As hiring improves, construction job openings deepen
With total payroll employment rising by 943,000 and the unemployment rate dropping to 5.4% in the latest employment situation report, more hurdles for the construction industry are looming on the horizon.
According to the National Association of Home Builders (NAHB), the surge of the Delta variant could have an impact on the labor market. With more reports of Covid cases, along with the spreading of the Delta variant, new restrictions could rise across the nation.
And the situation emerges as job openings are on the rise.
Both residential construction (+8,300) and nonresidential construction (+2,900) showed modest gains in July, the Bureau of Labor Statistics (BLS) reported last week.
But as residential construction employment exceeds its level in February 2020, only 56% of nonresidential construction jobs lost in March and April have been recovered. The overall construction industry (both residential and non-residential) employment totaled 7.4 million jobs in July of this year.
In March and April of 2020, the impact of the pandemic resulted in the economy losing 22.4 million jobs. With 4.3 million jobs created in 2021, employment still remains 5.7 million jobs lower than in February 2020.
But June labor market data shows that job openings for the overall economy increased to 10.1 million open positions.
What had been a challenge in certain sectors, like construction, is now a broad labor access issue as businesses seek workers while the economy reopens.
A challenge to housing is the number of open construction jobs increased in June to 339,000 unfilled positions, according to the BLS Job Openings and Labor Turnover Survey (JOLTS). The numbers arrive at a time when the housing market is being deemed as underbuilt and requires additional labor, lots, lumber, and building materials to add inventory.
The uptick in overall construction sector employment for July followed a revised decrease of 5,000 jobs in June, according to the BLS.
The NAHB says residential construction employment now stands at 3 million in July, broken down as 883,000 builders and 2.2 million residential specialty trade contractors.
The 6-month moving average of job gains for residential construction was 7,250 per month. Over the last 12 months, home builders and remodelers added 171,700 jobs on a net basis.
Since the low point following the Great Recession, residential construction has gained 1,057,300 positions.
The July unemployment rate for construction workers declined by a 0.6 percentage point to 7.3% on a seasonally adjusted basis. The unemployment rate for construction workers has been trending lower, after reaching 14.1% in April 2020 due to the impact of the COVID-19 pandemic.
Overall, hiring in the construction sector was solid in June, increasing to a 4.8% rate. The post-virus peak rate of hiring occurred in May 2020 (10.3%) as a rebound took place in home building and remodeling. Yet, hiring has slowed since that time, with the exception of a weather-related rebound in March 2021.
Hiring has been impeded due to a lack of workers, according to the NAHB.
The job openings rate in construction increased to 4.4% in May, with 339,000 open positions in the sector. This is higher than the 238,000 counts recorded a year ago.
“The job market continues to make progress, with nearly a million more employed in the latest month,” says Lawrence Yun, chief economist of the National Association of Realtors. “Job openings are plentiful, with a record high of 9.2 million ‘help wanted’ signs. The unemployment rate is low at 5.4%, down from the peak of 14.8% in April of 2020 when the economy was locked down.”
Yun notes that Wages are rising, “but a tad below the inflation rate: 4.0% versus 5.4% respectively.”
Labor help could be on the way. The NAHB reported that Rep. Lloyd Smucker (R-Pa.) has re-introduced the Workforce for an Expanding Economy Act.
The legislation would help alleviate the worker shortage in the construction industry by establishing a market-driven visa system to help employers find more laborers.
Employers would be required to prove they were unable to find American workers for vacant positions, pay them fair wages based on local wage data, and use E-verify to make sure only legal immigrants are hired.
The NAHB said that it believes a temporary, flexible visa system would help address the chronic labor shortage in the residential construction industry.