With a Labor Shortage, Why Is Construction Shedding Jobs?

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Robison Wells

The economy added 559,000 jobs in May, and the unemployment rate fell from 6.1% to 5.8%. However, despite the job gains and a massive labor shortage that has plagued construction, the industry lost a net 20,000 jobs; this comes after an April with no increase in construction jobs.

Data isolates the problem to a decline of laborers in specialty trades, particularly roofers, drywallers, and pipefitters—all in commercial construction. A dry-up in commercial projects leaves many laborers out of work.

"Projects are being postponed, then, of course, some construction workers are being released from employment," said Anirban Basu, chief economist for the Associated Builders and Contractors.

But none can exclusively blame commercial construction for the job shortage. Doug Duncan, chief economist at Fannie Mae, pointed out that residential construction—which is booming—only added a total of 1,900 jobs nationwide in May.

Much of this comes from a shortage of materials like lumber, iron, and steel, which spurs skyrocketing prices for these products.

Labor Secretary Marty Walsh said on CNBC. "A lot of [the job loss] could be getting construction materials on job sites."

Basu sees signs of life. Swells in commercial construction continue to rise, particularly in fulfillment and data centers. Basu expects jobs to pick up when distress in the materials market flags off (perhaps in late 2021 or early 2022).

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