AGC warns of labor shortage if demand continues to rise.
Construction employers added 19,000 workers to payrolls in March 2014, bringing industry employment to the highest level since June 2009, while the industry's unemployment rate dropped to the lowest March level in seven years, according to an analysis of new government data by the Associated General Contractors of America (AGC), Arlington, Va. AGC officials warned that the pool of available workers is declining rapidly, raising the prospects for significant labor shortages if demand continues to expand.
"The rate of construction hiring continues to outrun job growth in the overall economy for the past year," says Ken Simonson, AGC chief economist. "Furthermore, the pickup has been well balanced, as both nonresidential and residential construction segments added workers last month and over the past 12 months."
Construction employment totaled 5,964,000 in March, a gain of 151,000 or 2.6 percent from a year earlier, compared with a rise in total nonfarm employment of 1.7 percent over that period, Simonson noted. Residential building and specialty trade contractors added a combined total of 9,100 workers in March and 103,000 (4.8 percent) over 12 months. Nonresidential construction—building, specialty trades and heavy and civil engineering contractors—grew by 9,900 employees last month and 48,800 (1.3 percent) since March 2013.
"Although most construction employers who need workers have been able to find them so far, increasing numbers of contractors say they are having difficulty hiring," Simonson warns. "Last month, the number of unemployed former construction workers fell to the lowest March level since 2007. More of these experienced workers are leaving the industry than are rejoining it."
The unemployment rate for workers actively looking for jobs and last employed in construction declined from 14.7 percent a year earlier to 11.3 percent last month. Simonson noted that the unemployment rate for construction workers had fallen by more than half since March 2010, when it reached 24.9 percent. During that time, the number of unemployed workers who last worked in construction declined by 1.3 million, but industry employment increased by only 445,000.
"Based on projects that have been announced in recent months, contractors are likely to be seeking workers for many types of construction in most parts of the country this spring," Simonson adds. "Multifamily, manufacturing and oil and gas-related facilities will generate particularly strong demand for workers. It will be a challenge to fill all the openings."
AGC officials say one reason the industry is likely to face labor shortages is because of the declining number of secondary-level construction training programs. They urge federal, state and local officials to take steps designed to make it easier for schools, construction firms and local trade associations to establish new training programs for future construction workers.
"If elected and appointed officials don't act soon to improve the quantity and quality of training opportunities for future workers, many firms are going to have a hard time keeping up with demand," says Stephen E. Sandherr, the association's chief executive officer. "The last thing the economy needs is to have labor shortages undermine the construction industry's long hoped-for recovery."