Nearly 110,000 Fewer Construction Job Seekers than Openings as of May 2019 โ˜˜ Hoey Team โ˜˜ eXp Realty Florida

Dated: August 3 2019

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Job openings in construction in May 2019 outpaced the number of workers looking for construction jobs. As of the end of May 2019, there were 294,000 unemployed people (not seasonally adjusted) looking for jobs in the construction industry, fewer than the 404,000 job openings as of April 2019 (not seasonally adjusted)1. Lack of construction labor has been a major factor holding back new housing construction and driving the home price appreciation, although home prices are now appreciating at less than five percent compared to 2012—2013 when prices rose at double-digit rates.

The unemployment rate in the construction industry has fallen much faster than the overall rate. As of May 2019, the unemployment rate among 16+ years old in the construction industry (not seasonally adjusted) has fallen to 3.7 percent from a peak of 26 percent in February 2010, a faster decline than the national unemployment rate (not seasonally adjusted) which dipped to 3.4 percent from 10 percent in during February 2010.2

With fewer unemployed workers, job creation in construction has slowed. In May 2019, payroll employment in construction increased by 203,000 from one year ago, the slowest 12-month change in 2019 and a marked slowdown from the average of 320,000 annual change in 2018.  The shortage of construction labor has kept the lid on housing construction: with fewer construction payroll workers being added, housing starts have also fallen to 1.26 million in May 2019, down from 1.33 million in May 2018 (about 70,000 fewer housing starts).

Construction Employment in 2019 Still Below 2006 Level

Nationally, construction payroll employment (seasonally adjusted) has not rebounded back to pre-recession peak level. As of May 2019, there were 7.5 million workers on construction payrolls compared to 7.7 million in April 2006, or a gap of 244,000 construction payroll jobs.

As of May 2019, construction payroll employment remains significantly below the December 2006 level in 30 states, which includes states that were badly hit by the housing downturn: Florida (-113,000), Arizona (-60,400), and Nevada (-34,900).

Construction employment has also not recovered in states such as California (-18,500), Virginia (-46,100), and Maryland (-28,600). Attracting employment is California if it is to solve the severe affordability crisis. It is also critical to states such as Virginia and Maryland due to the expected increase of about 50,000 workers in the next 20 years arising from Amazon HQ 2 direct and indirect job creation. Click here for Amazon HQ2 effect.

States that gained the most payroll construction jobs were Texas (150,900), New York (65,200), and Washington (28,600).

Steep Decline in U.S. Born and Non-Hispanic Construction Workers

Another measure of employment is by occupation, which includes the self-employed. Based on the number people who reported construction as an occupation (OCC field in the American Community Survey PUMS data), there were 9.85 million such workers in 2017 compared to the peak of 11.66 million in 2006, or 1.81 million fewer construction workers.

By citizenship, the decline is coming from workers born in the United States or born abroad of American parents, with 1.62 million fewer workers in 2017 compared to 2006 (7.33 million in 2017 from 8.95 million in 2007).  Meanwhile, the number of workers born in Puerto Rico, Guam, or the U.S. Virgin Islands; naturalized U.S. citizens; or not U.S. citizens has declined by only 184,348 during this same period (2.52 million in 2017 from 2.71 million in 2006). So, 88 percent of the shortage is arising from fewer U.S. born workers or workers born abroad with American parents.

A breakdown by employment into Hispanic and non-Hispanic groups reveals the same trend: that the decline in construction workers is coming from Non-Hispanic/Latino workers, with 1.93 million fewer workers in 2017 compared to 2006 (6.84 million in 2017 from 8.77 million in 2006). Meanwhile, during this same period from 2006 to 2017, the number of Hispanic workers increased by 127,806 (from 2.88 million in 2006 to 3 million in 2017).

Regardless of citizenship, ethnicity, and gender, programs that will attract more workers in construction such as the apprenticeship programs are critical to increasing the supply of construction labor and easing the housing shortage.

Recent Trends: Change in Payroll Employment in May 2019 from One Year Ago

Compared to one year ago, payroll construction employment rose in 38 of 50 states, with the fastest pace in West Virginia (27%), Nevada (14%), Arizona (12%), North Dakota (11%), Wyoming (11%), Alabama (8%), Indiana (7%), and Alaska (6%).  Net gains in construction jobs in these states means more housing starts which will ease the price pressure that is coming from strong demand fueled by lower mortgage rates and real wage growth.  See the latest employment trends at the state level at NAR’s June 2019 State Employment Monitor.

1The unemployment rate at the industry level is only published on a non-seasonally adjusted basis by the Bureau of Labor Statistics.

2The May 2019 Jobs Opening and Labor Turnover Survey (JOLTS) data is not yet available for May 2019, but job openings have normally increased in May compared to April.

Article content from NAR Realtor Magazine


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