The immigrant factor

It's long been accepted that roofing contractors increasingly are dependent on immigrant labor to fulfill their work force needs. But the problem many contractors—in all industries—are facing is an insurgency of undocumented immigrants setting up shop and underbidding legitimate businesses.

According to Fortune Small Business magazine, this so-called "underground economy" is generating revenues of up to $1 trillion per year primarily because illegitimate businesses enjoy freedom from taxes and government regulations.

This is causing significant issues in states, such as California, that are heavily populated with undocumented workers. California businesses are starting to find it difficult to compete—many of their customers don't care whether a contractor pays his workers' compensation premiums, for example; all they want is the cheapest price.

The problem is so bad in California the state's Labor and Workforce Development Agency has set up a 61-person task force to root out cash-only businesses and investigate workers' compensation claims against previously unknown employers.