Construction Employment Declines Amidst Qualified Worker Shortages

Construction employment slipped from July to August for the fourth time in five months, but year-over-year job gains and recently released 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 the Associated General Contractors of America. 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.

“A variety of indicators suggest contractors would be adding to headcount if they could find qualified workers,” said Ken Simonson, the association’s chief economist. He noted that compared to a year ago, employment has risen nearly twice as fast in construction as in the overall economy. Meanwhile, average hourly earnings are rising faster than in the private sector as a whole, suggesting contractors are paying more to attract workers.

Simonson noted that there were also fewer unemployed workers with construction experience than in any August since 2000. “No wonder more than two-thirds of the respondents to a survey our association released this week reported difficulty filling craft worker positions,” the economist added.

Construction employment totaled 6,640,000 in August, a dip of 6,000 from July but an increase of 199,000 or 3.1 percent from a year ago. That rate of increase in construction employment was nearly twice as fast as the 1.7 percent increase for total non-farm 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, Simonson added.

Average hourly earnings, a measure of wages and salaries for all workers, increased 2.8 percent in construction over the past year to $28.22 in August, nearly 10 percent more than for all nonfarm jobs, the economist noted. For the private nonfarm sector, earnings rose 2.4 percent over the past 12 months to $25.73.

Residential construction—comprising residential building and specialty trade contractors—added 11,000 jobs in August and 132,000, or 5.4 percent, 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 percent rise. There were year-over-year gains for nonresidential building and specialty trades contractors but job losses among heavy and civil engineering construction firms.

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. They urged officials to act on the measures in the association’s Workforce Development Plan to boost recruitment and training opportunities.

“While contractors in many parts of the country are eager to hire new workers, they are having a hard time finding qualified candidates,” said Stephen E. Sandherr, the association’s CEO. “The best way to ensure continued economic growth is to enact measures to attract more young people into high-paying construction jobs.”