Demand Impacts Hiring
Construction Jobs Increase While Unemployment Rate Falls
by the Associated General Contractors of America
The construction sector added 27,000 jobs in June while its unemployment rate fell to 3.6%, its lowest rate for the month, and pay levels in the industry continued to rise, according to an analysis of new government data the Associated General Contractors of America released this month. Association officials said construction firms are boosting pay and taking other steps to recruit workers amid tight labor conditions.
“Construction employment strengthened in June, with all segments adding workers despite recent weakness in demand for residential and commercial buildings,” said Ken Simonson, the association’s Chief Economist. “Finding enough qualified workers remains a greater challenge for most firms than finding projects to work on.”
Construction employment in June totaled 8,245,000, seasonally adjusted, an addition of 27,000 or 0.3% from the month prior. The sector has added 235,000 jobs during the past 12 months, an increase of 2.9%. Nonresidential construction firms, nonresidential building, and specialty trade contractors along with heavy and civil engineering construction firms, added 21,200 employees in June. Meanwhile, employment at residential building and specialty trade contractors only grew by 5,500 or 0.2%.
The unemployment rate among jobseekers with construction experience declined from 3.6% in June 2023 to 3.3%, the lowest June rate in the 24-year history of the data. A separate government report released earlier this month reported that new hires in construction at the end of May totaled 383,000, growing 3% from one year prior. The new hires figure does not account for the number of workers who left the industry during the same timeframe.
Average hourly earnings for production and nonsupervisory employees in construction, covering most onsite craft workers as well as many office workers, jumped by 4.6% over the year to $35.64 per hour. Construction firms in June provided a wage premium of nearly 19% compared to the average hourly earnings for all private-sector production employees.
Association officials welcomed the jump in construction employment but noted that firms would likely have added even more jobs last month if more qualified workers were available to hire. They said those labor shortages are preventing some firms from bidding on projects, limiting the amount of competition in the construction industry.
“Boosting investments in programs that expose more students to high-paying careers in construction will put more workers on a path to middle class prosperity,” said Jeffrey D. Shoaf, the association’s Chief Executive Officer. “Until public officials boost those investments, however, the lack of workers will undermine construction activity and constrain employment growth.”
Construction employment increased in 225, or 63%, of 358 metro areas between May 2023 and May 2024, according to an analysis by the Associated General Contractors of America of new government employment data. Association officials noted that employment levels in some parts of the country have been impacted by changing demand for construction and ongoing labor shortages.
“A pullback in starts by developers of apartments, warehouses, and offices, along with spotty improvement in single-family starts, has held down job gains in some metros,” said Simonson. “Surging demand for data centers, manufacturing and power projects, and infrastructure means contractors in many metros are still short of all the workers they need.”
Houston-The Woodlands-Sugar Land, Texas, added the most construction jobs, 8,400 jobs or 4%, between May 2023 and May 2024, followed by Baton Rouge, Louisiana, 8,200 jobs, 18%; Las Vegas-Henderson-Paradise, Nevada, 6,900 jobs, 8%; Atlanta-Sandy Springs-Roswell, Georgia, 6,000 jobs, 4%; and Miami-Miami Beach-Kendall, Florida, 5,200 jobs, 9%. The largest percentage gain, 23%, occurred in Fairbanks, Alaska, which added 600 jobs. The pickup in Fairbanks was followed by two areas with 20% increases: Anchorage, Alaska, with 2,200 jobs and Lawton, Oklahoma, with 300 jobs.
Construction employment declined over the year in 83 metro areas and was unchanged in 50 areas. The largest job loss occurred in Denver-Aurora-Lakewood, Colorado, -4,400 jobs, -4%; followed by Minneapolis-St. Paul-Bloomington, Minnesota, and Wisconsin, -3,800 jobs, -4%; New York City, New York, -3,800 jobs, -3%; Baltimore-Columbia-Towson, Maryland, -3,500 jobs, -4%; and Portland-Vancouver-Hillsboro, Oregon, and Washington, -2,700 jobs, -3%. The largest percentage decrease occurred in Augusta-Richmond County, Georgia and South Carolina, -12%, -1,900 jobs; followed by Duluth, Minnesota and Wisconsin, -11%, -1,100 jobs; Decatur, Illinois, -9%, -300 jobs; Ithaca, New York, -8%, -100 jobs; and Bellingham, Washington, -8%, -700 jobs.
Construction spending declined by 0.1% between April and May to a seasonally adjusted rate of $2.139 trillion, amid declines in demand for a range of nonresidential and residential construction projects. However, construction spending levels are up 6.4% compared to May 2023, according to an analysis by the Associated General Contractors of America released this month of new federal data. Association officials noted that public construction demand was up 0.5% for the month, helping offset declines in other types of activity.
“The Census Bureau responded to requests by the association and others to show data centers separately from the overall private office category,” said Simonson. “While the overall category slipped just 1.7% in the latest 12 months, that total hides a 69.0% jump in data center construction, which nearly offset an 18.5% plunge in spending on actual private offices.”
Spending on private nonresidential projects declined 0.3% on balance in May but rose 4.1% year-over-year. The largest private segment, manufacturing construction, grew 1.3% for the month and 20.2% over 12 months. Commercial construction fell 0.6% in May and fell 13.5% from a year earlier. Investment in power, oil, and gas projects slipped 0.8% in May, but rose 8.3% year-over-year.
Spending on private residential construction edged down 0.2% for the month but grew 6.5% year-over-year. Single-family construction fell by 0.7% but grew 13.8% year-over-year. Multifamily spending remained flat in May and fell 4.6% from May 2023.
Public construction spending grew 0.5% for the month and rose 9.7% from a year earlier. The largest public segment, highway and street construction, fell 0.5% in May but rose 9.2% over 12 months. Public educational spending grew 0.6% in the month and 6.6% over the year.
Association officials said new regulatory obstacles are keeping public-sector spending on construction from being even higher. They urged federal officials to look at ways to streamline the Build America review and waiver process to accelerate reviews for federally funded projects. They also continued to call for greater federal investments in workforce development to expose more people to construction career opportunities.
“Federal officials should be looking at ways to reduce the amount of time and red tape it takes to go from announcing funding for a project to construction starting for that project,” said Shoaf. “At the same time, they should invest in encouraging and preparing workers to help build infrastructure and other construction projects.”
