded with other factors such as high unemployment has affected the value of houses. To attract would be buyers who are struggling with low incomes and unemployment, home builders have to compete among themselves to lower housing prices. This can result to a loss on the part of the home builders, even though it may influence some home buyers attracted by the low prices.
There is an imbalance in the market when the demand for housing is lower than the supply. Wage inequality as a result of unemployment, for example, can cause fewer people to move into their own homes. According to the National Association of Home Builders, when home builders construct excessively in the anticipation of higher demand in times such as a recession it is likely that the supply will be more than the demand. In times of economic recession, unemployment is high and wages decline, therefore causing depressed consumption in most sectors of the economy.