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Strong Gains in July Construction Employment
But The Labor Pool Continues to Shrink

The Associated General Contractors of America has sounded yet another warning about the shrinking pool of qualified building trades workers. This time, it is in relation to a construction employment report for the month of July. Data shows employment in building trades is at its highest level since February 2009. But there is also evidence that builders and contractors are having a great deal of difficulty finding qualified employees.

The Associated General Contractors of America has issued yet another warning about the limited pool of laborers with building trades experience.

It comes in the wake of a construction industry employment report for the month of July, and the data affects builders and contractors in two vastly different ways.

On the one hand, the July numbers show construction employment has reached the highest level in more than six years, the AGC said. But on the other, it also reveals that the number of available, qualified building trades workers is at a 14-year low.

"It is encouraging to see construction employment rising again, but the industry could hire many more workers if they were available," said Ken Simonson, the association's chief economist. "The lack of experienced construction workers may be impeding the industry's ability to start or complete new projects."

A total of 6.3 million people were working in construction trades jobs in July, the most since February 2009. But that number rose by a mere 6,000 in July, and has increased an average of just 7,200 per month over the past five months. At the same time, the number of unemployed people who last worked in any construction trade totaled 474,000 in July, the lowest since 2001, the AGC noted.

Recent Census Bureau data also indicates that construction spending is rising at the fastest rate since 2006, the AGC added.

"There are several indicators, such as the steady increase in hiring of architects and engineers, that suggest demand for construction will remain strong, but contractors may have difficulty finding enough workers to take on all those projects," Simonson said.

The hike of 6,000 workers from June to July is way below the monthly average of 19,250 between July 2014 and July 2015. But construction put-in-place spending jumped 12 percent from June 2014 to June 2015.

"The recent acceleration in construction spending may soon level off unless the sector can draw in more workers with the right skills," Simonson said.

There are several reasons why the labor pool is shrinking. Many aging workers are retiring, while others who lost their jobs during the economic troubles of a few years ago are now doing other types of work.

Also, fewer young people are pursuing building trades as a long-term career, partly because not enough high schools offer these types of vocational programs.

"We are doing many students a real disservice by not telling them how they can make a good living working in construction," Stephen E. Sandherr, chief executive officer of the AGC, said.

The AGC's Workforce Development Plan calls for increasing the number of career and technical education programs nationwide. "The more options we give students, the more likely they are to succeed," Sandherr added.

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Associated Builders and Contractors, a related organization, has also weighed in on this issue. "U.S. construction industry employment rose 0.1 percent in July and added 6,000 net new jobs, while the construction unemployment rate shed 0.8 percentage points and now stands at 5.5 percent," Anirban Basu, chief economist for the ABC, said.

"Given the uptick in overall nonresidential construction spending, one would anticipate that the net figure would be better than it has been in recent months, likely indicating that expanding firms are finding it increasingly difficult to secure properly credentialed workers," Basu said. "This is, of course, true in many industries. But construction may be considered a special case, because so many workers left the construction segment in favor of others during the downturn."

Nonresidential building construction employment shed 900 jobs in July, but is up by 20,100 jobs or 2.9 percent on a year-to-year basis.

Residential building construction employment expanded by 6,000 jobs in July, and is up by 30,900 jobs or 4.7 percent since the same month in 2014.

The Associated Builders and Contractors story can be seen in its entirety on this web page:

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September 17, 2019, 11:00 pm PDT

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