More than 1.3 million residential construction jobs have disappeared since the last peak of the housing industry, as production of new homes has withered to one-third of boom time levels. And this labor estimate, by the Bureau of Labor Statistics, probably doesn’t fully account for the hordes of undocumented laborers who returned to their countries once work dried up in the United States.

Still, the builders which have remained active during the recession say they’ve aren’t having too much difficulty finding skilled and unskilled labor. “It’s very easy; these guys are dying for work,” says Art Rutenberg, owner of Arthur Rutenberg Homes in Clearwater, Fla. But there have been a few adjustments. Some builders say their contractors are using smaller crews and taking longer to complete work stages. And more than a few builders are concerned about whether there will be enough workers to go around when buyer demand is high enough again to justify revving up construction again.

After all, the construction industry is still shrinking--just at a slower pace than previously. The Associated Press reported Thursday that Florida partly attributes its recent drop in overall jobless claims, the largest in the country, to fewer layoffs in construction. Housing analysts Zelman & Associates noted recently that construction jobs in May nationwide were down 11.1% on an annualized basis, their lowest decline since last October. However, residential construction jobs within this sector fell by 19%, compared to the same month a year ago, and by 22.1% on a trailing three-month basis.

“All of the trades have reduced their workforces,” says Terry Tondre, vice president of construction for History Maker Homes, which is currently building about two homes per day in the Dallas-Fort Worth area. He observes that some construction laborers have simply left the business, while others are “chasing storms,” including those who left the Dallas-Fort Worth metro for Houston to rebuild that market’s coastal area after Hurricane Ike.

However, Tondre says that his company’s production velocity is such that it hasn’t had difficulty finding workers. However, he’s already anticipated some “growing pains” finding roofers, plumbers. and other skilled trades once business picks up.

Some builders aren’t looking that far ahead. “We’re not there yet,” says Craig Perry, president of Centerline Homes in Coral Springs, Fla., which expects to build 315 homes this year. When labor is in short supply, he’s more concerned about subs raising their rates. But for the time being, it’s a buyers’ market for labor. “So many [construction] jobs have failed at this point that even if [subs] wanted competition [for labor], there’s not much out there,” says Perry. He also believes that companies like Centerline, which are still building at a fairly steady pace, might have more leverage with subs. “I think it’s harder to find workers if you’re doing onesies or twosies.”

David Murtagh can attest to that. He is vice president of construction for Michael Sivage Homes and Communities in San Antonio, which expects to build 285 homes this year, or 27% more than it did in 2008. Murtagh considers his company fortunate to be operating in a market with a strong subcontractor base. But when this builder's production activity was slower, it found itself with less leverage to compete for labor against firms offering more consistent work.

Gary Arnold, vice president of construction for The Corky McMillin Cos. in San Diego, has been in residential construction for 26 years, and his long relationship with contracting firms has served him well during the recession. “We remind them that we’ve been one of the builders that helped carry them during the downturn, and I want to be first on their list” for jobs, now and in the future.

Arnold has found that most of the contractors his company uses, especially the larger ones, have managed to stay in business. However, “a lot of the work is being done by superintendents and foremen. The quality of the work is excellent, but it’s taking a little longer to complete because some of these guys might be a bit rusty.” Arnold also notes that where a contractor might have sent a crew of 10 to a job site in the past, it’s now sending six to eight workers, “and all of them are foremen.”

This year, Corky McMillin expects to build fewer than 800 homes. When BUILDER interviewed him last week, Arnold said the construction that his company is working on includes eight homes in San Diego and 14 in the Imperial Valley. But this builder typically builds around 2,000 homes in a good year, and Arnold wonders where he’ll find more crews under more robust business conditions.

His and other builders' concerns about how quickly the labor pool could replenish itself are justified, based on a recent survey of 2,000 U.S. employers, conducted by the employment consultant Manpower, which found that “skilled/manual trades” ranked third (below engineers and nurses) as the hardest jobs to fill. The “skilled/manual trades” group didn’t even show up in the top 10 when this survey was taken in 2006 and 2007.

“I’ve always said that we struggle the most in an inclining or decreasing market,” says Arnold. “It’s the transitional period that’s the worst.”

John Caulfield is senior editor for BUILDER magazine.

Learn more about markets featured in this article: Tampa, FL, Dallas, TX, San Diego, CA.