Trading Places
How Immigration
Upended Dreams
Of an Entrepreneur
Mr. Hairston's Stucco Workers
Quit to Become His Rivals;
Illegals Drive Prices Down
A Wife's Political Riposte
By MIRIAM JORDAN
December 13, 2006; Page A1
HILTON HEAD ISLAND, S.C. -- About five years ago, the journey of Starletta and William Hairston from the underclass to the upper class hit a roadblock.
Both were born to poor black Southern families. William, a stucco subcontractor, built a thriving business beautifying houses in the gated communities on this resort island, a magnet for wealthy retirees seeking a laid-back lifestyle by the sea. Starletta, a former flight attendant, won accolades for her community activism.
Then Hilton Head suddenly saw a wave of illegal immigrant workers from Mexico. Mr. Hairston, 54 years old, initially hired the Hispanic newcomers for his stucco business, helping it flourish. But soon, some of those same workers splintered off to form their own businesses, undercutting Mr. Hairston with lower bids to capture jobs. The Hairstons' net income plunged from roughly $500,000 in 1997 to about $70,000 in 2005, according to the couple.
To stay afloat, the Hairstons remortgaged their house twice and sold a condominium and a plot of land. Mr. Hairston now hustles for jobs in Charlotte, N.C., and beyond, looking for better opportunities. Meanwhile, Starletta Hairston, 53, won election to the Beaufort County Council, where she has joined a wave of local officials around the country trying to pass new laws cracking down on illegal immigrants.
Amid the debate over illegal immigration, one of the most contentious questions is whether unauthorized workers from Mexico and other Latin American countries displace U.S. workers, especially low-wage workers in agriculture, cleaning and construction.
The Hairstons' saga shows that the issue is not just about low-paid workers, but also entrepreneurs who set out to make their own fortune. As an ambitious small-business man, Mr. Hairston helped himself to undocumented immigrant labor and thrived with it. But as more immigrants flocked to the area and acquired skills, some of them harnessed their own entrepreneurial drive and became competitors.
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Question of the Day: What is the net effect of illegal immigration on the U.S. economy?Mr. Hairston got his start in the plastering business in his native North Carolina. His business took off in Atlanta in the late 1980s when construction in the city boomed. Mr. Hairston married Starletta, the daughter of a maid who raised eight children alone, in 1985. The next year they had a son, William III. The couple restored a dilapidated boarding house in downtown Atlanta and moved in.
By the mid-1990s, stucco jobs increasingly took Mr. Hairston and his predominantly black crew from Atlanta to Hilton Head Island. Mr. Hairston fell in love with the moss-draped oak trees and intercoastal waterways inhabited by snowy egrets. Golf and hotels had turned the area into a resort mecca, and in the mid-1990s, a housing boom in the area allowed Beaufort County to boast the fastest growth and lowest unemployment in the state. "There was tons of work ... and only a couple stucco contractors in the whole area," recalls Mr. Hairston, a tall, strong man who sports a shaved head and a goatee. For some time, he commuted from Atlanta, living in motels or houses that he rented for himself and his employees. "He was a good subcontractor," says Ellis Smith, owner of Sandcastle Constructors, a local home builder for whom Mr. Hairston did several stucco jobs.
Mr. Hairston eventually convinced Starletta to leave Atlanta for Hilton Head. Mrs. Hairston had just had the couple's second son, Skylor, when she arrived in 1993. In Hilton Head, the Hairstons were far from their roots. They rented houses in tony gated communities. Typically the only black family, the couple says they endured complaints from white neighbors who didn't like seeing company trucks parked in the driveway or their son's plastic playhouse in the yard.
Mr. Hairston's business thrived. He says there was more work than he could keep up with, and a dearth of locals willing to do the heavy lifting required of stucco work: mixing and lugging buckets of cement, for example. "It was hard to find people willing to work sunrise to sunset," says Mr. Hairston. Many people, he added, only "worked long enough to keep their trailer lights on."
Latin American immigrants were just starting to trickle into the area, as word spread that jobs in construction and hospitality were plentiful. Immigrants were increasingly bypassing traditional gateways, like California and Texas, to seek work in the Southeast.
So Mr. Hairston, who until then had mostly relied on black labor, hired a handful of Mexicans. He says they were diligent and eager to learn. They were "prepared to acquire basic knowledge and not afraid to try" new work, says Mr. Hairston. When he needed more hands, his Mexican workers sent for their relatives back home and elsewhere in the U.S. Mr. Hairston says they presented Social Security numbers, and he in turn paid taxes and workers' compensation although he acknowledges some of them had probably entered the U.S. illegally.
In 1997 the stucco business made $971,000, according to the Hairstons' tax return. To handle his blossoming business, Mr. Hairston rented a large office with four rooms, two restrooms and warehouse space behind it. He bought a condominium and a plot of land as investments. Flush with success, the Hairstons broke ground on a 7,600-square-foot, three-story house with an ornate gold-and-black gate, a cherub fountain in the front and a large swimming pool in the back.
As Hilton Head prospered, more and more Mexican immigrants flocked there. From 1% of the population in 1995, Latinos accounted for 11% of Hilton Head's 34,000 residents in 2000, according to census figures. Officials peg the current Latino population at about 15%.
One immigrant who prospered was Fidel Serrano.
After eking out a living as a baker at a doughnut shop in Houston for five years, Mr. Serrano moved to Hilton Head Island in 1994, joining two brothers who had recently settled there. "There was plenty of work and life was calmer here for the kids," recalls Mr. Serrano, a native of Mexico. Mr. Serrano, his wife, two sons and two brothers rented a rundown two-room trailer, for which they collectively paid $600 a month.
Mr. Serrano began to work in stucco, perfecting his skills as an employee of Mr. Hairston's Pro Plastering & Stucco. He says he earned $8 to $10 an hour during the two-and-a-half years he worked for Mr. Hairston. In the beginning, Mr. Serrano recalls, Mr. Hairston still employed several black workers. But gradually Mr. Hairston came to rely more on Mr. Serrano and other Mexican immigrants. "We showed up for work every day and we were dedicated," Mr. Serrano recalls.
On His Own
Around 2000, Mr. Serrano struck out on his own, working as a subcontractor to Mr. Hairston. He supplied Mr. Hairston with crews for several jobs. "I was able to train the workers," who were all Spanish speakers, he recalls. Mr. Hairston typically paid him about 25% of the value of the contract for the job, he says. Mr. Serrano says that he pays taxes on all his workers, as well as workman's compensation.
Mr. Hairston says that for a while it didn't bother him that some of his Latino workers, like the Serranos, struck out on their own. "I never thought I would be competing against them," he says. But he felt particularly stung when he encountered one of his workers -- who had asked for two weeks off -- working on an $80,000 job on a high-end house that Mr. Hairston's company had bid for.
Mr. Hairston's business gradually began to unravel. Mr. Hairston "would bid and another guy who used to work for him would bid on the same job," recalls Greg Goldberg, another builder, who is currently president of the local home builders' association. Mr. Goldberg himself says he hired some of Mr. Hairston's former workers.
Mr. Hairston says that he never knew by how much he was undercut because the bidding process in construction isn't open. Builders often approach two or three subcontractors and invite them to make an estimate for a project. The builders rarely reveal the value of the winning bid to the losing parties.
Mr. Hairston says that he found himself losing bid after bid. Longtime customers didn't want him, he says -- a fact the contractors confirm. "We get happy with a subcontractor that does good work and we'll use him all the time," says Mr. Smith of Sandcastle Constructors. Currently, he employs Premium Stucco, owned by Fidel Serrano, Mr. Hairston's former employee. "They do an excellent job,'" he says, noting that they are working on a $2 million house that his company is building.
Mr. Serrano received his green card last year and bought a three-bedroom house. Most of his jobs are in luxurious gated communities, some of the same ones where Mr. Hairston thrived a decade ago. "Work is the only thing you can do to better yourself," Mr. Serrano says. "We aren't expecting the government or anyone to support us." He says that Mr. Hairston does good work and declines to comment about his former boss's financial difficulties.
In addition to facing competition from former workers, Mr. Hairston says he also faced competition from subcontractors hiring illegal immigrants and paying them under the table. Mr. Hairston says that while he hired undocumented workers he paid payroll taxes and workman's compensation for them which added about 20% to his labor costs.
Other subcontractors agree they are being undercut by competitors who hire illegal immigrants off the books. Danny Miller, who runs a stucco business called Two Brothers, says that "on a weekly" basis, his company loses bids for jobs to contractors who hire illegal immigrants. "That pretty much explains it all," says Mr. Miller.
At Sea Island Supply, owner Ron Sandlin remembers when mainly blacks and whites came in to buy brick, stucco and masonry materials. Now, his clientele is 85% Hispanic. He and his staff are taking Spanish lessons at a local college.
Though construction in Hilton Head continued to boom, Mr. Hairston closed his business office in 2002. He began to seek jobs in other markets. By 2003, revenue from Mr. Hairston's stucco business had fallen to $182,000 from $971,000 six years earlier.
As their fortunes were souring, Mrs. Hairston, a Republican who had become involved in community activities, decided to run for a seat on the 11-member County Council of Beaufort County. Her long hair usually adorned with a headband, she campaigned on improving conditions in impoverished areas. In a runoff, she defeated her white male Republican opponent by 50 votes and took office in January 2003.
Political Inspiration
Shortly after taking office, Mrs. Hairston requested a meeting with Hilton Head Mayor Tom Peeples, himself a residential developer. "William didn't understand why he couldn't win any bids. I thought, 'Let's find out what we can do,' " recalls Mrs. Hairston. "We went in there to say we were willing to work with him," says Mr. Hairston. Mr. Peeples told them that it was about who could give him the best price, according to the couple.
Mr. Peeples didn't reply to several messages left at his business office and voice mail.
Gradually, Mrs. Hairston found a new political inspiration: the immigration issue. "I saw inequities," she says, adding she also felt illegal immigrant workers were being exploited. Others see her motivation differently: "Starletta got bitter because of her husband's business," says Juan Campos, a Hilton Head restaurateur and Latino activist. Mrs. Hairston says she isn't motivated by her husband's plight, noting that Mr. Hairston no longer does business in the area.
In September, Mrs. Hairston presented a draft of an "illegal immigration relief ordinance" to the County Council. Under the ordinance, companies that knowingly hire undocumented laborers could have their business licenses revoked. The ordinance would require that all businesses volunteer to participate in a federal government pilot program that verifies whether a Social Security number matches an individual's name. It would bar illegal immigrants from getting a business license.
If the ordinance passes, "costs for yard service, green fees and house painting might escalate marginally for a while," Mrs. Hairston says, but "we will hold the moral and ethical high ground."
Loud Opposition
The County Council voted overwhelmingly to move the proposal forward in the first and second readings. But after loud opposition from Hispanic residents and many employers, the council instead approved on Monday a watered-down version called "lawful employment ordinance," which is less controversial and mainly reinforces existing federal and county employment codes. The council is to take its final vote on Dec. 27.
Whether the ordinance passes or not, it's not helping the Hairstons now. Starletta Hairston lost a Republican primary in June and will go off the council next year. William Hairston hasn't bid on a job in Beaufort County for at least two years. Instead he flies to North Carolina every week, where he says he uses a native-born, mostly black crew.
Mr. Hairston remains in touch with some of his old workers. A few months ago, Paul Serrano, who with his brother Fidel left to form a rival stucco company, approached Mr. Hairston to help him secure a green card which would put Paul Serrano on the path to citizenship and allow him to travel back and forth legally to Mexico to visit his elderly mother who is ill.
Mr. Hairston agreed to fill out forms attesting to his former employee's business skills and good character. He says he did it as an act of compassion but acknowledges the larger irony.
"He's my competition and I just signed papers to get him legal," says Mr. Hairston. "I'm making it possible for him to live the American dream."
WSJ 12/13/06