Construction employment dipped for the second consecutive month in May, but rising industry pay and plunging unemployment suggest contractors would be hiring more workers if they were available, according to an analysis by the Associated General Contractors of America. Association officials cautioned that worker shortages may be reaching the point where they undermine the sector's growth.
"Although construction employment slipped in April and May, the industry has added workers in the past year at double the rate of the overall economy," said Ken Simonson, the association's chief economist. "Average pay in construction is rising faster than in the rest of the private sector, and the number of unemployed construction workers was at the lowest May level in 16 years. These facts support what contractors tell us: they have plenty of work but are struggling to find qualified workers to hire."
Construction employment totaled 6,645,000 in May, a drop of 15,000 from April. The change from March to April was revised to a 5,000-employee decline from an initial estimate of a 1,000-job gain. Even with the back-to-back decreases, industry employment increased by 219,000, or 3.4 percent, compared to a year ago. Total nonfarm payroll employment increased 1.7 percent over the year.
Average hourly earnings, a measure of wages and salaries for all workers, increased 2.6 percent in construction to $28.04 in May. That was nearly 10 percent higher than the private-sector average, which rose 2.5 percent over the past 12 months, Simonson said. He added that the number of unemployed jobseekers who last worked in the construction industry decreased for the seventh year in a row, to 461,000, the lowest total for May since 2000.
Residential construction—comprising residential building and specialty trade contractors—declined by 4,400 jobs in May but is up by 127,700, or 5.2 percent, compared to a year ago. Nonresidential construction—building, specialty trades, and heavy and civil engineering construction firms—shed 10,300 jobs for the month but added 91,400 employees compared to May 2015, a 2.3 percent increase.
Association officials said the new AGC Career Center and the measures outlined in the association's Workforce Development Plan could help address worker shortages in the short and long term. The new Career Center can help firms in the short term who are looking to find qualified workers. And the Workforce Development Plan measures, which include increasing funding for the Perkins Act, can help rebuild the pipeline for recruiting and preparing future workers over the longer term.
"Tight labor markets are beginning to undermine the construction industry's ability to expand," said Stephen E. Sandherr, the association's chief executive officer. "And while we are taking steps to provide short-term relief, we need public officials to provide the funding and flexibility needed to allow for more career and technical education in this country."