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The House Committee on Business & Industry and House Committee on Licensing & Administrative Procedures met offsite at Houston City Hall in a joint hearing on July 24 to hear invited testimony on the adequacy of the workforce currently available for rebuilding the state’s key infrastructure as well as residential and commercial properties damaged by Hurricane Harvey.

This report is intended to give you an overview and highlight of the discussions on the various topics the committee took up. This report is not a verbatim transcript of the hearing; it is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

 

Opening Remarks

 

Ellen Cohen, Mayor Pro Tem and Council Member District ‘C’

  • Over 300,000 Houston homes were damaged in Harvey
  • Goal is to make permitting process for disaster recovery as easy as possible
  • Skilled labor shortage has delayed home repair – need to find and encourage skilled labor to come to Houston to help with home repair

 

Chair Oliveira

  • Noted the House B&I Committee hearing will be immediately following the conclusion of the joint hearing
  • Have been old that if another hurricane hit the Rio Grande valley this year, the recovery would be much slower due to the lasting damages from Hurricane Harvey
  • We have a significant number of unskilled laborers; however actual skilled workers are tremendously difficult to find and more expensive to pay these skilled workers
  • There is a need to get our junior colleges to train young people to go into these industries, however this work is physically demanding and dangerous, thus making it difficult to recruit
  • Worker misclassification is a major problem
  • Also, with independent contractors, there is no income tax. There is no paycheck that can be garnished to pay into necessities like Medicaid, child support etc.
  • For undocumented workers, wage theft is a huge issue. They go and work at a site and the hiring contractor never pays them at the end of the day
  • A real need to find ways to speed up the administrative side for disaster repair

 

Invited Testimony

 

Evaluate the adequacy of the workforce currently available to the industries responsible for rebuilding the state’s key infrastructure as well as residential and commercial properties damaged by Hurricane Harvey. Specifically, examine the labor needs within the construction industry and skilled trades and determine if local or state licensing requirements and regulations are an unnecessary barrier to the ongoing success of post-Harvey recovery.

 

Jose Jimenez, City of Houston Office of Business Opportunity

  • $2.4 billion in damages to city property from Harvey
  • Currently there is no research available regarding labor shortages in pre and post Harvey environments – but plenty of anecdotal evidence of a shortage
  • Shortage of skilled labor has lengthened home repair time by 4-8 weeks causing higher construction costs
  • Of the 71 City of Houston facilities damaged, only 21 have been repaired
  • Creation of a visa program to allow skilled laborers to come and work would be beneficial
  • Mayor Turner is actively working on solutions
    • created training programs for young men and women to grow the labor pool
  • Stickland – Will you need more resources than what is already been granted to train more people? Referencing the $500,000 provided for 14 skilled laborers, which would be $35,000 a piece
    • I believe so, I’ll have to get back to you
  • Romero – How many people were you hoping to get in that class? Did it work?
    • Yes, it did work, a good amount of interest seems to be widespread.
  • Oliveira – Did you try and associate with any junior colleges or workforce centers?
    • Yes, we did connect with the local workforce board, now that we have proof of concept we are reaching out to Junior Colleges and other institutions.
  • Oliveira – Please try and bring back more figures. We need to figure out how to do this cheaper and faster to speed up this process
  • Thompson – What have you found to be lacking in the public education of these students so that we can enhance the curriculum?
    • One of the unique parts of this program, is that it is more holistic. They are also taught about finances and other things to help them grow this into a real business. We want to show them that this a road to taking care of yourself and family and community etc.
  • Collier – Please explain the income level and how this program helps students in this area
    • Talks about the mayor’s complete communities’ initiatives, were trying to bring opportunities to disenfranchised communities. Part of the model is bringing these programs directly to the communities.
  • Collier – The good thing about this program is that it helps them become self-reliant
    • Exactly, that’s what were emphasizing
  • Oliveira – When they graduate the program, what’s the entry level wage?
    • I don’t know
  • Geren – Are you all working with local school districts on vocational programs?
    • I don’t know
  • Hernandez – What is the maximum capacity of a class?
    • Don’t know. The tough part is finding qualified instructors
  • Oliveira – Are you doing anything to make a list of workers for the future? Some places post hurricane are compiling lists to prepare for disasters
    • I’m not aware of any program like that

 

Mike Holland, Texas Construction Workers Association

  • Not aware of an abundance of regulations that prevent us from solving this problem
  • Lack of consistent skill training currently – we don’t do a good job of connecting our resources
  • Our construction supply chains reward price and not value of the work, believes this a theme around the country as well
  • We have an aging workforce made up of baby boomers, more are leaving than are coming currently which is an issue for instruction. Unsustainable model
  • S Thompson – How are you addressing this abundance of low skill workers?
    • Residentially, we are doing nothing
    • Commercially speaking, with the upscale initiative and construction career collaborative we are trying to mandate these relationships and a training program that involves looking at career paths
    • Other than the licensure requirements, there is very little infrastructure that encourages pursuing these fields
  • We need to stop the piecemeal strategy of immigration, wants to put pressure on the federal government to meet the needs of employers as opposed to dealing with the politicized environment
  • Public and private owners need to understand what they can do to impact this issue
  • Our biggest problem is that the construction industry thinks someone else is going to provide them with a workforce, this just isn’t the case
  • Oliveira – You’ve spoken to us before about how your company is at a disadvantage when you’re bidding because you take care of your employees, can you elaborate on this?
    • As long as contractors can call their craft workers independent contractors with no liability at all, then the problem will continue. It’s very difficult for us to compete with price because we pay worker comp
  • Romero – You’re saying that immigration policies drive away your skilled workforce, how can you validate this?
    • It’s largely rhetoric, however we also see immigration policies that hurt this. The best example is our workforce, if E-Verify is validated, were putting an incredible filter on the availability of the workforce. Immigration centers have more data, mine is just anecdotal
  • Romero – Where are the workers going?
    • In some cases, other states, some in fact going back across the border. Others do not enter the hourly workforce and stay as independent contractors
  • Romero – Can you give me an estimate on how many of the folks working in recovery were undocumented?
    • Roughly 75%
  • Romero – So if we did E-Verify, roughly 75% of the workforce would go away?
    • I think so yes. We need to fix this issue one way or another

 

Andy Adams, VP of Adams Insurance

  • We represent contractors in all facets of construction
  • Any loosening or reduction of current licensing processes or certifications, a move like this would just encourage “storm chaser” mentality
  • Generally speaking, these contractors are not of the same quality and do not provide the same value of work. Short term it works, but long term we deal with the defective quality later, which can be dangerous and expensive
  • Two areas the legislature could assist
    • Support for vocational programs that provide pathways to construction careers as a primary choice as opposed to trying to get in college. Wants to show them the options that a construction career path
    • Do not harm principle – avoiding passing laws that force construction companies to be immigration enforcement officers, encourages looser immigration policies
  • Kuempel – We passed HB 5 that did just that, and it’s implemented. They get to choose an endorsement of whether they want to be college or career bound. Encourages every trade to work with the ISDs
    • Message from the construction industry would just be more please
  • S Thompson – Have you talked to the US senators that represent us?
    • Yes, we have communications with both senators. The issue has become so toxic (referring to immigration) that its difficult to address the issue appropriately
  • Oliveira – There is some bipartisan support to continue to have certain exemptions (i.e. shrimping industry receives exemption to recruit employees to work on shrimp boats) this is one of those instances where regular citizens don’t want to do it because its dangerous. Injury is common. We could recommend the federal government reconsider these proposals. The issue is who tries to overstay their visa or exemption status.
  • Stickland – You mentioned you don’t want to deal with storm chasers, what is the problem with that? If they are bad, how do we expect to maintain these jobs once the work is done?
    • What I’m referring to is a fly by night entity (typically independent contractor) who have very little experience in the field. Anyone with a pickup truck holds themselves out as a roofer, and they are not skilled in the area
  • Stickland – Do you understand how people would view that as protectionism of your industry?
    • Yes, I could see that
    • The industry has a view that there is such a thing as a craft worker, a skilled worker
  • Stickland – Why hasn’t the industry solved the problem on their own?
    • This has been a slow progression; the growth of independent contractors makes it very difficult to maintain craft workers. They’re taking steps to try and solve it, C3 is a great example of it. It’s a 3-decade program that won’t be solved overnight
  • S Thompson – With the growth of NASA and Silicon Valley etc. we have forgotten that we live in houses that need to be built. We’ve been moving in these new directions so quickly that were forgetting about the necessities, the simple things.
  • S Thompson- I agree that we need to dial back regulation, but we don’t want anyone to get hurt because of that. Sometimes regulation is a good thing.
  • Romero – can you speak to what has happened with some of the claims here in Houston, what is the role of the insurance company to adjust the cost of repair when there is a shortage of workers that causes an increase to the cost of the project?
    • Can only speak anecdotally – many people were not able to get everything they wanted repaired to be repaired. They are not the one hiring the contractor, they evaluate and come up with a claim number which the owner is then able to pay contractors with
  • Romero – so when a claim is made, does the insurance company base the numbers on the previous year? And do you get complaints that construction is not able to be rebuilt for the cost of the claim? And is there an organization that keeps track of how often a contractor does not finish work?
    • Does not know of an organization that tracks contractors for information like that
    • There are many disputes over the cost of repair, and there is no doubt that the cost of repair went up after Harvey in both material and labor costs
  • Oliveira – Comments how finding the balance between trade workers and college graduates is important. Not everyone is going to be a neurosurgeon. A balance is vital.
  • Oliveira – Wants to send a letter to TEA to find out what exactly HB 5 did successfully.

 

Terrence Fisher, Associated Builders and Contractors of Texas

  • Speaks to the need of skilled workers in the aftermath of Hurricane Harvey
  • Discusses the stigma surrounding construction workers and how it is not true any longer
  • When you invest in your employees, the quality of work improves
  • Wants to update the mindset that skilled trades are only for those not fit for college
  • Allowing apprentices to use hands on time work towards their licenses would be helpful
  • Collier – Are you aware of contractors hiring former convicted criminals?
    • Yes, companies in my region do
  • Collier – Do you notice a significant quality of work difference?
    • No, they do an excellent job.
  • Collier – How about with their ethics?
    • Generally, they are fantastic.
  • Collier – Would it be possible to allow certain convicted criminals to have accessibility to craft licenses? This could help with our shortage, as there are people available to help with this.
    • Yes, I agree. Former felons are dedicated to the craft that often they learn in prison.
  • Kuempel – In your experience, what did the state of Texas do well and what did they lack in addressing this catastrophic event?
    • Allowing contractors to use out of state licenses was very good. Many other states have stricter licensing requirements than we do.
  • Kuempel – We want to be able to address this situation again, asks him to please continue sharing information for the future
  • Oliveira – In reference to electricians, also feels we shouldn’t minimize regulations, but believes we can do things more efficiently. Would an oral exam/personal interview substitute for people who don’t do well on written exams?
    • I certainly believe it would.
  • Oliveira – Would that be something you recommend that the committee look at?
    • Yes

 

Don Klein, Texas Association of Builders & Greater Houston Builders Association

  • We have a major problem in the construction industry workforce
  • In the early 2000s, it took us 73 days to build a home. After the recession, many home builders went back to their home countries
  • Our average time is now 122 days, large in part because a lot of these workers didn’t return after the housing market came back
  • After Harvey, our build time is now up to almost 152 days
  • The biggest obstacle to rebuilding is the lack of labor available. The average skilled worker is 58 years old
  • For every 3 skilled people that retire, only 1 enters the workforce
  • When you have less labor, the cost of the labor goes up. This is a great thing for kids graduating from schools
  • Suggests comprehensive immigration reform, believes the only way we can get this done is to resolve the border issues and welcome workers up here
  • Speaks to the great success of the Warren Academy
    • We personally have hired 2 of the kids while they attend college
  • Wants to address the stigma that if you don’t go to college you’re an idiot

 

John Mata, International Association of Plumbing and Mechanical Officials

  • Should not relax any licensing requirements in the crafts
  • A lot of the programs we have allow them to graduate with little to no debt, it’s a best kept secret
  • Multi Core Curriculum program- composed of everyone from the skilled crafts region
  • Urges committee to reach out to these associations and talk with them, this would be vital to summing up the labor shortage
  • Stickland – Do you anticipate that your association would fight us if we tried to do a temporary deal to help with Harvey?
    • When Louisiana tried to this with Katrina, it didn’t go too well. It’s a passionate industry, we don’t want them lowered for safety.
  • Stickland – Were talking specifically about this disaster, so you will not relent for a short period of time on a license?
    • Both associations I’ve talked with, and PAMPLA they’ve all assured me that none of this as hindered any of them.
  • Stickland – So you think that there isn’t a plumbing shortage in Harris?
    • Its because of the baby boomers

 

Robert Lord, Plumbers Local Union 68

  • We put 60 cents for every man hour that we work into a training fund
  • Oliveira – So if they complete the program are they apprentices?
    • No when they start they are apprentices, and when they finish they are journeyman
  • Of our apprentices, 13% of them are veterans. We also have a few women
  • Believes if they are licensed in another state, that we need to take a look at allowing them to come work in our state for the next time something like this happens
  • Would like to see a template developed that the state can use down the road

 

Lisa Hill, State Board of Plumbing Examiners

  • Worked hard during the storm to accelerate licensing applicants during Harvey recovery
  • We’d love to be able give examinations in other parts of the state, however we can’t move the practical portion to another part of the state
  • We issued a number of provisional licenses
  • Only has 3.5 examiners currently, the journeyman requires 8,000 hours so we allow them to apply if they’re getting close just to offset the amount of time between application and actual exam time
  • Need to get better outreach in the schools
  • Allowing 200 hours from high school to be put towards journeyman experience
  • The state of Washington came and visited us to learn about our practices and be closer to our licensing procedures
  • Kuempel – The test is accessible as we can make it across the state? Is it in the states best interest to have it centrally located in Austin? Wants to expedite the process
    • We’d love consideration of anything like that, we do offer the exam in situations where the practical exam is not needed
    • We made a mobile inspector examination to better suit the needs of the cities
  • Geren – is it possible to do the written portion online?
    • It is not available now, but if directed we would look into that
  • Geren – think that is worth looking into
  • Shine – Can you give us an example of constraints as to why you cannot have regional exam centers?
    • Only have 31 employees
  • Shine – What about a mobile facility?
    • Would love a mobile facility, have had it in plans for several years
  • Shine – What’s the constraint?
    • Funding
  • Shine – Is there a situation where an individual could have an enhanced practical test in lieu of a written test, especially for those who have difficulty taking tests?
    • Written exam was given orally up until 1989, were questions of validity that led to switch to written exam
    • Project design is also a key portion of the examination process
  • Shine – Have you asked for these items before?
    • There hasn’t been a good time to ask for large amounts of funding
  • Shine – Mobile facility seems to be a good place to start
    • In this session we intend to ask for additional funding for education programs
  • Shine – I think you need to make the mobile facility one of your priorities
    • Can certainly role education and mobile testing in together
  • Shine – I think we should be as “customer friendly” as possible for all of these licensing boards, mobile facility would be ideal
  • Geren – How many states require the practical exam
    • Unsure, in the process of investigating each state
  • Geren – Should look at online training while you’re doing that
  • Paddie – You’re a bit unique in that you’re under Sunset currently, will have opportunity to address these and other issues
  • Paddie – Regarding coming to Austin, applicants have to come twice?
    • No, written portion may be taken in other areas, but practical portion must be taken in Austin
    • If taking written and practical portion in Austin, they take both at the same time
  • Paddie – How would you grade yourself as far as responsiveness & addressing a major disaster?
    • We were on it immediately, also touched base with TDLR quickly; reached out to other states & created process for out-of-state individuals needing provisional licenses
    • Created rubric for individuals needing to postpone continuing education, eliminated wait fees, etc.
  • Paddie – What are your chief complaints?
    • Length of time applicants wait for an examination, 2-3 months in not uncommon
    • Disaster made the already large demand for exams much more difficult to manage; only have 2-3 examiners
    • Disaster needs like rebuilding work, home repair, compounded the overall need
    • Running Saturday exams as well, examiners do not get overtime
  • Stickland – So you disagree and believe that there is a plumbing shortage exposed by Harvey? Heard from previous witness that we have enough plumbers to do the job
    • Need is relative
  • Stickland – Work is being done by people without licenses during Harvey, what are we doing about this?
    • Have handled things like this before for previous disasters, field investigation staff go into these areas and stress need of licensed work
    • Issue fines & guidance for unlicensed plumbers
  • Stickland – Would you say you’re more or less lax during a disaster
    • No way we are less lax
  • Stickland – And you have 9 field investigators, how many were in Harris County?
    • 2 were permanently stationed, 4 were brought to help
  • Stickland – Would you say you targeted Harris County?
    • No, we assisted in any way we could, enforced regulations, helped citizens &protected them from unscrupulous actors
  • Stickland – How much of your operation is funded by fees?
    • None of our operations

 

Brian Francis, Texas Department of Licensing and Regulation

  • >200,00 licensees in areas affected, TDLR tried to do no harm by extending licenses, waiving continuing education, waiving late & replacement fees, etc.
  • 10,385 students in impacted area, postponed facility inspections and identified students with minimal hours left, waived in certain circumstances
  • All of this was done under the Governor’s Disaster Declaration
  • Estimated 800k vehicles were washed out, issued provisional tow licenses for out-of-state personnel to clear vehicles, far in excess of needs of previous disasters
  • Also brought in contractors from out-of-state in a variety of professions, approach was to leave contracting system in place & let out-of-state individuals work through contractors
  • Electrician licenses have grown recently, but not indicative of lack of shortage, only of growth; still have issues filling positions & do not have licensees coming in at enough rates
  • Focus on substantially equivalent licensing requirements in other states for purposes of reciprocity; air conditioning, electrician, tow trucks, etc. saw >3,000 individuals come in from out of state
  • Should not focus on lowering code requirements, codes are critical
  • Need to be asking municipalities if they have adopted the most recent codes, codes were tested by Harvey and older codes are insufficient; legislature should look at this issue
  • TDLR focused more on developing emergency rules sets instead of waiving requirements
  • TDLR has held 3 summits for the electrical program to help deal with shortfall, have ongoing messaging in schools and providing pathway for apprenticeship students to take exams early
  • TDLR created Strategic Response Coordinator to provide sole contact during emergency and other situations requiring collaborations
  • Still in the recovery and rebuilding portion of Harvey, but also still in the mitigation process
  • For air conditioner and electrician program, have identified 11 military occupational specialties that tie to these programs, veterans can be a valuable source of licensees
  • TDLR inherited the mold program from DSHS effective Nov. 1, 2017, requirements were lowered in response to Harvey, but TDLR has not received complaints from these actions
  • Legislature should consider if we need to deregulate mold or move it back to DSHS as the more appropriate place
  • TDLR looks at every application on a case-by-case basis, each case with a criminal conviction background is individually looked at; license denials and revocations are very low compared to total applicants, etc.
  • Shine – Are you familiar with what private industry is doing with soldiers at Fort Hood with ETS and getting veterans into a career path?
    • We have, have created a database of careers available for military personnel correlated with data on vacancies in areas around the state?
  • Shine – Do you have contacts or postings at Fort Hood, Fort Bliss, etc.? Also, could look to reserve elements
    • We’ve visited Fort Hood and shared software with Department of Defense
  • Shine – Do you have a firm point of contact at Fort Hood and Fort Bliss?
    • Unsure, but perhaps you can help
  • Shine – What can you do to help licensing boards collaborate on mobile sites? And how come we haven’t done it yet?
    • We can help, past priorities have come before mobile sites
    • TDLR contracts for exam services @23 sites in Texas
  • Shine – Can you look at helping these boards provide exams at these sites?
    • Can look into this, have helped other boards run exams at these sites
  • Shine – If you look at collaboration and the mobile sites, TDLR can probably coordinate
  • Collier – Asks for numbers on criminal convictions and applicants
  • Collier – Is the criminal justice system encouraging people to apply for these types of crafts?
  • S Thompson – We instructed TDCJ to provide training in areas that could lead to jobs, was focused on jobs that certain convicts could actually do
  • Collier – Had a situation where a released convict was accepted in a school, but the school did not notify the individual that they would not be able to obtain a license or job in the field; need to look at this and the process for reviewing applications
  • Collier – I know there is a waiting period, but also an opportunity for TDLR to waive that
    • It depends, wait time is roughly 1 year, depends on how fresh the crime is
  • Collier – Need to look at this, if we have shortages we should make use of the skilled population
    • HB 1508 included a provision requiring occupational schools to provide notice and provide eligibility information to these individuals
  • Oliveira – When we look at substantial equivalency with other states, are you granting permanent licenses or temporary licenses?
    • Permanent licenses wouldn’t say move away from reciprocity, but only add the substantial equivalency test
    • Only license of this type that is short-term is emergency tow license due to short length of need
  • Paddie – How long does it take to get a license and test for an electrician?
    • Electricians can sit for an exam within 2 days of application, sometimes 3
  • Paddie – Are there situations where there are written and practical exams for these licenses?
    • For electricians and air conditioning contractors it is written, professions and exams are code-based, and applicants can bring the codebook with them
    • Includes diagrams and other solving problems
  • Paddie – So short answer is 2-3 days I can sit and take the test
  • Paddie – Asks after enforcement process
    • Have a separate enforcement division staffed with 99 individuals, divided into investigation, prosecutions, etc.; Also have field inspectors for all licenses
    • Have subject matter experts for different areas, have Chief Inspectors
  • Stickland – So there is a $50 fee to file a letter to reapply on behavior?
    • Have been corrected, it’s a $25 fee to see if an applicant will be eligible for a given profession
  • Stickland – Do you set this, or do we do?
    • TDLR sets this by rule

 

Ana Gonzalez, Workers Defense Project

  • Wage theft is a common occurrence where employers refuse to pay adequate wages, withhold wages, or do not pay workers at all
  • Wage theft can be intentional and unintentional, in some sectors employers can do this to try and make themselves more profitable
  • After Harvey, studies showed an increased incidence of wage theft, many workers had been misclassified as contractors and were more vulnerable
  • ¼ of day laborers reported no provision of hard hats or gloves; safety stats increased after Harvey, 80% of workers were not informed of dangers of mold, for instance
  • Recommendations
    • Disqualifying companies who have committed multiple wage theft or OSHA violations
    • Strengthening existing workforce law at the Texas Workforce Commission, e.g. regulations applying to employers who have stolen wages
    • Extending statute of limitations to file a TWC complaint from 180 days to 2 years
  • Romero – What were the numbers you gave regarding day laborers not getting paid? Do you have any information on how these cases are resolved, do workers search for other jobs?
    • There can be different situations, workers will typically find organization that will help them navigate legal process and attempt to recover wages
    • Can go through small claims, Texas and federal authority, file liens, etc., highly dependent on situations
  • Romero – Did you find those committing wage theft were based outside of Texas, were they here? And what is the impact on employees attempting to recover wages
    • Our understanding was that many companies were out of state & they often disappear without recourse
    • Often workers do not have full information for the company and makes it difficult to locate the company
  • Romero – Do you think day laborers are being informed of their rights in these situations? Seems like problem is not getting fixed
    • Colleague can speak more to this, but correct that problem persists
  • Romero – Do you have figures on wage theft?
    • For the ¼ of day laborers within the sample size, up to $20k
  • Oliveira – Could you identify the study you pull data from?
    • After the Storm, developed in collaboration with the University of Illinois in Chicago & a Texas organization

 

Arnaldo Iglesias, Workers Defense Group

  • Shares experience talking with workers and holding wage theft clinics after Harvey, wage theft was a large problem after the storm and many workers did not have proper information for the contracting companies
  • Also, a lot of health issues, mold and contaminated water, etc.; workers did not have proper training and equipment to deal with these hazards
  • Workers Defense Project conducted OSHA training afterwards, also workshops informing workers of their rights and how to defend against wage theft
  • Oliveira – Do you have any data indicating how many workers were injured post Harvey & who picked up the tab for those medical bills
    • I don’t have this information, Ana Gonzalez might be able to provide this
  • Oliveira – Would ask for this information on the record, money used to fix these issues is taxpayer’s money if workers have to go to Workers Compensation

 

Salvador Herrera, International Union of Painters

  • There is a misconception about the difficulty of painting, it does require a certain degree of skill to do well
  • These companies threaten workers sometimes with violence and deportation to keep them in a state of fear and take advantage of undocumented workers
  • Advocates laws that hold contractors being held accountable for injustices
  • Oliveira – Wants to see a registry of these kind of companies, I would encourage you to be very careful granting out of state permanent licenses.

 

Agustine Villanueba, Construction Worker  

  • Ana Gonzalez, Workers Defense Project – Served as interpreter
  • Worked for a company that ultimately didn’t pay him for the work he did in the aftermath of hurricane Harvey
  • My family suffered as a result of the lack of payment