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AGC: Rising Costs Threaten Hiring in Construction

November 18, 2018

Labor costs and a shortage of skilled workers may result in fewer construction jobs next year, according to the Associated General Contractors of America.

Forty-four states and the District of Columbia added construction jobs between October 2017 and October 2018, while 36 states and D.C. added construction jobs between September and October, according to an analysis by the Associated General Contractors of America of Labor Department data. Association officials said that firms in most parts of the country are adding staff to keep pace with growing demand for construction, but cautioned that rising labor and materials costs could undermine future demand.

“Construction activity continues to expand at a steady clip, with employment growing by more than 10 percent during the past year in five states and by more than 5 percent in another 18 states,” said chief economist Ken Simonson. “As contractors pay more for labor and most of the materials they use to build, construction costs will climb, potentially dampening future demand for their services.”

Texas added the most construction jobs during the past year (49,900 jobs, 6.9 percent). Other states adding a large number of new construction jobs for the past 12 months include: Florida (43,400 jobs, 8.5 percent), California (30,000 jobs, 3.6 percent), Georgia (21,600 jobs, 11.6 percent), Arizona (18,000 jobs, 12.1 percent) and New York (15,600 jobs, 4.1 percent). Arizona added the highest percentage of new construction jobs during the past year, followed by Georgia, Nevada (11.4 percent, 9,500 jobs), Oregon (10.5 percent, 10,400 jobs), New Hampshire (10.3 percent, 2,800 jobs) and Florida. Construction employment reached a record high in five states: Massachusetts, New York, Oregon, Texas and Washington.

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Six states shed construction jobs between October 2017 and 2018. The largest declines and steepest percentage losses occurred in New Jersey (-3,800 jobs, -2.5 percent), followed by South Carolina (-1,700 jobs, -1.7 percent), Oklahoma (-500 jobs, -0.6 percent), Hawaii (-300 jobs, -0.8 percent) and Mississippi (-300 jobs, -0.7 percent).

Among the 36 states with one-month job gains between September and October, Florida (3,000 jobs, 0.5 percent) and California (3,000 jobs, 0.4 percent) had the largest gains, followed by Arizona (2,500 jobs, 1.5 percent), Georgia (2,500 jobs, 1.2 percent), Washington (2,500 jobs, 1.2 percent) and New York (2,500 jobs, 0.6 percent). Iowa added the highest percentage of construction jobs for the month (2.0 percent, 1,600 jobs), followed by Wyoming (1.9 percent, 400 jobs) and Rhode Island (1.6 percent, 300 jobs).

From September to October, construction employment declined in 12 states and was unchanged in Connecticut and Maine. Louisiana lost the most construction jobs (-1,900 jobs, -1.3 percent), followed by Oklahoma (-900 jobs, -1.2 percent) and Michigan (-900 jobs, -0.5 percent). Mississippi lost the highest percentage of construction jobs in October (-1.6 percent, -700 jobs), followed by Montana (-1.4 percent, -400 jobs), Louisiana and Oklahoma.

Association officials said widespread construction employment gains are a sign of strong demand for construction services in most parts of the country. But they cautioned that without new investments in career and technical education, immigration reform and swift resolution of trade disputes, labor and materials costs will continue to climb.

“Firms in many parts of the country are hiring as fast as they can find qualified workers to bring onboard just to keep pace with demand,” said Stephen E. Sandherr, the association’s chief executive officer. “But at some point, the increasing costs of labor and construction materials are going to drive construction prices to the point where many customers reschedule or rethink their projects.”