Construction Industry Still Struggling With Skilled Labor Shortage

While COVID-19 has certainly caused its fair share of problems for the construction industry in the U.S., residential construction and home building have seen a massive upswing in activity. With unemployment numbers on the rise and construction activity hitting all-time highs, it makes sense to think that a significant portion of the people looking for work might turn to jobs in skilled labor.

But this has not been the case, at least not according to the 2020 Marcum Jobs Opening and Labor Turnover Survey (JOLTS) Analysis. It’s an annual study from the Bureau of Labor Statistics that supplies data on the movement of jobs and labor across employers — hiring, firing and related trends.

“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 says. “That simply hasn’t happened to any meaningful degree.”

JOLTS data supports the idea that the construction industry’s skilled labor shortage still exists despite widespread unemployment. While some data shows a decrease in construction job openings, those numbers are not nearly as impressive in the longer view.

“Presently, the number of job openings is equal to 2.6 percent of available construction jobs (195,000 unfilled positions),” the report says. “While that’s the lowest proportion registered since December 2017, it’s higher than the average proportion of job openings observed from 2014-2017. It’s also higher than any month during the 2008-2013 period, indicating that job openings are low by recent standards but not especially low in the context of the past decade.”

JOLTS data also shows layoff activity in the construction industry declined late last year, suggesting construction firms are keeping the workers they do have. The resulting labor market tightness has caused the average hourly earnings of construction employees to climb over that same time period.

“In the midst of a gut-wrenching, economy destroying pandemic, average hourly earnings of construction employees reached their highest level on record in January 2021 ($32.11), and average weekly hours worked rose to their highest level since 2019’s third quarter,” the report says.

“This is what might be expected from a strong economy operating under normal circumstances, not one facing a lingering pandemic and elevated unemployment. At the time of this writing, the construction unemployment rate is a still lofty 9.4 percent.”

The regional disparity in construction job availabilities may be one reason for the current labor shortage. The report says residential construction booms are taking over in regions like the Southeast and Mid-Atlantic, while the Midwest hasn’t seen the same boost in activity.

“In other words, the job openings are concentrated in certain regions while idle labor is concentrated in others,” the report says.