Realty Check

Are Construction Job Losses All About Pay?


Despite rising demand for newly built homes, construction employment in August remained flat, stuck at the same paltry pace for the past four months.

The numbers don’t make a lot of sense at face value, given that housing starts are up in both single and multi-family, and builders are reporting big jumps in new orders for homes.

“Since the ‘official’ end of the recession in June 2009, construction employment has fallen 8.2 percent, even though overall employment is up 2.1 percent,” notes’s Jed Kolko. “The share of national jobs in construction (4.14 percent) is at the lowest level since 1946.”

Yesterday we reported on how certain builders in Dallas, TX claimed there were not enough skilled workers to fill the construction jobs they have open. The story garnered a huge response, with most claiming that was impossible, but others noting that it is all about the pay scale. (Read the story:Home Builders Don't Have Enough Workers to Meet New Demand)

“Only about 20 million out of work construction workers in the country. I think what they really mean is they can’t find enough workers who will do hard construction work for 8 dollars an hour,” wrote one respondent on the blog.

I'm a sub-contractor in South Florida,” wrote another. “The problem here is, the big builders are paying sub-contractors less than what they paid in 1998. On top of that there are more city and OSHA rules to abide by. There is no way for me to employ a crew and pay them what they need to support their families. The only crews that are working are illegals, and the only reason they can survive on these wages is because there living with 2 families in 1 bedroom apartments. That's not my idea of job creation.”

Builders will argue that the rising cost of construction materials is making it harder for them to raise wages, not to mention that they are still competing with large supplies of cheaper, distressed properties, many of which are relatively new construction.

“Here locally, we’ve measured that the average price of a house has gone up 1.7 percent from last year, which is not nearly enough to cover the 9 percent increase in costs that has occurred since 1st of the year, so it’s coming right out of the margin,” says Stephen Brooks, CEO of Dallas-based Grand Homes.

The argument quickly turns to immigration policies, given that so many construction workers are not U.S. citizens, but it is also a matter of investment in the work force, which we see in so many sectors, like the auto industry, as reported by CNBC’s Phil LeBeautoday. Apparently their aren’t enough skilled engineers to do the necessary work on cars. (Help Wanted: Engineers)

Says another blogger: “I’m thinking these folks need to rescrew on their heads on what it will take to grow their businesses, like maybe invest some resources to bring new folks on board and work with them to make sure they have those skills they want long term.”

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