Construction employment rate increases, but trails pre-pandemic high

Dive Brief:

• June construction employment in 39 states remained below the pre-pandemic peak of February 2020, according to an analysis of federal government data by the Associated General Contractors of America.
• Although not back to pre-pandemic levels, construction employment has experienced improvement over the past year, according to a report from Associated Builders and Contractors.
• Both the AGC and ABC note supply chain constraints and rising materials prices undermine demand for new projects and put a dent in firms’ plans to hire new workers.

Dive Insight:

Although national construction employment increased by 233,000 from June 2020, seasonally adjusted construction employment remained below its February 2020 peak by 238,000, or 3.1%, according to the ABC report. Construction employment is unlikely to grow in many parts of the country until supply chain challenges facing the industry improve, according to the AGC report.

A number of owners are postponing projects because rising costs and delivery delays have made projects infeasible or they want to wait until conditions improve, said AGC Chief Economist Ken Simonson.

“We’re seeing some recovery, not back to where we were, but we are moving forward,” said Bernie Markstein, president and chief economist of Markstein Advisors, an economic consulting company. “One big question is will there be an infrastructure bill out of Washington? If we get that, that obviously will help construction. I’m pretty optimistic overall in terms of construction going forward.”

The Senate voted Wednesday to advance a bill which includes $550 billion in new federal funding for infrastructure. AGC officials said President Joe Biden could further help the industry by “removing tariffs on key construction materials,” according to the report, and “ending unemployment supplements.” That would add to the pool of workers available to hire.

“First of all there’s been a long term problem with having enough skilled workers in particular [and] the pandemic just exacerbated that problem,” said Markstein. “The rate at which people are retiring and the skill gap that is there is pretty significant. That is going to continue to be a problem for the industry for at least a couple of years and maybe as many as five years or longer.”

The national construction unemployment rate went from 5.5% in February 2020 to 7.5% in June 2021, according to the ABC report.

From May to June, construction employment decreased in 25 states, increased in 24 states and Washington, D.C., and remained the same in Maine, according to the AGC report. The largest decline over the month occurred in New York, which lost 6,900 construction jobs, or 1.9%, followed by Pennsylvania, which lost 4,100 jobs, or 1.6%. The steepest percentage declines since May occurred in Vermont, which lost 3.5%. New York, Alabama and North Dakota each lost 1.9% of previous construction jobs, according to the AGC report.

Georgia added the most construction jobs over the same span, adding around 5,700 jobs, an increase of 2.9%. Kentucky and Florida followed, adding 2,700 jobs, or 3.4%, and 2,500 jobs, or 0.4%, respectively. Kentucky had the largest percentage gain for the May to June period, followed by Alaska and Georgia, which both grew by 3.0%.