Friday, June 1, 2007

Why you still can't find a builder

Home building is in free fall but construction employment is steady, a sign housing won't tank the job market.

NEW YORK ( -- There's no doubt the bottom has fallen out of the home-building market in the last year. But if you're trying to find an out-of-work carpenter or skilled
craftsman today, you'd think the nation was still in the middle of a building boom.

Employment in home building has fallen 4 percent from a year ago, according to government figures, but construction employment overall has slipped just 0.2 percent over that period. The difference? A 2.7 percent jump in the number of workers on construction sites for hospitals, roads and other projects aside from homes and residences. And the shift may be even more dramatic than those numbers suggest.

Some of it is due to the shift of workers to non-residential
construction jobs, some of it is due to employers not wanting to let go of skilled craftsmen in case the homebuilding market picks up.

And part of it may be due to the large use of immigrant labor in the construction industry. If contractors and subcontractors were not reporting off-the-book employees to the government during the housing boom, their absence now won't be missed in the figures.

The government figures on construction spending show the same thing. Thursday the Census Bureau reported that while residential construction tumbled 14 percent in April from a year earlier, non-residential construction jumped nearly 13 percent.

"A concrete block doesn't know if it's a wall of a house, or the wall of a shopping center," he said. "The same people are going to lay the block."

It’s no great secret; commercial construction lags residential construction.
As residential projects develop, retail chains and infrastructure follow.
Many have already factored in this lag effect to forecast construction based job markets into next year. There should be no appreciable effect yet as workers move to the commercial projects now under way.

The problem will come sometime in late 2007 to 2008 when these commercial building projects reach completion. A number of residential developments these commercial projects are being built around will be non-starters. When those jobs are done construction workers will suddenly find less to do and construction employment numbers are bound to drop.

The mention of migrant workers filling construction jobs is also to be considered. I know from personal experience that this has been the case. In 2005 workers were in short supply. If you could hold a hammer, you were suddenly a carpenter. What was not mentioned were the number of skilled workers who were drawing pay under the table as well for what ever reason. My point being that the current numbers are bound to show only documented workers while off the books workers may have made up a considerable portion of construction labor force leaving no honest way of tracking the figures.


Anonymous Anonymous said...

I read in California that contractors were hiring Mexican fruit pickers to build houses in 04 and 05 bacause there was a major shortage of qualified workers to build houses.

You can just imagine the number of law suits that this will generate when the work falls apart!

Friday, June 01, 2007  

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