It is said that the American economy ebbs and flows with the fortunes of the construction industry. If that is the case, then it appears that the economy could be in for a very strong upswing in the near future. Construction employment is posting record numbers and it looks like construction spending in New York City is ready to break more records as well. All of this good news is hitting just as the possibility of an immigration wall threatens to deteriorate the prosperity the construction industry has worked so hard to create.
When you talk about construction employment numbers, there is perception and there is the reality. The perception looks great on paper, but the reality can be a little shaky when you look at where those numbers come from. In any industry, a surge in employment is always a good sign. However, in the construction industry, it may only be a forerunner of some struggles ahead.
Construction Employment Numbers
A look at the raw numbers shows us that construction employment is definitely helping the American economy. In January 2017, it was reported that 36,000 new construction jobs were added around the country. The boost in January 2017 puts the total number of jobs added from January 2016 to January 2018 at 170,000, which represents a 2.6 percent increase in that time.
When it comes to separating commercial construction job growth from residential, that task is relatively easy. Nearly 75 percent of all of the new construction jobs created in the past year were added in the residential construction field. This means that 128,000 new jobs were added to the residential construction industry from January 2016 to January 2017, bringing the national total for all construction employment to 6,809,000.
Wages are also on the rise as the average construction worker makes 10 percent more per hour than any other type of worker in the private sector. In Queens, the wage news for construction workers is even more promising. While the average hourly rate for construction workers around the United States is $17.57 per hour, construction laborers in Queens are averaging $24.71 per hour. With construction spending on the rise in New York City, these numbers will look to continue going up.
A Lack Of Skilled Workers Causing A Concern In The Industry
The employment numbers announced are great news for a construction industry that has been booming for years, but these numbers also bring the construction industry one step closer to collapse. While there are nearly seven million construction workers employed in the United States, the national unemployment rate in the construction industry is 9.4 percent. That seems incredibly high for an industry that is growing, but that is because supply is not meeting demand.
When the construction industry bottomed out in 2008, many workers went years without being put on another project. A large percentage of skilled construction workers left the industry and found employment elsewhere. Most of those workers who left construction never came back, and that was a big problem in the 2010s when the industry rebounded.
The reason that the construction unemployment rate is so high is because there is a shortage of construction workers. The unemployment rate is based on the number of positions that are filled, and there is a huge demand for construction workers that is not being met. The lack of skilled workers is the reason why wages continue to go up. Construction companies need to pay higher wages if they want to attract the skilled workers they need to get jobs done on time. Unfortunately, not every company is finding the workers it needs and the shortage of workers is threatening to collapse the industry.
Does The Immigration Wall Plan Create More Problems In The Industry?
When Donald Trump was running for president, he promised he would build a 30-foot high wall that spans across the entire border with Mexico to keep out illegal immigrants. When Trump insisted Mexico would pay for the wall, few in the construction industry took his idea seriously.
When Trump won the election, one of his first acts was to go to Congress to get funding for his wall. The wall is expected to cost around $15 billion and employ approximately 25,600 construction jobs. The American public will pay for the wall, but President Trump boasts that the public will also benefit from the new jobs being created.
Construction spending in New York City is expected to go from $43.1 billion in 2016 to $42.3 billion in 2018. This means that the pace of spending in development projects in New York City will remain essentially same for the next two years. To maintain that pace, construction companies would need to at least maintain their current staffing levels. Ideally, construction companies in New York City want to increase payroll to get projects done on time and under budget.
Trump’s wall complicates things for New York City and other areas in the United States where construction is on the rise, we previously wrote about this here.The president maintains that he is creating 25,600 temporary construction jobs, but there are no skilled workers to fill those jobs. If the president is going to build his wall, he will need to attract skilled workers away from their current employers with higher wages. This would cause a significant drop-off in the talent level available to the construction industry, and it would also force construction companies to pay even more to skilled workers who are already seeing significant pay increases due to a shortage of labor.
The Acute Need For Training Programs
The good news is that construction employment is up, but the bad news is that demand for workers is up even more. Construction companies and labor groups around the country are scrambling to develop training programs that will fortify a depleted workforce, but bringing new skilled workers into the construction industry takes time. The time it takes to train new works may end being too long for new projects to be completed, creating a vicious cycle.
What could change this current cycle in the construction industry is the immigration wall proposed by President Donald Trump. If the project is approved, then the federal government will need to offer extremely high wages to attract skilled workers away from their current jobs and get them to start working on the wall. If that happens, then projects around the country will become much more expensive and take much longer to complete. Companies will have to lay off, even more, laborers because they cannot start projects without the skilled workers necessary to take care of the critical tasks that go into building a structure.
The Gap Widens Between Supply And Demand
The need for construction laborers and skilled workers is expected to continue to rise throughout 2017 and into 2018, and that does not include the immigration wall project. While it is not going to be as difficult to fill the laborer positions, it will be extremely difficult to fill new skilled labor positions when there are no laborers available.
This sort of situation will enhance the chain reaction that is already taking place. Construction companies are already laying off laborers because they are unable to get the skilled workers they need to get projects going. This is another reason why the unemployment rate in the construction industry is at 9.4 percent despite record job growth. As the gap between supply and demand gets wider, the construction industry is in a position where it could see serious problems in the face of tremendous growth.