Job growth continues to increase strongly, with the economy generating 2.5 million jobs in March 2019 from one year ago. Payroll employment rose in March 2019 from one year ago in all industries except for information services, utilities, and retail trade. With the economic recovery now on its 10th year of expansion, payroll employment has increased by 2.3 million annually since September 2010. With the unemployment rate at a low level of 3.9 percent, wages[1] have also been rising faster than inflation in all major industry groups except transportation and warehousing and manufacturing.

Construction jobs[2] rose by 239,000 in March 2019 from one year ago, the fourth largest source of job growth, next to health care & social assistance, accommodation & food services, professional & technical services, and manufacturing.

In terms of level change, the largest increases in construction jobs occurred in California, Washington, Nevada, Arizona, Texas, New York, Georgia, Florida, and West Virginia. As of March 2019, construction jobs made up a larger fraction of total nonfarm payroll employment—at six to eight percent—in Washington, Nevada, Utah, Idaho, Wyoming, Colorado, Florida, as well as Louisiana and West Virginia.

Notwithstanding the sustained and solid growth in construction jobs, residential construction employment is still below the peak pre-recession level. As of March 2019, there were 550,000 fewer people employed in residential building construction and specialty trades (2.9 million) compared to the peak levels during the housing market boom (3.45 million). Lack of construction labor has constrained the building of new homes, leading to a tight housing market.

In contrast, non-residential (‘commercial’) construction is now slightly above the peak pre-recession level. As of March 2019, there were 26,000 more people employed in the non-residential building construction and specialty trades (3.47 million) compared to the peak level during the housing market boom (3.44 million). The industrial and office commercial sectors have been growing strongly amid sustained economic growth, the penetration of data and technology in every industry requiring data storage facilities, and the expansion of e-commerce which has increased the demand for warehouses and distribution centers.

Housing starts projections for 2019-2028

During 2016 through 2018, jobs in building construction and specialty trade rose five percent on average and there was one housing start per five jobs created. Based on these recent trends, one can project that housing starts will increase from 1.362 million in 2018 to 2.0 million by 2028. In 2019, this means an increase of only 56,000 housing starts, and in 2020, an increase of 57,000 housing starts. This is still below the shortage of about 600,000 units[3] based on household formation and for replacement for obsolete/demolished housing.

Housing supply will continue to remain tight unless constructions job growth accelerates to more than the current annual pace of four percent. Addressing the current housing supply constraints will require collaboration between industries and trade-schools in attracting workers, including women, in construction. The relatively higher wage of construction workers compared to workers in manufacturing, transportation, and warehousing, education and health, retail trade, hospitality, and private industries in general, should attract workers in construction compared to these other industries, if workers are trained in these specialty skilled jobs.

With demand likely to outpace supply, there will also be increasing demand for housing that requires less construction labor, such as panelized and modular construction and manufactured housing.

View the State Employment Monitor report here.


[1] Average weekly wages, Bureau of Labor Statistics

[2] The construction industry (NAICS Code 23) is composed of the construction of buildings (residential and non-residential), heavy and civil engineering construction, and specialty trade contractors (residential and non-residential).

[3] Currently, there are 1.1 million housing starts, while household formation is running at about 1.3 million, a deficit of 200,000 units related to household formation alone. In addition, about 450,000 housing units are needed to replace units lost to obsolescence or that are demolished (0.36% of housing stock of 1.127 million units.

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