Builders and contractors across the US are warning of a looming extreme worker shortage, according to a new study and report released by the Associated General Contractors of America and SmartBrief.
Construction Employment United States
Twenty-five per cent of US construction firms report turning down work due to labour shortages, finds a recent study by the Associated General Contractors of America. The AGC and SmartBrief conducted the survey in early June with 509 respondents representing several sectors of the construction industry. Of the respondents, 48 per cent were general contractors and 28 per cent were subcontractors.
The survey found that 63 per cent of respondents had faced a labour shortage in the last year.
In the wake of the recession, 2 million workers left the construction industry, either retiring or finding more stable work in another industry. According to the latest data from the Commerce Department, the industry is on a seven-month streak of adding jobs and now employs 6 million Americans—an increase of 609,000 jobs since the low point for construction employment in January 2011. And after reaching a high of 27 per cent in February 2010, the industry’s unemployment rate has fallen to 7.5 per cent.
Nationally, construction employment grew in 223 metro areas, declined in 72, and was stagnant in 44, from July 2013 to July 2014 according to the Census report.
Contractors have said they expect the labour shortage to intensify and competition between firms for skilled workers to grow. In fact, 67 per cent of the AGC/SmartBrief survey respondents said they’re paying more for skilled labour this year than they did last year. Thirty-one per cent said they’re paying the same and only 2 per cent said they’re paying less. And when it comes to paying even more for skilled workers, 80 per cent of respondents said they would do just that.
According to the study, 40 per cent of skilled workers who have returned to the industry are now making equal to or more than they were when they lost their jobs between 2011 and 2013. Twenty-two per cent of returning workers are making between the same and 20 per cent more, while 18 per cent have boosted their earnings by 20 per cent or more. Meanwhile, 30 per cent of returning skilled workers are making less than before. Twenty-three per cent saw their earnings fall 20 per cent or more while 7 per cent saw their earnings fall no more than 20 per cent.
Firms who responded said carpenters, project managers, and supervisors are the most difficult positions to fill right now, however they’re also having difficulty finding qualified labourers, estimators, electricians, plumbers, and ironworkers.
As well, according to a recent Bureau of Labor Statistics study, 62 per cent of the 393,000 long-tenured workers who lost their jobs in the construction industry between 2011 and 2013 have been rehired by the industry as of January. Of the skilled workers who have returned to the industry, 6 per cent are working part-time and 10 per cent are either self-employed or unpaid family workers. The study also found that the total number of workers that left the construction industry, including both long-tenured and non-long-tenured workers, was 1.03 million. Of that number, 63 per cent are employed again, but not necessarily in the construction industry.
Elsewhere, data showed US construction spending rebounded strongly to hit its highest level in more than 5-1/2 years in July as private construction increased and state and local government outlays surged, a further sign of economic vigour.
Construction spending increased 1.8 per cent to an annual rate of US$981.31 billion, the highest level since December 2008, the Commerce Department reported.
July’s percentage increase was the largest since May 2012 and reflected gains across all categories, with the exception of the federal government.
It followed June’s revised 0.9 per cent decline.
Construction spending in July was buoyed by a 3.4 per cent jump in state and local government projects, which lifted outlays to their highest level since June 2012. The increase in state and local government outlays, which was the largest since April 2013, offset a 1.1 per cent drop in spending by the federal government on construction projects.
Private construction, the largest portion of construction spending, advanced 1.4 per cent to its highest level since November 2008. Private residential construction spending gained 0.7 per cent as housing starts rebounded.
The housing market recovery is back on track after stagnating from the second half of 2013 in the wake of a spike in mortgage rates and higher home prices amid a stock shortage.
Part of the increase in private residential construction spending reflected home improvements.
Investment in private non-residential structures such as factories and gas pipelines jumped 2.1 per cent in July to its highest level in five years.
A good forward indicator of US building activity, US architecture firms have produced three straight months of accelerating gains in design billings, said the American Institute of Architects August 22. With a reading of 55.8 for the month (where any score above 50 signifies growth), the July reading reflects stronger gains in billings than any period since mid-2007. With solid monthly scores for new design contracts (at 54.9 this month) and new project inquiries (66), all signs indicate strong momentum building in design activity, which is expected to produce solids gains in construction later this year and into 2015 said the AIA.