A Sustainable Workforce Starts With You

AGC Data DIGest: September 1-3, 2021

Construction firms are struggling to find enough qualified workers to hire even as they continue to be impacted by pandemic-induced project delays and supply chain disruptions, according to results from the 2021 Autodesk-AGC of America Workforce Survey, posted yesterday. Of the 2,136 responses received between July 7 and August 13, 40% of firms had added employees in the past 12 months, vs. 34% that had reduced headcount. Ninety percent of respondents have open hourly craft positions; of those, 89% report having a hard time filling some or all positions. For salaried positions, 62% of firms have openings and 86% of those report having difficulty filling them. The most common reason for difficulty, cited by 72%, was “available candidates are not qualified,” followed by “unemployment insurance supplements are keeping workers away,” cited by 58%. In the past 12 months, 73% of firms raised base pay rates, compared to 38% in the August 2020 survey and 66% in the August 2019 survey. Most firms reported delays in completing projects due to: longer lead times or shortages of materials—75% of respondents, shortages of workers (their own or subcontractors’)—61%, or delivery delays—57%. Rising materials costs have affected 93% of respondents, including 36% who reported absorbing all additional costs. Three out of five reported that upcoming or expected projects have been canceled, postponed, or scaled back due to: cost increases (51% of respondents), lengthening or uncertain completion times (26%), or changes in demand/need (22%). More positively, 28% reported there are more projects to bid on or projects have been expanded in scope. For 46% of firms, the volume of business already matches or exceeds the year-ago level, but 9% expect that will require 1-6 months more, and 26% expect a delay of more than six months. Only 6% expect to furlough or terminate employees in the next 12 months, vs. 74% who expect to add or recall employees. Results are broken out by region and 31 states, three revenue size ranges, four project types, and union vs. open-shop firms.

Construction employment, seasonally adjusted, totaled 7,416,000 in August, a decrease of 3,000 from July, according to AGC’s analysis of Bureau of Labor Statistics (BLS) data posted today. The August total was 232,000 (-3.0%) below the pre-pandemic peak in February 2020. The gap widened between residential and nonresidential employment. Residential construction employment, comprising residential building and specialty trade contractors, increased by 17,400 in August, putting the total 77,900 (2.6%) higher than in February 2020. Nonresidential construction employment—building, specialty trades, and heavy and civil engineering construction—declined for the fifth-straight month in August, by 20,300, putting the total 310,000 (-6.6%) below the February 2020 level. The heavy and civil engineering segment has regained only 29% of the jobs it lost between February and April 2020, compared to 56% for each of the other two nonresidential segments and 117% for residential construction. A total of 448,000 former construction workers were unemployed in August, a 41% drop year-over-year (y/y) from August 2020. The industry’s unemployment rate in August was 4.6%, not seasonally adjusted, compared to 7.6% in August 2020 and the third-lowest August rate in the 22-year history of the series. (The only lower August rates were in 2018, 3.4%, and 2019, 3.6%.) The figures are consistent with the AGC survey findings that there are relatively few unemployed construction workers available to hire despite the decline in nonresidential employment. Average hourly earnings in construction totaled $33.07 in August, seasonally adjusted, an increase of 3.9% y/y and a premium of 7.6% over the average for the nonfarm private sector ($30.76, up 4.4% y/y). In August 2018, the construction premium was 10.3%. The premium has declined as historically low-wage employers such as restaurants and warehouses raise starting pay.

Construction spending in July increased 0.3% from June 2021 and 9.0% y/y from July 2020 to a seasonally adjusted annual rate of $1.57 trillion, the Census Bureau reported on Wednesday. Nonresidential activity was mixed—an improvement from more widespread declines in recent months. Public construction spending rose 0.7% for the month but slumped 5.1% y/y. The largest public segment, public education construction, declined 0.5% and 6.4%, respectively. Highway and street construction increased 1.9% for the month but inched down 0.1% y/y. Public transportation construction rose 0.3% from June but decreased 4.2% y/y. Private nonresidential construction spending slipped 0.2% for the month and 3.6% y/y. The largest private nonresidential segment (ranked by year-to-date spending)—power—declined 0.7% and 0.9%, respectively (including electric power, -1.6% y/y, and oil and gas field structures and pipelines, 1.8% y/y), followed by commercial, unchanged for the month and up 4.6% y/y (including warehouse, 14% y/y, and retail, -7.6% y/y); manufacturing, flat for the month and up 1.8% y/y; and office, -0.1% and -6.1%, respectively. Lodging had the largest y/y decrease, -30%. (Census includes data centers in office construction and does not break them out. Nonresidential combines renovation and new construction.) Private residential construction spending climbed 0.5% for the month and 27% y/y (single-family, 47% y/y; multifamily, 15%; and owner-occupied improvements, 7.7%).

Some steel prices rose again this week without advance notice. Steel Dynamics Sales North America, Inc. announced on August 31 that effective with orders received after 8 p.m. Eastern time on August 30, it “will be increasing published prices [$50/ton] on most parallel flange, structural merchants and bar products.” Nucor announced a similar increase.

“Most actively traded copper futures on the New York Mercantile Exchange rose 0.6% to $4.30 a pound on Thursday and are still up more than 20% for the year,” the Wall Street Journal reported today. However, “copper prices are about 10% below a record [set in May] as supply constraints ease and traders worry that the delta variant of the coronavirus will soften demand.”