Now that the pandemic is slowly subsiding and construction activity is stepping up, the construction industry is back to a familiar refrain: labor shortages.
According to the 2020 Marcum JOLTS Analysis, total hires and job openings within the industry as of Dec. 31, 2020 were down only slightly from a year earlier, before the pandemic shutdowns resulted in industry layoffs. At year end, the number of job openings was equal to 2.6% of available construction jobs—meaning there were 195,000 unfilled positions.
“When the pandemic began, some thought (and hoped) that the massive job losses observed in March and April would mitigate the skilled labor shortages that have frustrated construction firms for years,” the report’s authors wrote. “That simply hasn’t happened to any meaningful degree.”
The labor shortage is also evident in the “quits rate”—as of Dec. 31, there were 13,000 more workers who quit their construction jobs than were laid off or discharged by their employers.
The continued labor shortage is also hiking wages in the employees’ market. Average hourly earnings for construction employees reached their highest level on record at $32.11 in January 2021, and average weekly hours worked rose to their highest level since 2019’s third quarter.
“This is what might be expected from a strong economy operating under normal circumstances, not one facing a lingering pandemic and elevated unemployment,” the report stated.
Marcum found that job openings within the industry are concentrated in certain regions, while idle labor is concentrated in others.
“Parts of the U.S., like the Southeast, Texas, Colorado and segments of the Mid-Atlantic region have surging residential marketplaces and reasonably stable levels of nonresidential activity,” the authors wrote. “Other areas, like the Northeast and certain parts of the Midwest, where much of the industry’s job losses have occurred and where population has been stagnant or declining for years, are home to an abundance of unemployed construction workers.”
There are three things to watch as the pandemic continues to subside, according to the report: whether construction workers who quit or were laid off and found positions in other industries will come back to construction, whether nonresidential construction will rebound like the residential construction sector and whether public construction will continue.
Now that the $1.9 trillion stimulus package has passed and will be signed into law by President Joe Biden, states and local municipalities will likely continue construction projects that had already been scheduled. Moreover, Congress is expected to soon start deliberating on a massive infrastructure bill, spelling more work for the construction industry.
The question then becomes how these developments will impact the industry’s labor shortage.