June Employment Continues to Vary Between Sectors
Between May and June, construction employment declined by 7,000 according to an analysis of data from the Associated General Contractor of America. Officials say that losses in the nonresidential sector offset what gains did occur in residential construction.
The bottom line, according to the AGC: Firms are struggling with worker shortages, supply chain disruptions and material prices to the point where it is disrupting economic recovery from the COVID-19 pandemic. Firms still employ 238,000 fewer than before the pandemic.
“It is hard for the industry to expand when it can’t find qualified workers, key building materials are scarce, and the prices for them keep climbing,” said Stephen E. Sandherr, the association’s CEO. “June’s job declines seem less about a lack of demand for projects and a lot more about a lack of supplies to use and workers to employ.”
Construction employment in June totaled 7,410,000, dropping 7,000 from the revised May total.
Residential and nonresidential construction sectors have differed in their recovery since the pre-pandemic peak in February 2020. Residential construction firms, for instance, gained 15,200 employees during the month and have added 51,000 workers or 1.7% over 16 months.
The nonresidential sector, however, shed 22,600 jobs in June and employed 289,000 fewer workers or 6.2% less than in February 2020.
Sandherr noted that the key reasons for the overall dip are material backlogs in addition to the prices and, of course, the challenge of finding workers.
AGC officials said they were taking steps to recruit more people into the construction industry and pointed to the launch of its “Construction is Essential” recruiting campaign earlier this year.
They said Washington officials could help the industry by taking steps to ease supply chain backups. They also continued to call on President Biden to remove tariffs on key construction materials, including steel.
“It appears there are large numbers of qualified workers available to hire who are on the sidelines until schools reopen and the federal unemployment supplements expire,” said Sandherr. “Our message to these workers is clear, there are high-paying construction careers available when they are ready.”
Last month marked a third-consecutive decline in job numbers as the same impacts on the industry have been felt for months.
“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” Ken Simonson, the association’s chief economist, said at the time. “If they can’t get the materials, they can’t put employees to work.”
According to AGC, seasonally adjusted construction employment in May totaled 7,423,000, a drop of 20,000 from the April total.
“Contractors are being told they must wait nearly a year to receive shipments of steel and 4-6 months for roofing materials,” Simonson noted. “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.”
Recent Trade Talks
Trade ministers from the United States, Canada and Mexico met for two days at the end of May for the first time to review the U.S.-Mexico-Canada Agreement, which took effect in July 2020.
U.S. Trade Representative Katherine Tai, Mexican Economy Minister Tatiana Clouthier and Canadian Trade Minister Mary Ng met virtually this week and focused on topics such as fighting climate change and cracking down on the import of goods that are made with forced labor, according to a report from Reuters.
Topics discussed included Canada’s proposed digital tax as well as Ottawa’s allocation of dairy quotes; Canada’s concerns about U.S. lumber tariffs as well as the “Buy American” restrictions on infrastructure and public projects; and the interpretive differences between the countries on the automotive content rules as well as a review of transportation rules.
The statement put out, however, focused on a goal to reach out to underrepresented groups, with a plan to meet with small-business owners in October in San Antonio.
Additionally, just before those meetings, the U.S. Department of Commerce issued a preliminary determination in its second review of the softwood lumber imports from Canada and issued a combined anti-subsidy and anti-dumping duty rate of 18.32%. This is an increase from 8.99%.
The U.S. Lumber Coalition hailed the move.
“A level playing field is a critical element for continued investment and growth for U.S. lumber manufacturing to meet strong building demand to build more American homes,” said Jason Brochu, U.S. Lumber Coalition Co-Chair and Co-President of Pleasant River Lumber Company. “The U.S. Lumber Coalition applauds the Commerce Department’s continued commitment to strongly enforce the U.S. trade laws against subsidized and unfairly traded Canadian lumber imports.”
The National Association of Home Builders, meanwhile, said that the decision shows that the government simply does not care about housing affordability.
“At a time when soaring lumber prices have added nearly $36,000 to the price of a new home and priced millions of middle class households out of the housing market, the Biden administration’s preliminary finding on Friday to double the tariffs on Canadian lumber shipments into the U.S. shows the White House does not care about the plight of American home buyers and renters who have been forced to pay much higher costs for housing,” the NAHB said in a statement.
“This action clearly shows the White House is disingenuous when it claims the nation’s housing affordability crisis must be an important priority. This move certainly demonstrates a lack of courage to stand up to the U.S. lumber lobby that is already reaping record profits off the backs of hardworking American families.”
Meanwhile, Tai, along with U.S. Secretary of Commerce Gina M. Raimondo, met with European Commission Executive Vice President Valdis Dombrovskis to start discussions to address the global steel and aluminum excess capacity.
The leaders reportedly acknowledged the need for solutions that preserve critical industries and agreed to chart a path that ends the WTO disputes following the U.S. application of tariffs on imports from the EU under section 232.
The U.S. and EU reportedly agreed to hold other countries accountable and are beginning to work out resolutions.