Construction Adds 23,000 Jobs in September

According to data released last month by the US Bureau of Labor Statistics, the national construction industry added 23,000 net new jobs in September, following 23,000 in August, 18,000 in July, 13,000 in June and 29,000 in May.

Press Release from Associated Builders and Contractors, Inc (ABC)

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Construction Industry Adds 23,000 Jobs in September, Says ABC

WASHINGTON, Oct. 5—The U.S. construction industry added 23,000 net new positions in September, according to an Associated Builders and Contractors analysis of data released by the U.S. Bureau of Labor Statistics.

During the last 12 months, the industry has added 315,000 net new jobs, an increase of 4.5 percent. Nonresidential construction employment expanded by 18,600 net jobs on a monthly basis, while the residential sector added just 4,400 net positions.

Though construction unemployment rose to 4.1 percent in September, it remains low by historical standards. National unemployment dropped to 3.7 percent across all industries, the lowest rate since December 1969.

“For several years, job growth has been just right—not too hot, not too cold,” said ABC Chief Economist Anirban Basu. “The term ‘Goldilocks economy’ is often tossed around, with the implication being that employment growth has been solid enough to keep consumers spending and businesses confident, but not so fast that inflation and interest rates spike, causing asset prices (e.g., stocks, bonds and real estate) to fall in value.

“Coming into the latest employment report, economists were collectively expecting around 180,000 jobs to be created in September and an official rate of unemployment of 3.8 percent. That’s effectively what occurred,” said Basu. “But these are not the important numbers. The most important number is average hourly earnings growth, which has been at the high point of the cycle recently. Conventional wisdom suggests that if average hourly earnings were to grow 3 percent or better on a year-over-year basis, that actually would be bad news from the perspective of financial markets. This suggests that the grinding search for talent is driving up compensation costs and that interest rates will continue to head higher.

“Contractors will have noticed that borrowing costs have risen more rapidly of late, resulting in yesterday’s sharp dip in stock prices,” said Basu. “Essentially, we may have reached the point in the cycle during which good news is bad news, at least from the perspective of financial market performance. What’s more, construction firms will find it increasingly difficult to recruit labor—that much is obvious. This week’s announcement by Amazon regarding its increase in minimum wages indicates that firms are having to pay more to attract and retain workers. It is perfectly conceivable that more junior members of the construction workforce also heard about Amazon’s new $15 minimum wage.”

Press Release from Associated General Contractors of America (AGC)

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Construction Employment Rises by 23,000 Jobs in September and 315,000 for the Year; Hourly Pay Exceeds $30 in an Increasingly Tight Labor Market

Despite Above-Average Job Gains and Pay Increases, Industry Survey Finds Contractors Are Struggling to Find Craft Workers; Association Officials Call for Reforms to Immigration, Career and Technical Education

Construction employment increased by 23,000 jobs in September and by 315,000 jobs over the past year, reaching a 10-year high, while the industry’s unemployment rate decreased more than half-a-percentage point to 4.1 percent from a year earlier, according to an analysis of new government data by the Associated General Contractors of America. Even as firms increase headcount and increase pay, a survey by the association suggests that this expansion is threatened by a lack of skilled craft labor.

“The construction industry added workers and increased pay in the past year at rates higher than the overall economy,” said Ken Simonson, the association’s chief economist. “However, the pool of unemployed workers with construction experience has nearly evaporated, pushing up contractors’ costs and adding to project completion times.”

Construction employment totaled 7,286,000 in September, the highest level since May 2008 and a gain of 4.5 percent over the past 12 months. Employment in residential construction – comprising residential building and specialty trade contractors—grew by 4,400 jobs for the month and 139,600 jobs over the past 12 months, a 5.2 percent increase. Employment in nonresidential construction—including building, specialty trades, and heavy and civil engineering construction—grew by 18,600 jobs in September and 176,300 jobs during the past year, a 4.1 percent increase.

Hourly earnings in the industry averaged $30.18 in September, exceeding $30 per hour for the first time, and an increase of 3.1 percent from a year earlier. Average hourly earnings in construction now have a 10.7 percent premium over the average for all nonfarm private-sector jobs, which rose 2.8 percent in the past year, to $27.24. Meanwhile, the unemployment rate for workers with construction experience in September was 4.1 percent, down from 4.7 percent in September 2017 and the lowest September rate since the series began in 2000.

In the recent AGC-Autodesk Workforce survey, 76 percent of respondents said their firms plan to increase their headcount of hourly craft workers in the next year. However, 80 percent of the firms said they are having trouble filling hourly positions. For all but one of 20 specific crafts included in the survey, a majority of respondents reported that they were having more trouble hiring craft personnel this year compared to last year. And in addition, over three-quarters of respondents replied that the local programs for supplying well-trained, skilled craft personnel were poor or only fair.

In addition to the results of the Workforce survey, the association released a Workforce Development Plan, which shows how the association is increasing training efforts and encouraging job-seekers to choose a career in construction, while suggesting concrete policy changes including reforming immigration and increasing funding and flexibility for current federal career and technical education programs.

“Despite stellar growth, the construction workforce shortage is hurting contractors and others who depend on our industry,” Stephen E. Sandherr, the association’s chief executive officer, said. “Reforming current career educational programs can provide real choice to students and encourage the development of high-reward, high-skill jobs.”