Construction Industry Adds 6,000 Jobs in June as Sector’s Unemployment Rate Declines to 8.2 Percent - July 03, 2014

Despite Recent Gains, Industry Employment is Still More than 1.7 Million Jobs Below 2006 Peak, Planned Federal Transportation Spending Cuts in August Threaten to Undermine Sector's "Uneven" Recovery

Construction employers added 6,000 workers to payrolls in June as the industry's unemployment rate dropped to 8.2 percent, its lowest June level in six years, according to an analysis of new government data by the Associated General Contractors of America. Association officials cautioned, however, that recent employment gains could be undermined when the federal government begins scaling back transportation investments in August.

"The construction industry continues to expand gradually and unevenly," said Ken Simonson, the association's chief economist. "Despite recent job growth, construction employment is still more than 1.7 million jobs or 22 percent below its 2006 peak."

Construction employment totaled 6,015,000 in June, the highest total since June 2009 and an increase of 186,000 or 3.2 percent from a year earlier, Simonson noted. Residential construction employers added 6,600 jobs in June and 106,300 (4.9 percent) over 12 months. Nonresidential construction employment was unchanged since May, but up by 80,000 (2.2 percent) since June 2013.

The sector's recent employment gains could be undermined, however, by cuts in federal transportation funding that are expected to begin taking effect in August, association officials warned. The funding cuts will come as the balance in the highway account of the federal Highway Trust Fund runs short of money later this summer. Association officials urged Congress and the Obama administration to work together to find new revenue for the Fund that will keep federal highway investments levels from dropping.

"It is hard to imagine how the industry will continue to recover amid significant cuts to the largest single federally-funded construction program," said Stephen E. Sandherr, the association's chief executive officer. "The last thing Washington should be doing is needlessly creating more obstacles for economic growth."

Even as many construction firms brace for federal transportation funding cuts, others are struggling to find enough skilled workers to meet current demand. Growing labor shortages are less a measure of the strength of the sector's recovery and more of an indication that many former construction workers have left the industry, while relatively few young workers seek new careers in construction, association officials observed.

The unemployment rate for workers actively looking for jobs and last employed in construction declined from 9.8 percent a year earlier to 8.2 percent in June - the lowest June rate since 2008. Simonson noted that over the past six years, the number of unemployed workers who last worked in construction declined by 1.075 million, but industry employment increased by only 512,000.

"The belated and partial nature of the construction recovery means many experienced workers have left the industry and fewer new entrants have chosen construction as a career," Simonson commented. "That will make it hard for contractors in many regions to find the workers with the right skills over the coming months."

Source: AGC of America.