According to data released last week by the US Bureau of Labor Statistics, the national construction industry lost 20,000 jobs on net in May.
Key Takeaways
- Overall, the industry has recovered 888,000 (79.8%) of the jobs lost during earlier stages of the pandemic.
- Nonresidential construction employment declined by 21,800 positions on net, with the majority of losses sustained among nonresidential specialty trade contractors, a segment that lost 16,800 jobs. Heavy and civil engineering lost 5,500 jobs, while nonresidential building added 500 jobs on net.
- "Constraints on hiring are pushing wages higher. This comes on top of materials price increases experienced in recent months. Remarkably, despite inflationary pressures, the ongoing wait for a meaningful federal infrastructure package and compromised commercial real estate fundamentals, most nonresidential contractors remain positive regarding their prospects over the balance of the year."
Press Release from Associated Builders and Contractors, Inc (ABC)
WASHINGTON, June 4—The construction industry lost 20,000 jobs on net in May, according to an Associated Builders and Contractors analysis of data released today by the U.S. Bureau of Labor Statistics. Overall, the industry has recovered 888,000 (79.8%) of the jobs lost during earlier stages of the pandemic.
Nonresidential construction employment declined by 21,800 positions on net, with the majority of losses sustained among nonresidential specialty trade contractors, a segment that lost 16,800 jobs. Heavy and civil engineering lost 5,500 jobs, while nonresidential building added 500 jobs on net.
The construction unemployment rate fell to 6.7% in May. Unemployment across all industries declined from 6.1% in April to 5.8% last month.
“The issue is not demand for workers, it is supply,” said ABC Chief Economist Anirban Basu. “The number of available, unfilled jobs openings in construction has been rising rapidly in recent months, but employment gains proved elusive in May. This is hardly unique to construction. Despite a record number of available, unfilled jobs in America, the labor force participation rate actually dipped in May to 61.6%. Coming into the pandemic, that level was 63.3%. In percentage terms, this doesn’t appear especially revolutionary, but it translates into millions of Americans who are no longer working and who are not presently seeking employment.
“Constraints on hiring are pushing wages higher,” said Basu. “This comes on top of materials price increases experienced in recent months. Remarkably, despite inflationary pressures, the ongoing wait for a meaningful federal infrastructure package and compromised commercial real estate fundamentals, most nonresidential contractors remain positive regarding their prospects over the balance of the year. ABC’s Construction Confidence Index indicates that contractors expect sales, employment and profit margins to rise over the next six months. Backlog remains steady.
“There are several possible reasons why many Americans remain reluctant to re-engage in the labor market,” said Basu. “Among the challenges are stepped-up unemployment insurance benefits, children still learning remotely and lingering fears of infection and/or vaccination and prior stimulus payments. A number of governors have seen fit to truncate the duration of supplemental federal unemployment insurance benefits. At least theoretically, this should result in more significant labor force participation going forward. But it is conceivable that the pace of job gains will remain somewhat disappointing over the summer from a national perspective since governors in many populous states have not moved in that direction.”
Press Release from Associated General Contractors of America (AGC)
Many Construction Firms Also Report Difficulty Finding Qualified Workers to Hire as Some Remain Reluctant to Return to Work amid Child Care Challenges and Elevated Unemployment Supplements
Construction employment declined for the third time in the past four months in May as nonresidential contractors coped with lengthening and unpredictable delivery times that limited their ability to start or complete projects, according to an analysis by the Associated General Contractors of America of government data released today. Association officials added that many contractors report they are having a hard time finding qualified workers to hire as some people remain reluctant to return to work while their children are learning from home, or they are collecting elevated unemployment supplements.
“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, the association’s chief economist. “If they can’t get the materials, they can’t put employees to work.”
Seasonally adjusted construction employment in May totaled 7,423,000, a drop of 20,000 from the downwardly revised April total. Industry employment declined as well in April and February. The total in May remained 225,000 less than in February 2020, the high point before the pandemic drove construction employment down by more than a million jobs.
The gap widened in May between residential construction, which has experienced feverish demand for new and remodeled housing, and nonresidential construction, which has been declining, aside from a few niches. Residential construction firms—contractors working on new housing, additions, and remodeling—gained 1,900 employees during the month and employed 35,000 more workers (1.2 percent) in May than in the pre-pandemic peak month of February 2020. In contrast, the nonresidential sector—comprising nonresidential building, specialty trades, and heavy and civil engineering contractors—shed 21,800 jobs in May and employed 260,000 fewer workers or 5.6 percent less than in February 2020.
“Contractors are being told they must wait nearly a year to receive shipments of steel and 4-6 months for roofing materials,” Simonson noted. “These delays make it impossible to start some projects and to complete others, leaving contractors unable to keep workers employed. In addition, soaring prices for steel, lumber, and other materials are deterring owners from committing to going ahead with projects.”
Association officials urged Congress and the Biden administration to take steps to address the record materials price increases and supply chain bottlenecks. They said the President should end tariffs on key materials like lumber, steel, and aluminum. They added that Washington officials should look at ways to ease manufacturing and shipping backups. And they urged Congress to allow unemployment supplements to expire, as planned, after Labor Day.
“The decline in construction employment is likely less about a lack of demand as it is about the challenges contractors are facing in meeting that demand,” said Stephen E. Sandherr, the association’s chief executive officer. “Supply-chain problems and labor shortages are holding back what should otherwise be a much stronger recovery for the construction sector.”
