The cost and availability of labor remains a top supply-side headwind for home builders and remodelers as the residential construction industry expands. Over the past few years, the issue has increased in importance according to NAHB industry surveys. In 2013, 53% of builders rated the issue as a significant problem; that share increased in 2014 and 2015 to 61% and 68%, respectively. For 2016, 76% of builders indicated that they expected cost and availability of workers to be a significant problem, making it the top business concern of the industry.
Despite widespread agreement that the labor market has grown tighter, some analysts have cast doubt on industry concerns regarding worker availability. For example, an April Goldman Sachs research article challenged these concerns by noting that residential construction employment was growing. That finding misses the point.
While employment is growing, the construction sector has experienced a rising trend of unfilled jobs. Consider data from the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey (JOLTS) for the overall construction industry. Despite expecting to construct 40% fewer single-family homes in 2016 compared with 10 years ago, the number of unfilled construction sector jobs with a “help wanted” sign is currently at 2006 rates as measured as a percent of industry employment.
Sector employment is expanding nonetheless. As of March 2016, home builders and remodelers have added 612,000 jobs from industry lows set after the Great Recession, increasing total employment to almost 2.6 million. But the industry lost almost 1.5 million workers during and after the recession. And it will take time to rebuild the infrastructure of the industry, including its labor force. Over the past six months, the industry has added roughly 20,000 jobs a month. But given flat existing-home inventory and positive housing affordability conditions, employment could grow faster if labor market conditions eased.
Recruiting the next generation of workers is more than just a short-term challenge for builders. According to an NAHB analysis of U.S. Census Bureau data, the median age of a worker in the construction industry is 42, which is just older than the median age for the national labor force, which is 41. These numbers place worker training and recruitment as a top agenda item for builders in the years ahead. It is for this reason that the NAHB is partnering with other organizations to promote career training and workforce development.
