Industry Employment Stagnant Despite Demand

THURSDAY, MAY 13, 2021

An analysis of construction employment data from the Associated General Contractors of America released last week revealed that employment remained stagnant between March and April despite high demand, pointing analysts once again to material prices and workforce issues.

“Contractors are experiencing unprecedented intensity and range of cost increases, supply-chain disruptions, and worker shortages that have kept firms from increasing their workforces,” said Ken Simonson, the association’s chief economist. “These challenges will make it difficult for contractors to rebound as the pandemic appears to wane.”

Construction employment in April totaled 7,452,000, matching the March total but amounting to about 2.6% below the most recent peak in February 2020.

The number of former construction workers who were unemployed in April, 768,000, dropped by half from a year ago and the sector’s unemployment rate fell from 16.6% in April 2020 to 7.7% last month.

“The fact that employment has stalled—despite strong demand for new homes, remodeling of all types, and selected categories of nonresidential projects—suggests that contractors can’t get either the materials or the workers they need,” Simonson added.

While the association notes that federal unemployment supplements could be contributing to the worker shortage, they point more toward workers having to care for dependents as well as federal tariffs and materials prices that are disrupting the supply chain.

“Federal officials need to look at ways to encourage people to return to work, end damaging tariffs on materials like steel and lumber, and act to ease shipping delays and backlogs,” said AGC CEO Stephen E. Sandherr.

Previous Numbers

March saw a rebound by about 110,000 jobs that helped the sector climb out of a major February slump caused in part by severe weather.

Despite the encouraging March numbers, the AGC said at the time that projects are still threatened by the rising prices and subsequent erratic delivery schedule of some key construction materials such as wood, steel and aluminum.

The AGC noted that nonresidential construction remained at about 4.9% under the pre-pandemic peak while residential building and specialty trade contractors sat 1.6% above that February 2020 employment level.

As mentioned, employment plunged in February by about 61,000, and the AGC cited severe weather as the primary driver, as well as continued weakness in new nonresidential projects.

That slump was reportedly the first overall decline since April 2020. Other details include:

  • nonresidential construction had a decline of 60,800 jobs in February, following a dip of 400 jobs in January;
  • the February 2021 total was 316,000 jobs or 6.8% less than a year earlier;
  • only half the jobs lost in the first two months of the pandemic had been regained by February;
  • in the latest month, nonresidential building contractors shed 3,300 jobs;
  • nonresidential specialty trade contractors lost 5,500 workers;
  • heavy and civil engineering construction firms—the category most likely to be affected by winter storms—lost 20,800 employees; and
  • even residential construction employment inched down by 200 jobs in February.

Then, later last month, AGC released a year-over-year analysis from January, which found that nearly two-thirds of the nation’s metro areas saw construction employment decrease.

These numbers were anticipated as a response to the COVID-19 pandemic, however, the AGC says that employment could continue to decline as contractors grapple with the spike in materials prices.

Construction employment fell in 225, or 63%, of 358 metro areas between January 2020 and January 2021. Industry employment was stagnant in 41 additional metro areas, while only 92 metro areas—26%—added construction jobs during that time period.

Other data points include:

  • Houston-The Woodlands-Sugar Land, Texas lost the largest number of construction jobs over the 12-month period (-32,900 jobs, -14%);
  • followed by New York City (-23,000 jobs, -15%);
  • Midland, Texas (-11,100 jobs, -29%); and
  • Chicago-Naperville-Arlington Heights, Illinois (-10,400 jobs, -9%).
  • Lake Charles, Louisiana had the largest percentage decline (-40%, -8,100 jobs);
  • followed by Odessa, Texas (-37%, -7,600 jobs); Midland; and
  • Laredo, Texas (-27%, -1,100 jobs).
  • Sacramento--Roseville--Arden-Arcade, California added the most construction jobs over 12 months (3,500 jobs, 5%);
  • followed by Indianapolis-Carmel-Anderson, Indiana (3,100 jobs, 6%);
  • Boise, Idaho (2,500 jobs, 9%); and
  • Seattle-Bellevue-Everett, Washington. (2,100 jobs, 2%).
  • Sierra Vista-Douglas, Ariz. had the highest percentage increase (42%, 1,000 jobs);
  • followed by Bay City, Michigan (18%, 200 jobs); and
  • Auburn-Opelika, Alabama (15%, 400 jobs).

Tagged categories: Associated General Contractors (AGC); COVID-19; Economy; Good Technical Practice; Jobs; NA; North America

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