July 2, 2021

Association Officials Note that Labor and Supply Chain Issues are Leading to Project Delays that May be Undermining Recovering Demand for Nonresidential Construction Projects, Call for Relief Measures

Construction employment declined by 7,000 between May and June as the industry still employs 238,000 fewer people than before the pandemic, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said that job losses in the nonresidential construction sector offset modest monthly gains in residential construction as many firms struggle with worker shortages, supply chain disruptions and rising materials prices.

“It is hard for the industry to expand when it can’t find qualified workers, key building materials are scarce, and the prices for them keep climbing,” said Stephen E. Sandherr, the association’s chief executive officer. “June’s job declines seem less about a lack of demand for projects and a lot more about a lack of supplies to use and workers to employ.”

Construction employment in June totaled 7,410,000, dropping 7,000 from the revised May total. The total in June remained 238,000 or 3.1 percent below February 2020, the high point before the pandemic drove construction employment down. The number of former construction workers who were unemployed in June, 730,000, dropped a quarter from a year ago and the sector’s unemployment rate fell from 10.1 percent in June 2020 to 7.5 percent this June.

Residential and nonresidential construction sectors have differed sharply in their recovery since the pre-pandemic peak in February 2020. Residential construction firms—contractors working on new housing, additions, and remodeling—gained 15,200 employees during the month and have added 51,000 workers or 1.7 percent over 16 months. The nonresidential sector—comprising nonresidential building, specialty trades, and heavy and civil engineering contractors—shed 22,600 jobs in June and employed 289,000 fewer workers or 6.2 percent less than in February 2020.

Sandherr noted that many firms report key materials are backlogged or rationed, while also reporting frequent increases in the amount they pay for those materials. In addition, many firms report they are having a hard time finding workers to hire despite the relatively high number of people currently out of work. He added these factors are contributing to rising costs for many contractors, which are detailed in the association’s updated Construction Inflation Alert.

Association officials said they were taking steps to recruit more people into the construction industry. They noted the association launched its “Construction is Essential” recruiting campaign earlier this year. They said Washington officials could help the industry by taking steps to ease supply chain backups. They also continued to call on the President to remove tariffs on key construction materials, including steel.

“It appears there are large numbers of qualified workers available to hire who are on the sidelines until schools reopen and the federal unemployment supplements expire,” said Stephen E. Sandherr, the association’s chief executive officer. “Our message to these workers is clear, there are high-paying construction careers available when they are ready.”