The Building Tradesman Newspaper

Friday, October 27, 2017

Construction employment is up - pay is, too

By The Building Tradesman

U.S. construction employment increased by 8,000 jobs in September to the highest level since October 2008, amid a tight labor market that may be keeping contractors from hiring as many workers as they need, according to an Oct. 6 analysis of new government data by the Associated General Contractors of America. 

In the meantime, average hourly earnings in the construction industry climbed to $29.19, an increase of 3.0 percent from a year earlier. Increases in the past few years have been in the 2 percent range. The AGC said  that construction pays nearly 10 percent more per hour than the average non-farm private-sector job in the United States, which pays an average of $26.55 per hour.

“Construction firms added employees over the past year at a much higher rate than the public and private sectors as a whole, and contractors have been boosting pay to attract more workers,” said Ken Simonson, the AGC's chief economist. “But with unemployment so low overall and in construction, many contractors are having trouble filling a variety of hourly craft and salaried openings.”

Construction employment totaled 6,911,000 in September, a gain of 8,000 for the month and 184,000, or 2.7 percent, over 12 months. Simonson said that the year-over-year growth rate in industry jobs was more than double the 1.2 percent rise in total non-farm payroll employment. He cautioned that employment figures for both the construction industry and the total were likely distorted in September by temporary impacts from Hurricanes Harvey and Irma.

The other major group that pays attention to construction trends, Dodge Data and Analytics, reported on Oct. 19 that the value of new construction starts in September soared 14 percent from the previous month to a seasonally adjusted annual rate of $814.8 billion. Their index showed that the nonresidential sector jumped 37 percent, while residential inched up by 1 percent last month.

Through the first nine months of 2017, total construction starts on an unadjusted basis were $557.7 billion, essentially matching the corresponding amount from a year ago, Dodge said. The year-to-date dollar volume for total construction was dampened by a 38 percent decline for the electric utility/gas plant category. 

“The pattern of construction starts on a monthly basis has occasionally been subject to spikes, due to the presence of unusually large projects in a given month, and September certainly qualifies,” said Robert A. Murray, chief economist for Dodge Data & Analytics.  “Looking at the data on quarterly basis helps to ease the volatility present in the monthly statistics, and it shows the third quarter rebounding 8 percent after a 9 percent decline in the second quarter, returning the level of activity to within 2 percent of the strong pace achieved during the first three months of this year.  As the current expansion for construction has matured, there’s been more of an up-and-down pattern on a quarterly basis, including what’s been reported so far during 2017.  What does stand out about the construction industry in 2017 is the strength shown by nonresidential building."

Residential construction—comprising residential building and specialty trade contractors—shed 7,200 jobs in September but added 80,600 jobs, or 3.1 percent, over the past 12 months, government figures show. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment increased by 11,700 jobs in September and 103,300 positions, or 2.5 percent, over 12 months.

The construction sector’s 4.7 percent unemployment rate and the number of unemployed former construction workers in September, 433,000, were the lowest September figures since 2000. Similarly, the overall unemployment rate and number were the lowest for September since 2000, the AGC said.

The AGC has been among the most vocal groups in pushing for more exposure of the building trades as a career option to young people. Several nationwide surveys of contractors this year have confirmed a growing scarcity of construction workers.

“There are a lot of under-employed Americans who would be much better off working in construction, instead of doing shift work for little more than minimum wage,” said Stephen E. Sandherr, the association’s chief executive officer. “It is time to stop stigmatizing jobs like construction just because they require workers to use their hands as well as their brains.”