Why is Construction Employment Still Lagging Pre-Covid Levels?

Construction employment in June remained below the pre-pandemic levels of February 2020 in 39 states, according to an analysis by the Associated General Contractors of America.

New York and Wyoming suffered the worst losses, while Utah and Idaho added the most construction jobs. New York, Vermont and Iowa had the biggest declines in June. Georgia and Kentucky were the top gainers.

AGC officials put the blame on supply chain shortages and rising material prices, which are undermining demand for new projects and impacting construction firms’ ability to hire workers.

“The construction industry is a long way from full recovery in most states, in spite of a hot homebuilding market in many areas,” said Ken Simonson, AGC chief economist. “Soaring materials costs, long production times for key items and delayed deliveries are causing owners to postpone projects.”

16 months into pandemic

From February 2020 to June 2021, New York shed the most construction jobs (54,300 jobs or 13.3%) followed by Texas (54,100 jobs, 6.9%) and California (36,500 jobs, 4%). Wyoming recorded the largest percentage loss (15.3%, 3,500 jobs), followed by Louisiana (15.1%, 20,700 jobs) and New York.

On the positive side, Utah added 7,000 jobs, (6.1%), followed by Idaho with 4,400 jobs (8%), South Dakota (1,400 jobs, 5.9%) and Rhode Island (1,200 jobs, 5.9%). Idaho claimed the largest percentage gain, followed by Utah, Rhode Island and South Dakota.

May to June 2021

From May to June of this year, construction employment decreased in 25 states, increased in 24 states and D.C., and held steady in Maine. The largest declines occurred in New York, which lost 6,900 construction jobs (1.9%), followed by Pennsylvania (4,100 jobs, 1.6%) and Texas (3,300 jobs, 1.3%). The steepest percentage declines since May occurred in Vermont (3.5%, 500 jobs), followed by New York, Alabama (1.9%, 1,700 jobs), and North Dakota (1.9%, 500 jobs).

Georgia added the most construction jobs between May and June (5,700 jobs, 2.9%), followed by Kentucky (2,700 jobs, 3.4%) and Florida (2,500 jobs, 0.4%). Kentucky had the largest percentage gain for the month, followed by Alaska (3.0%, 500 jobs) and Georgia.

Tariffs, logistics and unemployment

Association officials cautioned that construction employment is unlikely to grow in many parts of the country until supply chain challenges improve. They added that President Joe Biden could help by removing tariffs on key construction materials. The AGC also noted that ending the unemployment supplements would add to the pool of workers for manufacturers, shippers and construction firms to hire.

“Easing tariffs will help, but what the construction supply chain needs are workers to manufacture the products, ship them to contractors and build the projects the economy demands,” said Stephen E. Sandherr, the association’s chief executive officer. “Unemployment supplements helped families survive the pandemic-related lockdowns, but they are undermining the post-pandemic recovery.”