Construction employment dipped in October

January 01, 2004 |

Contractors employed 6,856,000 workers throughout the construction industry in November, adding 10,000 people; the ninth consecutive monthly gain and a record high for employment. Nonresidential construction employment has lagged, however, with 10,000 fewer workers employed in October (779,000) than the previous year. Peak nonresidential construction employment occurred in October 2000, when 834,000 workers were employed.

The average hourly wage for nonresidential construction workers in October was $20.05, up from $19.51 the previous year. This is about 2/3's of the percentage wage gain seen in the entire economy, which means it is still a slack nonresidential labor market.

Ahead, construction employment for all sectors should be steady through the winter and then expand by almost 100,000 jobs by the end of 2004. Nonresidential builders are expected to account for 15,000-20,000 of these new jobs.

This leveling off will reflect some layoffs by homebuilders as housing starts fall from their peak level and 2,000-3,000 layoffs a month by heavy contractors as they wait for congressional action on transportation project funding. Specialty contractors will continue to add about 8,000 jobs a month for the still expanding remodeling and maintenance markets, but these will be largely in the residential market.

A modest tightening of the construction labor market will arrive late this year, but labor supply and cost will not be a general concern until well into 2005. By then contractors will be competing with rapidly expanding manufacturing and truck-freight employers. Remaining to be seen is the affect on the supply of immigrant workers caused by the economic recovery in Mexico, which is just beginning, and greater attention being given to border security.

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