There was a lot of news on the employment front. On Thursday March 9, the Associated Builders and Contractors (ABC) reported that the number of construction job openings was almost halved from December 2022 to January 2023 (a decrease from 488,000 to 248,000). This was a shocking development until a few days later when construction employment was reports by the Bureau of Labor Statistics as reaching 7,918,000, the highest level ever. The construction industry has been steadily increasing in employment since May 2021.
Current employment levels are well above the previous peak of 7.7 million in May 2007. This is amazing given the Fortune article published on March 10 (sorry, paywall protected) recounting an anecdote in the latest version of the Fed's Beige Book about a Montana-based contractor that flies its employees around in a private jet to fill operational need. As wild as that sounds, the article cited ABC data that shows we need to hire a lot more people even if the need for construction slows.
According to ABC, if the economy slows, an additional 342,000 construction workers will be needed, or 4.3% more than current levels. Should the need for construction stay at its current rate, an additional 546,000 workers will be needed, or 6.9% more than current levels. Given almost two years of employment gains, including adding 24,000 from the previous month, one might think that we will eventually add enough jobs, even it it takes a long time. But the Fortune article drops another statistical nugget that is terrifying for those trying to hire construction workers: a quarter of all construction workers are over the age of 55, revealing a demographic headwind that will make it incredibly difficult to to ever hire enough workers to meet foreseeable demand.
Increasing wages and a concerted effort to invest in infrastructure by local, state and the federal government, making construction jobs viable for the long term, might help attract people to the industry, but we will need more than that. Immigration reform and automation can also help, but both of those have policy implications. The future is bright for those in the industry, yet we have a lot to do to make the construction industry more appealing to a new generation of employees.