This Labor Day week brings good and bad news for the construction industry as two new reports show both growth of the industry and a lack of skilled workers needed to fill positions and complete projects.
As the U.S. added 177,000 new jobs in August, the construction industry added 22,000 jobs, according to a U.S. Bureau of Labor Statistics (BLS) August Employment Situation report released Sept. 1. Inflation and interest rates, two factors that directly impact the construction industry, remain high. But government money from the infrastructure act is helping the construction industry grow and keep the demand for skilled workers high. Meanwhile, a severe workforce shortage is impacting construction projects across the country.
Construction employment continued to trend up in August with 22,000 jobs added. This follows an average monthly gain over the prior 12 months of 17,000 jobs. Employment continued to increase in August with specialty trade contractors adding 11,000 jobs and heavy and civil engineering construction adding 7,000 jobs.
There were some declines in the transportation and warehousing industries, which lost 34,000 jobs in August. Employment in truck transportation also fell sharply with a loss of 37,000 jobs, although this is likely due to a large business closure. Employment in transportation and warehousing has shown little net change over the prior 12 months.
“Continued gains in construction and manufacturing…reflect broad economic growth across different sectors…” Acting U.S. Secretary of Labor Julie A. Suaid said about the report.
Another BLS report Job Openings and Labor Turnover, released Aug. 29, shows that construction companies are paying a premium for skilled workers – and still falling short of where the industry needs to be.
Average hourly earnings employees in construction jumped by 5.7 percent over the year to $34.40 per hour in August, according to an Associated Builders & Contractors (AGC) analysis of U.S. Bureau of Labor Statistics data, which noted construction firms paid a wage “premium” of 18.6 percent compared to the average hourly earnings for all private-sector production employees.
Many contractors are still unable to find qualified workers amid an unemployment rate of only 3.9 percent in August for jobseekers with construction experience, the AGC analysis stated.
“Today’s reports show there is no letup in demand for construction workers or private-sector projects,” said Ken Simonson, AGC’s chief economist. “The industry is raising pay faster than other sectors amid persistently low unemployment.”
The construction unemployment rate remained unchanged at 3.9 percent for August, while the national unemployment rate jumped from 3.5 percent in July to 3.8 percent in August.
Leading the construction growth is non-residential projects, specifically megaprojects that often exceed $1 billion in areas like Ohio, Texas and Arizona. Many skilled workers are looking at where the highest pay is being offered and relocating to take advantage of the significant differences. This could cause a construction recession in some areas of the country, while other areas experience a boom.
For the construction industry, the data shows that conditions are not likely to level out anytime soon. Companies will be focused on solutions like finding skilled workers and retaining their current workforce to keep businesses profitable and projects moving forward.
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