The Building Tradesman Newspaper

Friday, April 06, 2018

Construction employment hums along in Michigan

By The Building Tradesman

U.S. construction employment increased by 61,000 jobs in February to the highest level in nearly a decade. And rising pay rates enabled the industry to attract more workers, according to an analysis of new government data released last month by the Associated General Contractors of America.

The numbers also showed that Michigan's construction industry employment has enjoyed a strong start in 2018, even during the frigid months of January and February. 

Our state employed 170,600 construction industry workers at the end of February, a robust 6.9 percent increase compared to 12 months prior, placing Michigan No. 11 among the states in job gains percentage during that time. Overall, 35 states gained construction jobs during that 12 month period, according to a report issued March 23 by the Associated General Contractors of America.

"The construction industry continues to add employees in most of the nation, despite a shortage of workers with construction experience," said AGC chief economist Ken Simonson. "But job openings are growing, as contractors encounter a shrinking pool of experienced jobseekers." Michigan gained 3,000 construction jobs during the first two months of 2018.

West Virginia (+14.3 percent), Nevada (+10.9 percent) and California (+9.5 percent) have been the major U.S. hotspots for construction jobs over the past 12 months. At the bottom of the list in terms of losing jobs percentage are North Dakota (-16.3 percent), Iowa (-8.5 percent) and Kansas (-5.3 percent).

The AGC said construction employment totaled 7.17 million in February, a gain of 61,000 for the month and 254,000, or 3.7 percent, over 12 months. Construction employment is more than double the 1.6 percent rise in nonfarm payroll employment during that 12-month period.

While the industry added more than a quarter-million jobs during the past year, the number of unemployed job seekers with recent construction experience only fell by 49,000 between February 2017 and February 2018. The unemployment rate in construction dropped to 7.8 percent last month from 8.8 percent a year earlier. 

The data suggests that most of the new hires at construction firms are from other sectors of the economy or new entrants to the labor force, Simonson said. And why not: the AGC said one reason so many people may be leaving other sectors for construction is that average hourly earnings in the industry climbed to $29.47, a rise of 3.3 percent from a year earlier. In contrast, the average for all nonfarm private-sector jobs rose just 2.6 percent in the past year, to $26.75. The construction rate is now 10.2 percent higher than the private-sector average.

But while construction employment is progressing nicely, the spending side has slipped a bit. Dodge Data & Analytics reported on March 22 that new U.S. construction starts in February slipped 3 percent from the previous month, following a 2 percent decline in January. "The early months of 2018 are showing some loss of momentum after the 12 percent increase reported back in December," Dodge said. During the first two months of 2018, total construction starts were down 7 percent from the same period a year ago.

"The pace of construction starts viewed over several months seems to have leveled off,” said Robert A. Murray, chief economist for Dodge Data & Analytics.  “What’s important to keep in mind is that the moderately subdued amount for total construction starts during the first two months of 2018 reflects diminished activity by public works and electric utilities, which given their inherent volatility are likely to bounce back over the next month or two.  Compared to last year’s fourth quarter, the first two months of 2018 have seen further increases for nonresidential building, helped by its institutional building segment, and residential building, helped by multifamily housing.  This suggests that the construction expansion, while slowing, is still in progress.”