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Construction Employment Outlook

By Anonymous

TIME asks: The Great Recession: Will Construction Workers Survive?

Nationally, unemployment fell to 9.7% in January, but in construction it jumped to 24.7% ... "In the previous 14 years, I had not been out of work for more than one week," says Pat O'Connor, 57, a Connecticut carpenter. With no work since July, O'Connor says, "It is a bad dream turning into a nightmare. Is construction dead? It's just horrible right now. No one expected this. It's a depression."

And it won't get better in 2010.

The following graph shows construction employment (total) and as a percent of non-farm payroll employment.

Click on graph for larger image in new window.

Although construction employment is off 2.1 million workers since the peak, there will be no increase any time soon.

Looking at the graph, it appears construction employment continues to decline for a time after a recession ends - or only picks up a little. However this masks the contributions from the two components of construction: residential and non-residential.

Residential investment (and residential construction) usually leads the economy out of recession, and non-residential construction lags the economy. Unfortunately the BLS didn't start breaking out residential construction employment until recently, but that is the pattern.

This time any improvement in residential construction employment will be small, in fact completions in 2010 will be at an all time record low (see: Housing Stock and Flow).

The TIME article notes:

In downtown Los Angeles, just east of Little Tokyo, one of the only active construction sites is a 53-unit apartment building at Alameda and 4th Street.

And when that is completed, the opportunities will be few. In 2010 the number of 5+ unit completions will collapse:

The blue line is for multifamily starts and the red line is for multifamily completions. For the most part, all the multifamily units that will be delivered in 2010 have already been started since, according to the Census Bureau, it takes on average over 1 year to complete these projects.

Since multifamily starts collapsed in 2009, completions will collapse in 2010 - and construction employment will suffer.

And non-residential investment (and employment) is still getting crushed (see: Q4: Office, Mall and Lodging Investment). As these projects are completed, more construction workers will be let go.

So the outlook for construction employment in 2010 is grim.

Full post as published by Calculated Risk on February 06, 2010 (boomark / email).