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Spot labor shortages surface as construction unemployment figures slide

Sources: Associated General Contractors of America, Washington, D.C.; CP staff

Sustaining momentum from April and May, construction employers added 6,000 workers to payrolls in June as the industry's unemployment rate dropped to 8.2 percent, its lowest level for the month in six years, according to an AGC analysis of new government data.

“The construction industry continues to expand gradually and unevenly,” affirms AGC Chief Economist Ken Simonson. “Despite recent job growth, construction employment is still more than 1.7 million jobs or 22 percent below its 2006 peak.”
Construction employment totaled 6,015,000 in June, the highest total since June 2009 and an increase of 186,000 or 3.2 percent from a year earlier, he adds.

Residential builders added 6,600 jobs in June and 106,300 (4.9 percent) over 12 months. Nonresidential construction employment last month was unchanged from May, but up by 80,000 (2.2 percent) since June 2013. The sector's recent employment gains could be undermined, however, by cuts in federal transportation funding that are expected to begin taking effect in August, AGC officials warn, citing the Highway Trust Fund’s dwindling highway account.

Association officials urge Congress and the Obama administration to work together to find new revenue for the Fund that will keep federal highway investments levels from dropping. “It is hard to imagine how the industry will continue to recover amid significant cuts to the largest single federally-funded construction program," says AGC CEO Stephen Sandherr.

Even as many construction firms brace for federal transportation funding cuts, others are struggling to find enough skilled workers to meet current demand. Growing labor shortages are less a measure of the strength of the sector's recovery and more of an indication that many former construction workers have left the industry, while relatively few young workers seek new careers in construction, association officials observe.

The unemployment rate for workers actively looking for jobs and last employed in construction declined from 9.8 percent a year earlier to 8.2 percent in June—the lowest June rate since 2008. Simonson notes that over the past six years, the number of unemployed workers who last worked in construction declined by 1.075 million, but industry employment increased by only 512,000. “The belated and partial nature of the construction recovery means many experienced workers have left the industry and fewer new entrants have chosen construction as a career,” he adds. “That will make it hard for contractors in many regions to find the workers with the right skills over the coming months.”