US construction employment slipped from July to August for the fourth time in five months, according to an analysis by the Associated General Contractors of America released September 2.
US Construction Employment Problem
US construction employment slipped from July to August for the fourth time in five months, but spending data suggest the recent weakness is due to firms having a hard time finding workers rather than lack of demand, according to an analysis by AGC.
Construction employment in the US totalled 6,640,000 in August, a dip of 6,000 from July but an increase of 199,000 or 3.1 per cent from a year ago. That rate of increase in construction employment was nearly twice as fast as the 1.7 per cent increase for total nonfarm payroll employment.
There were 454,000 unemployed jobseekers in August who last worked in the construction industry, the lowest total for August in 16 years, Ken Simonson, the association’s chief economist added.
Residential construction—comprising residential building and specialty trade contractors—added 11,000 jobs in August and 132,000, or 5.4 per cent, compared to a year ago. Nonresidential construction—building, specialty trades, and heavy and civil engineering construction firms— lost 17,000 jobs for the month but gained 67,000 employees compared to August 2015, a 1.7 per cent rise. There were year-over-year gains for nonresidential building and specialty trades contractors but job losses among heavy and civil engineering construction firms.
ANNUAL JOB GAINS COMPARISON
Year-over-year job gains and recently released spend- ing data suggest the recent weakness is due to firms having a hard time finding workers rather than lack of demand. Association officials said its recent survey that found two-thirds of contractors are having a hard time finding qualified craft workers underscores the need for measures to boost recruitment and training on new workers.
Average hourly earnings, a measure of wages and salaries for all workers, increased 2.8 per cent in construction over the past year to US$28.22 in August, nearly 10 per cent more than for all nonfarm jobs, the economist noted. For the private nonfarm sector, earnings rose 2.4 per cent over the past 12 months to US$25.73.
Association officials cautioned that workforce shortages run the risk of undermining the industry’s continued recovery and could stall broader economic growth. They noted that firms can only do so much to improve their efficiency before workforce shortages force them to reconsider bidding on projects or delaying schedules. If that happens, overall demand for new development projects could dampen.
In a separate report, released August 31, the AGC said two-thirds of construction firms report they are having a hard time filling hourly craft positions that represent the bulk of the construction workforce, according to the results of an industry-wide survey. Association officials said that many firms are changing the way they pay and operate to cope, but warned that labour shortages could undermine broader economic growth and called for new workforce measures to improve the pipeline for recruiting and training new craft workers.
Of the 1,459 survey respondents, 69 per cent said they are having difficulty filling hourly craft positions, said Stephen Sandherr, CEO of the AGC. Craft worker shortages are the most severe in the Midwest, where 77 per cent of contractors are having a hard time filling those positions. That region is followed by the South where 74 per cent of contractors are having a hard time finding craft workers, 71 per cent in the West and 57 per cent in the Northeast.
The labour shortages come as demand for construction continues to grow. Sandherr noted that construction employment expanded in 239 out of 358 metro areas that the association tracks between July 2015 and July 2016, according to a new analysis of federal construction employment data the association also released today. Growing demand for construction workers helps explain why 75 per cent of firms report it will continue to be hard, or get harder, to find hourly craft workers this year.