Tax, Regulatory Reform and Infrastructure Investments Helping Boost Construction Employment

Construction employment reaches 10-year high as industry adds 13,000 jobs in June and 282,000 for the year

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Construction employment increased by 13,000 jobs in June and by 282,000 jobs over the past year, reaching a 10-year high, according to an Associated General Contractors of America analysis of new government data. Association officials said many construction firms appear to be more willing to hire amid lower tax rates and a more favorable business environment but caution that trade fights and labor shortages pose risks to future growth.

“The construction industry continues to add workers faster than the economy as a whole, and the industry is paying premium wages to attract and retain those workers,” said Ken Simonson, the association’s chief economist. “The employment gains are occurring in both residential and nonresidential construction. However, the industry is having to rely more and more on workers without construction experience, as the pool of unemployed construction workers has nearly evaporated.”

Construction employment totaled 7,222,000 in June, the highest level since May 2008 and a gain of 4.1% over the past 12 months. The economist pointed out that the­­ year-over-year growth rate in industry jobs was more than double the 1.6 percent rise in total nonfarm payroll employment.

Hourly earnings in the industry averaged $29.71 in June, an increase of 2.9% from a year earlier. That put average hourly earnings in construction 10.1% higher than the average for all nonfarm private-sector jobs, which rose 2.7% in the past year, to $26.98, Simonson added.

The unemployment for workers with construction experience in June was 4.7%, virtually unchanged from the levels in June 2017 (4.5%) and June 2016 (4.6%) — a sign that the industry is operating at essentially full employment, Simonson said.

Employment in residential construction comprising residential building and specialty trade contractors — grew by 4,400 jobs in June and by 133,800 jobs over the past 12 months, a 5% increase. Employment in nonresidential construction — including building, specialty trades, and heavy and civil engineering construction — grew by 8,600 jobs in June and by 147,900 during the past year, a 3.5% increase.

Association officials observed that construction employers appear more eager to hire amid lower taxes and increased efforts to reduce needless or ineffective regulatory burdens. They added that recent increased infrastructure investments at the federal and state level are also helping boost construction employment. But they cautioned that workforce shortages, tariffs and a looming trade war could undermine future construction employment gains.

“The steps Congress and the Trump administration have taken to create a more positive business environment and boost employment appear to be working,” Stephen E. Sandherr, the association’s chief executive officer, said. “But new trade disputes and chronic underfunding of career and technical education programs pose a real threat to continued employment gains in the sector.”