Construction Spending Increases

Job Openings Imply Contractors are Struggling to Keep Up With Demand

by the Associated General Contractors of America

Total construction spending increased by 0.4% in September, yet a record-high number of job openings suggests the industry would be completing even more projects if it could hire enough workers, according to an analysis of federal spending data the Associated General Contractors of America released today.  Association officials cautioned that efforts in Congress to limit the construction industry’s access to potential workers could undermine future infrastructure and economic development projects.

         “It is encouraging that most categories of construction, including homebuilding, are growing,” said Ken Simonson, the association’s chief economist.  “But the numbers would be even more impressive if the industry didn’t have so many unfilled job openings.”

         Construction spending, not adjusted for inflation, totaled $1.997 trillion at a seasonally adjusted annual rate in September.  That figure is 0.4% above the August rate, which was revised up from the initial estimate.  Spending on private residential construction rose by 0.6%, with a 1.3% increase in single-family spending and a dip of 0.1% in multifamily projects.  Spending on private nonresidential construction edged up 0.1% in September, while public construction investment rose 0.4%.

         The largest nonresidential segments showed mixed changes from August to September.  Spending on manufacturing plants declined 0.4%.  Spending on commercial construction, comprising warehouse, retail, and farm construction, rose by 0.7%.  Highway and street spending slipped 0.1%.  Investment in power, oil, and gas projects climbed 0.9%.  Education spending jumped 1.8%.

         A separate government report showed job openings climbed to 438,000 on September 30, the highest September figure in the 23-year history of the series.  Meanwhile, the industry was able to hire only 294,000 employees in the entire month, an 18% decline from September 2022.  Simonson said the huge number of openings was a sign the drop in hiring is due to a dearth of applicants, not projects.

         Construction employment increased in 212 of 358 metro areas between September 2022 and September 2023, according to an analysis by the Associated General Contractors of America of new government employment data.  Association officials said the figures come as many construction firms work to find new ways to recruit and retain enough workers to keep pace with demand.

         “The number of metros adding construction employees has slipped in recent months,” said Simonson.  “But contractors continue to report they are busy and have large backlogs, so the decline in metros with job gains probably reflects the dearth of qualified unemployed workers, not weaker demand.”

         Dallas-Plano-Irving, Texas added the most construction jobs, 17,300 jobs or 11%, followed by New York City, 15,200 jobs, 10%; Baton Rouge, Louisiana, 9,000 jobs, 19%; Portland-Vancouver-Hillsboro, Oregon and Washington, 8,700 jobs, 11%; and Atlanta-Sandy Springs-Roswell, Georgia, 7,300 jobs, 5%.  The largest percent age gains were in Baton Rouge, Louisiana, followed by Corvallis, Oregon, 13%; 200 jobs, Fayetteville-Springdale-Rogers, Arkansas and Missouri., 11%; 1,600 jobs, Portland-Vancouver-Hillsboro; and Dallas-Plano-Irving.

         Construction employment declined over the year in 78 metro areas and was unchanged in 68 areas.  The largest job loss occurred in Houston-The Woodlands-Sugar Land, Texas, -8,800 jobs, -4%; followed by Miami-Miami Beach-Kendall, Florida, -4,700 jobs, -9%; St. Louis, Missouri and Illinois, -4,500 jobs, -6%; Nassau County-Suffolk County, New York, -4,100 jobs, -5%; and San Francisco-Redwood City-South San Francisco, California, -2,400 jobs, -6%.  The largest percent age decrease occurred in Kankakee, Illinois, -13%; -200 jobs, followed by Bay City, Michigan, -12%; -200 jobs, Pittsfield, Massachusetts, -9%; -200 jobs, Binghamton, New York, -9%; -400 jobs, and Miami-Miami Beach-Kendall.

         The construction industry added 11,000 jobs in September as unemployment rates for the sector remained at historically low levels, prompting contractors to raise pay faster than for other jobs, according to an analysis of new government data the Associated General Contractors of America released today.  Association officials noted that the number of people working on nonresidential construction projects declined for the month as firms struggle to find enough workers to hire amid tight labor conditions.

         “Construction firms have plenty of projects but a dip in nonresidential employment last month shows how hard it has been to find enough skilled workers,” said Simonson.  “Job openings remain stubbornly high, even though the industry has been raising hourly pay at an elevated rate.”

         Construction employment in September totaled 8,014,000, seasonally adjusted, with a gain of 11,000 or 0.1% from August.  The sector has added 217,000 jobs during the past 12 months, an increase of 2.8%.  Residential building and specialty trade contractors added 12,600 employees in September and 55,300, 1.7%, over 12 months.  Employment at nonresidential construction firms, nonresidential building, and specialty trade contractors along with heavy and civil engineering construction firms, declined by 1,300 positions for the month but increased by 161,600, 3.5%, since September 2022.

         The unemployment rate among jobseekers with construction experience was 3.8% in September, one of the lowest September rates in the 24-year history of the data.  A separate government report released earlier this week reported that there were 360,00 job openings in construction at the end of August, the second-highest August total in series history and a further sign of contractors’ difficulty in finding qualified workers.

         Average hourly earnings for production and nonsupervisory employees in construction, covering most onsite craft workers as well as many office workers, climbed by 5.5% over the year to $34.54 per hour.  Construction firms in August provided a wage “premium” of nearly 19% compared to the average hourly earnings for all private-sector production employees.

         Association officials noted said that member firms were finding new ways to recruit workers amid ongoing tight labor market conditions.  They noted that construction employers are modernizing the way they recruit, including using digital advertising and building partnerships with local school districts.  They added that the association is supporting those recruiting efforts with its own advertising campaigns and resources, like Culture of Care, to help members better retain workers.

         “Construction firms are going to great lengths to recruit and prepare enough workers to keep pace with demand,” said Stephen E. Sandherr, the association’s chief executive officer.  “We are working with those firms to help encourage more people to pursue high-paying careers in construction.”

         Association officials warned that efforts in Congress to exclude the construction industry from the H-2B visa program will make it even harder for firms the find enough workers to keep pace with demand.  They noted the federal government already underinvests in career and technical education programs that focus on construction.  Excluding the industry from accessing the pool of workers available through the visa program would only make it harder for firms to build vital infrastructure and economic development projects, they noted.

         “The construction industry is already up against a federal government that spends most of its education money urging students to pursue other career fields,” said Sandherr.  “Excluding construction from the visa program is like having a federal government that wants to build things but doesn’t seem interested in having anybody to build them.”

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