Although demand for new residential housing is strong among consumers, and spending on new construction is up overall, hiring in the construction industry has not increased on a corresponding basis, a new report from CoreLogic finds.
According to the report, ‘Hesitation in the Construction Industry,’ included in CoreLogic's MarketPulse report for November, construction hiring in recent years has not been aligned with the seasonal and cyclical trends seen in the industry.
Typically what happens is, when construction spending goes up, there is a corresponding increase in construction hires. However, in recent years, there has been a growing divergence between construction spending and hiring.
As the report points out, new construction spending fell to a low of 16.8%, year over year, in December 2009 and then increased until peaking at about 9% in October 2012.
Conversely, total construction hires peaked at 14.6% in June 2010 but then started decreasing at an annual rate of about 8%, as of October 2013.
So, even though demand for new construction began to pick up in 2012, and spending increased, construction companies did run out and hire more people. Previous reports have pointed to a lack of skilled labor as being the primary reason – when construction workers lose their jobs, they often find new jobs in unrelated fields, thus taking them out of the pool of skilled labor.
As the report shows, there were about 7.1 million workers in construction from January 2000 to September 2008 (based on U.S. Department of Labor statistics). These workers represented about 5.1% of the total U.S. workforce. However, today there are only 5.8 million – about 4.1%. Yet the population is growing, and demand for new construction is through the roof. This suggests, according to the report, that there has been a level shift in the data, meaning that the construction industry is either ‘going through a fundamental change’ or is ‘self-correcting to a more sustainable level of employment.’
To download the full report, click here.