Construction Sector Faces Employment Challenges Amid Broader Recovery
In two separate announcements earlier this month, the Associated General Contractors of America (AGC) reported recovery-driven declines in construction-related employment. You read that right: employment declines as the economy is rebounding, rather than retreating as it was a year ago.
AGC said construction employment declined for the third time in the past four months in May, as nonresidential contractors coped with lengthening and unpredictable delivery times that limited their ability to start or complete projects. Seasonally adjusted construction employment in May totaled 7,423,000, a drop of 20,000 from the downwardly revised April total. Industry employment declined as well in April and February.
Separately, AGC reported that employment had fallen in 107 U.S. metro areas, or 30% of the total, between February 2020—the pre-pandemic peak of employment—and April of this year. Houston-The Woodlands-Sugar Land lost the largest number of construction jobs over the 14-month period (-29,300 jobs, -12%), followed by New York City (-22,300 jobs, -14%); Midland, TX (-9,800 jobs, -26%); Odessa, TX (-8,000 jobs, -39%); and Lake Charles, LA (-7,200 jobs, -36%).
Association officials said many contractors report they are having a hard time finding qualified workers to hire as some people remain reluctant to return to work while their children are learning from home, or they are collecting elevated unemployment supplements.
“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, the association’s chief economist. “If they can’t get the materials, they can’t put employees to work.”
AGC said the employment gap widened in May between residential construction, which has experienced “feverish” demand for new and remodeled housing, and nonresidential construction, which has been declining, aside from a few niches. Residential construction firms gained 1,900 employees during the month and employed 35,000 more workers (1.2%) in May than in February 2020.
Conversely, the nonresidential sector shed 21,800 jobs in May and employed 260,000 fewer workers, or 5.6% less, than in February 2020.
“Contractors are being told they must wait nearly a year to receive shipments of steel and 4-6 months for roofing materials,” said Simonson. “These delays make it impossible to start some projects and to complete others, leaving contractors unable to keep workers employed. In addition, soaring prices for steel, lumber, and other materials are deterring owners from committing to going ahead with projects.”
Association officials urged Congress and the Biden administration to take steps to address the record materials price increases and supply chain bottlenecks. They said the President should end tariffs on key materials like lumber, steel, and aluminum. They added that Washington officials should look at ways to ease manufacturing and shipping backups. And they urged Congress to allow unemployment supplements to expire, as planned, after Labor Day.
“Supply-chain problems and labor shortages are holding back what should otherwise be a much stronger recovery for the construction sector,” said AGC CEO Stephen E. Sandherr.