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Worker Shortage Threatens Growth

Thursday, August 6, 2015

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Optimism is high as construction spending levels rose strongly in June compared to the past year, but the outlook is tempered by concerns over a lack of skilled workers in key areas, which may undercut that growth.

U.S. construction spending inched up in June to an annualized rate of $1.06 trillion, up 12 percent from year ago levels, according to newly released Census Bureau data.

Despite the smallest month-over-month increase seen in five months (0.1 percent), the spending rate is at the best pace recorded since 2006, the Associated General Contractors of America (AGC) reported in an analysis of the figures released Monday (Aug. 3).

Construction work
Photos: AGC

Construction spending in June recorded the highest year-over-year growth rate since 2006.

“Spending rose strongly in June from a year ago for all major construction categories—private nonresidential, residential and public,” said Ken Simonson, the association’s chief economist.

“Several of the private categories have risen especially fast,” Simonson said.

Meanwhile, the association warned of a worker shortage and urged lawmakers to adopt and expand training opportunities.

“Whether they can keep growing depends in part on companies being able to find enough skilled workers," Simonson added, "a problem many contractors are already facing.”

Private Construction

Overall, spending on private construction was at a seasonally adjusted annual rate of $766.4 billion in June—0.5 percent below the revised May estimate of $770 billion, the Commerce Department reported.

Residential private construction spending saw a 0.4 percent increase from May, to reach $371.6 billion, while nonresidential spending dipped 1.3 percent from the month prior to reach $394.8 billion.

Residential construction spending rose 13 percent over 12 months and nonresidential spending increased 15 percent from a year earlier.

Public Construction

Public spending reached $298.2 billion, a 1.6 percent increase from revised May figures and an 8 percent jump from 12 months earlier.

highway construction

Construction spending is increasing, but a shortage of skilled workers plagues the industry, according to AGC.

Education construction spending rose 0.2 percent, to $67.2 billion. Highway construction was at a seasonally adjusted annual rate of $90.9 billion, a 1.2 percent increase above revised May numbers.

Worker Shortage

Simonson listed a few areas where one-year spending increases may present “troublesome" worker shortages:

  • 62 percent in manufacturing construction;
  • 48 percent in amusement and recreation construction;
  • 42 percent in lodging construction;
  • 27 percent in private office construction; and
  • 24 percent in private multifamily construction.

AGC has been warning the industry about a shortage in skilled workers since at least July 2013 and its latest report sings the same tune.

According to the association, the results demonstrate the need for federal, state and local officials to implement measures the association outlined in a Workforce Development Plan.

Those measures, which include expanding career and technical education opportunities (making it easier for firms to establish regional training programs and immigration reform) are designed to simplify recruiting and prepare new construction workers, AGC said.

‘Concerted Effort’ Needed

“It is clear that construction is rebounding but the progress may stall unless there is a concerted effort at all levels of government to provide training to get new workers into high-paying construction careers,” said Stephen E. Sandherr, the association's CEO.

“It would be a lost opportunity for the economy if firms can’t take advantage of growing demand for work because of a lack of qualified workers.”

Established in 1918, AGC represents nearly 30,000 general contractors, specialty contractors and service providers and suppliers.

July construction spending data is scheduled for release Sept. 1.


Tagged categories: Associated General Contractors (AGC); Construction; Contractors; Economy; Market; North America; Program/Project Management; Public Buildings; Trends; Workers

Comment from Jim Johnson, (8/6/2015, 10:36 AM)

With 93 Million American workers out of work when they say there is a shortage of workers I immediately question their agenda. In most such cases it is those who are desiring people to think we need more immigrants because they want cheap labor. In a free market system almost everything is priced based on supply and demand. With 93 Million people not working there is plenty of supply and if workers cannot be found then perhaps it is time to increase the pay offered.

Comment from peter gibson, (8/6/2015, 3:59 PM)

The 93 million are useless and not cut out for construction jobs. Construction is as a special breed of person. Most people are not employable.

Comment from Tom Schwerdt, (8/7/2015, 8:44 AM)

Ah yes. Construction unemployment has been under 10% for 4 whole months and is still higher than general unemployment. The AGC report seems to indicate they blame not having the government to pay for as much construction education as they used to. It declined to $1,112,000,000 from the Feds alone. Here in Texas you can make a while $13.59 an hour (median wage) as a construction laborer, working in the 'pleasant' summer sun.

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