People@Work: Construction Job Growth Is Slowly Rebuilding


Few industries have been hurt as hard as construction during the Great Recession. Construction projects, including important new-home building, slowed to a crawl during the last few years as consumers reined in expenses seeking to weather the economic storm.

New forecasts show, however, that the worst may be over for the construction industry, which has seen the highest levels of unemployment of any sector, as the economy slowly begins to improve and construction projects resume.

"This won't be an easy year for most firms, but it will be better than last year," says Stephen E. Sandherr, CEO at the Associated General Contractors of America. "If current trends continue, this industry will be in a much better position 12 months from now than it is today."

A 20.7% Unemployment Rate

Some 27% of construction firms report they plan to add staff this year, while only 20% plan to cut jobs, Sandherr says. Last year, 55% of companies cut staff, while only 20% added employees. Adding to the optimism, expanding firms plan to hire an average of 23 workers, while those companies cutting back expect to lay off an average of 16 employees.

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The construction sector has an unemployment rate of 20.7%, according to December data released from the Bureau of Labor Statistics released earlier this month (January data will be released on Friday, Feb. 4). Still, the rate is an improvement from a year ago, when joblessness among workers in construction trades was a full two-percentage points higher.

Despite the improving outlook, more contractors expect the construction market to shrink in 2011 than predict it to grow, AGC says. Within the private-office market, for example, 56% of contractors expect activity to decline, followed by the retail, warehouse and lodging market, with 52% expecting less activity. Contractors are less pessimistic when it comes to projects involving hospitals or higher education, where just 36% expect the market to shrink.

There's also optimism to be found in the new-home construction and remodeling projects. David Crowe, chief economist at the National Association of Home Builders, forecasts a 15% increase in overall home starts this year.

One New Home Equals Three Jobs

Though he hasn't calculated what the increase may mean for job creation, Crowe expects that hiring will increase by roughly the same percentage. "What we know is that [the construction of] a single home creates three jobs," Crowe tells DailyFinance. With forecasts of 688,000 newly built homes in 2011, that translates to growth of about 2 million jobs.

In addition to construction jobs, new-home building also boosts demand for numerous other products, from dry wall to appliances to carpeting and other furnishings. Those jobs often show up in statistics for the manufacturing sector, Crowe says, even though they're created because of activity in the housing market.

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Though construction work tends to be cyclical, it does pay well. The mean annual wage for workers involved in residential construction is about $89,000 according to the Bureau of Labor Statistics. The data is from 2009, the most recent available. Those working on commercial projects earn about $2,300 more annually.

States with the highest wages among construction workers, not surprisingly are found on the East and West coasts, with New York topping the list with an annual mean wage of $142,550, or about $68.53 an hour. New Jersey is next on the list, with a mean hourly wage of $57.58, followed by Rhode Island ($55.75), Washington State ($53.89) and California ($53.38).

Texas, with more than 28,000 workers employed in some form of the industry, has the highest concentration of construction-related jobs, followed by Alaska, Nevada, Maryland and Colorado.

Workers Are Available but Credit May Not Be

Though the outlook for the construction sector and related jobs looks better in 2011 than in the past few years, concerns remain. They include tight credit, which continues to hamper not only consumers seeking mortgages or home-improvement loans but also contractors, who turn to banks to help finance projects.

"Builders are finding it very difficult to get credit to build the houses to anticipate the demand," Crowe says. One possible fallout is that home buyers may find fewer homes from which to choose if builders can't find financing to build them. One thing contractors won't have a shortage of, however, is ready labor.