Industry Employment Reaches 10-Year High and Unemployment Rate Falls to 5.0 Percent; Association Officials Say Tax Rate Cuts Will Enable Firms to Increase Pay and Attract More Workers to Construction 

Construction employment increased by 24,000 jobs in November to the highest level since November 2008, according to an analysis of new government data by the Associated General Contractors of America. Association officials said that tight margins are keeping firms from paying even more to attract hard-to-find workers, noting that efforts to cut tax rates should help lead to higher average hourly earnings for the sector.

“Employment and pay in construction have risen more rapidly over the past year than in the economy overall, as the supply of unemployed, experienced workers continues to shrink,” said Ken Simonson, the association’s chief economist. “With unemployment so low overall and in construction, contractors are likely to have increasing trouble filling many types of hourly craft and salaried openings.”

Construction employment totaled 6,955,000 in November, a gain of 24,000 for the month and 184,000, or 2.7 percent, over 12 months. The economist pointed out that the year-over-year growth rate in industry jobs was nearly twice the 1.4 percent rise in total nonfarm payroll employment.

Residential construction—comprising residential building and specialty trade contractors—added 14,800 jobs in November and 85,900 jobs, or 3.2 percent, over the past 12 months. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment increased by 8,600 jobs in November and 97,700 positions, or 2.4 percent, over 12 months.

The number of unemployed job-seekers with recent construction experience fell to 467,000 in November, down from 517,000 in November 2016, while the unemployment rate in construction dropped to 5.0 percent last month from 5.7 percent a year earlier. These declines show how difficult it has become for the industry to find experienced workers, Simonson said.

Average hourly earnings in the industry climbed to $29.17, a rise of 2.9 percent from a year earlier.  That was a steeper increase than for the total private sector, which rose 2.5 percent to an average of $26.55 per hour. The economist noted that construction pays nearly 10 percent more per hour than the average nonfarm private-sector job in the United States.

Construction officials said that one reason construction wages have not grown more rapidly is historically low profit margins for most construction projects as firms cope with increased regulatory compliance costs, higher health care costs and robust competition for work. They said that if proposed tax reforms are enacted in a way that lowers tax burdens for all employers, construction firms will have more room to increase wages as they work to recruit workers amid tight labor market conditions.

“Given current labor market conditions, it is reasonable to assume that many construction firms will take advantage of tax cuts to boost pay and benefits,” said Stephen E. Sandherr, the association’s chief executive officer. “Increasing wages should attract more young people into the industry, while boosting overall economic activity.”