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Wages for U.S. construction workers now outpace the private sector average
Construction workers are seeing larger paychecks these days. According to an analysis from the Associated General Contractors of America, average hourly earnings in construction—a measure of all wages and salaries—increased 3.2 percent over the year to $30.73. That figure was 10.1 percent higher than the private-sector average of $27.90. ManpowerGroup North America also reported a marked increase in the number of companies transferring workers to permanent contracts, especially in food service, construction and financial services.
Why the sudden pay bump?
Mostly it is due to supply and demand- there simply aren’t enough workers. Earlier this year, the Department of Labor reported that the number of job openings in construction, last reported for May, totaled 360,000. It was the highest May total in the 19 years the DoL has tracked the metric. The industry is expected to need an additional 747,000 workers by 2026, according to the U.S. Bureau of Labor Statistics. And according to another study from the Associated General Contractors of America and Autodesk, 80 percent of those surveyed said they were have a hard time finding workers. Builder confidence, as measured monthly by the National Association of Home Builders, declined from May to June.
How did supply get so off-kilter?
Turns out there are a variety of reasons.
1. After a recessionary slumber, demand is finally waking up.
In the decade following the housing crash, first-time homebuyers slowed due to a combination of increased starter housing cost, higher student loan liability and lower wage growth. But a report from Harvard’s Joint Center for Housing Studies shows this trend reversing, with the number of homebuyers under 35 increasing 6% from 2015 to 2017. In addition to that, remodeling dollars spent by younger homeowners spiked 38% since the 2013 post-recession low. Natural disaster events are also piling on extra demand for home building and repair. According to the Improving America’s Housing report from Harvard University’s Joint Housing Center, over the last decade, disaster repairs have increased in volume and as a percentage of overall home improvement.
2. Career & Technical Education (CTE) is underfunded and undervalued.
“The nation’s education system continues to produce too many over-qualified baristas and not enough qualified bricklayers and other craft construction professionals,” said AGC America CEO Stephen E. Sandherr in a July release. Younger people are taking a pass because they think the jobs don’t pay well, are too dirty or physically demanding, or mistakenly think construction doesn’t use much technology, said Silvia Lattoz, Governance and Global Relations Senior Manager at NKBA in an interview with the Associated Press in June.
3. The Great Recession sent many workers running.
Sheri Blattel, who heads the Austin office of CTA Architects Engineers, told the Austin American Statesman in June that many people left her profession during a downturn a decade ago and haven’t returned. “The midlevel talent is missing,” Blattel said. “We are really struggling (to find) that group that can mentor” students interested in the field.
4. Workers carrying the weight are graying fast.
The median age for a construction worker is 42.5 years, according to January figures from the Labor Bureau. In an interview with the Associated Press, Lattoz estimated that for every five workers retiring from the industry, only one is entering it.
5. Trump’s “Buy American and Hire American” memo.
In years past, many workers who previously had been admitted to the U.S. under the H-2B program were excluded from the annual quota of 66,000 visas. But a directive from President Trump changed that policy. Consequently, there was a massive scramble for those 66,000 visas (33,000 each for winter and summer). With unemployment rates at historical lows, approval rates for employment-based requests for foreign workers submitted to the Department of Homeland Security have declined from 22.6% in fiscal year 2016 to 16.8% in fiscal year 2018. Faced with rising demand for the temporary visas, the Department of Labor set up a lottery system, but it was a make-it-or-break-it situation for many construction companies. After all, foreign-born workers were twice as likely to be employed in construction in 2018 as workers born in the United States, according to the Department of Labor.
What are people trying to do to fix these problems?
More money for training.
The Home Depot Foundation announced last year it was committing $50 million to skilled trades training, with plans to attract 20,000 people by 2028. “We want to bring shop class back, from coast to coast,” Shannon Gerber, executive director of the foundation, said in a press release. The program focuses on supporting veterans, as well as underserved high schools. Lowe’s last year started offering employees tuition and other incentives to train for jobs such as carpentry, plumbing, and appliance repair. More than 1,350 associates were enrolled in the Track to the Trades program this spring according to a release.
Promoting construction with younger people.
In April, Lowe’s and 60 of its suppliers and partners debuted a new program called Generation T, an online marketplace for jobs, apprenticeships and education programs in construction. It’s also on Twitter and Facebook. The National Association of Home Builders, meanwhile, sponsors student chapters in high schools and colleges. The clubs currently have more than 4,500 members.
Lobbying for Immigration Reform.
The NAHB and other trade groups continue to put pressure on Congress. Comprehensive reform attempts such as the Gang of Eight immigration bill backed by U.S. Sen. Michael Bennet, D-Colo., passed the Senate in 2013 but likely won’t go further in the current political climate. The last meaningful stab at immigration reform was in 1986, during the Reagan administration, when there was an attempt to create a year-round, low-skilled, non-immigrant work visa. The effort failed.
Sad to say, but the pay bump in construction is less a reward for a job well done, and more a symptom of an ailing industry. And consumers are feeling it: Single-family home construction dropped 6.4 percent in May 2019.
About the author:
Alyssa Ford is a Minneapolis-based freelance writer. Her work has been published by the Star Tribune, Crain’s, Minnesota Monthly, msn.com and many other outlets.