There was more good news than bad in the employment report
that the Labor Department issued on May 2. The construction industry added
32,000 workers in April, bringing seasonally adjusted employment to an even 6.0
million—the highest total since June 2009.
Employment increased by 189,000 or 3.3 percent over the past
12 months—double the growth rate of all nonfarm employment. Aggregate hours
worked by new and existing employees rose even faster, by 3.8 percent,
indicating that the industry is expanding workers’ hours as well as hiring new
employees.
The volume of work is growing. Construction spending in
March was 8.4 percent higher, at a seasonally adjusted annual rate, than one
year before, the Census Bureau reported on May 1. That compares favorably with
a 5 percent increase for all of 2013. While some of this pickup probably reflects
higher prices charged by contractors, much of the rise stems from more private
nonresidential projects, apartments and houses.
The biggest upturn was in private nonresidential projects.
Spending put in place rose 8.3 percent from the first quarter of 2013 to the
first quarter of 2014, compared with a decrease of 0.4 percent in all of 2013.
Spending on most types of structures accelerated from the 2013 pace, except for
health care.
In contrast, public construction spending shrank at a 2.7
percent annual rate in 2013 and a further 2.0 percent in the first three months
of 2014. And residential construction continued to go up rapidly, but not as
fast as in 2013. Private multifamily construction rose 33 percent from first
quarter to first quarter, versus 45 percent in 2013. Single-family homebuilding
also slowed a bit, from a 28% year-over-year growth rate in 2013 to 13 percent
in the first quarter of 2014.
Therefore, it appears likely the industry will want more
workers during 2014 to complete ongoing projects and start new ones. But
finding workers may be increasing difficult, for two reasons.
First, the pool of unemployed experienced workers has shrunk
dramatically. From April 2010 to April 2013, the number of people who answered
the monthly survey on labor force status by saying, “I’m unemployed, looking
for work and last worked in construction,” plunged by 1.1 million to the lowest
April level since 2006. (Industry unemployment data are not seasonally
adjusted, which means comparisons are valid from year to year for a given month
but not across months.) But the construction industry has added only 450,000
employees in that time.
In the past, contractors have been able to attract
self-employed workers into becoming employees. But the number of independent
contractors, as measured by construction businesses without employees, has been
dropping as well. The Census Bureau reported in late April that in 2012 there
were 2.35 million construction businesses without employees, 90 percent of them
sole proprietorships. (The remainder were partnerships and
corporations—probably mostly holding companies.) That was the lowest total
since 2004, down 12 percent from a high of 2.66 million in 2007.
Thus, there are fewer self-employed construction workers and
fewer unemployed workers to draw from. Instead, the industry will have to
attract workers out of retirement, other sectors, outside the country, or train
new workers. But other sectors generally had later and milder employment
downturns than construction and started adding employees sooner, meaning it may
be hard for contractors to convince workers to come back to construction.
Immigration is more difficult than it was before the recession and less
appealing for workers from countries with economies that are now doing better
than formerly, relative to the United States. And finding new workers is not
easy in an economy in which so many young adults are either not trying to enter
the workforce or have inadequate education, criminal records or cannot pass
drug tests.
The next few months are likely to bring more good news about
construction spending and employment totals. But there will also be an
increasing number of contractors reporting difficulty finding the workers they
need.
Source: AGC
of America
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