As Housing Props Up GDP, Builders Lose More WorkersDecember 2nd, 2020 by Drew Vass
New residential construction continued its climb in October, according to the latest statistics available from the U.S. Census Bureau. In recent weeks, the Bureau reported that privately-owned housing starts were nearly 5% higher than the revised September estimate and 14.2% higher than 12 months prior. Permits were also up year over year, by 2.8%, but according to recent data released by the Associated General Contractors of America (AGC), more builders and contractors could find it difficult to deliver on those projects in the months ahead. Seasonally adjusted, construction employment was lower in October 2020 than it was when the COVID-19 pandemic began—to the degree that a Florida-based builder has taken to billboards in order to find workers. “Talent is hard to find,” Neal Communities vice president of operations Chris Clark told Business Observer.
According to AGC, even as demands for housing accelerated over the past six months following a steep drop off in the early days of the pandemic, construction employment decreased across 75% of states in October. Those figures include the addition of construction-related jobs in 36 states and D.C., officials for AGC reported. New York and Vermont posted their worst losses since February 2020, as Maryland also recorded its worst month on record. New York witnessed a roughly 10% drop, closely followed by Texas, where 41,500 construction-related jobs were lost. Vermont had the largest percentage loss, at -21.8%, followed by North Dakota, at -13.2%.
Virginia and South Dakota managed to add positions, while California and Alaska posted the largest gains—together tacking on nearly 30,000 jobs from September to October.
If there are any silver linings for the residential market, it might be the industry’s ability to pick up workers shed from other segments, as, “An increasing number of nonresidential contractors are experiencing cancellations that are forcing them to lay off workers,” said Ken Simonson, AGC’s chief economist. At the same time, they’re forced to compete with other, non-construction-related industries, he warned, adding, “Although single-family homebuilding and remodeling contractors are adding workers, most states are likely to have a net loss of construction workers soon, especially from high-paying, nonresidential jobs.”
As a result, AGC recently urged federal officials to enact a new round of economic stimulus, warning that demand for most types of nonresidential projects remains weak amid pandemic-related uncertainty. Even so, the housing market represents a bright spot in the economy, suggested Robert Dietz, chief economist and senior vice president for Economics and Housing Policy at the National Association of Home Builders. For the third quarter, overall growth for U.S. gross domestic product (GDP) rebounded at a 33.1% seasonally adjusted annual rate, Dietz said. Meanwhile, housing’s share of GDP remains elevated, he added, as home building and remodeling expanded at a 59.3% annual rate.
With or without job losses, housing gains are expected to continue, Dietz said, as the COVID-19 crisis reverses the trend for declining home sizes, following the need for additional home office space.