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Jobless Rate Drops as Firms Report Hiring Difficulties

CONSTRUCTION EMPLOYMENT STALLS IN AUGUST BUT JOBLESS RATE DROPS AS FIRMS REPORT HIRING DIFFICULTIES; ASSOCIATION CALLS FOR STEPS TO AVERT SHORTAGES
Drop in Unemployment Despite Lack of Hiring Shows Workers Leaving Industry; Association Survey Finds Difficulties Hiring Both Craft Workers and Professionals, Points to Need for Education & Immigration Reform

Construction employment stagnated in August, while the industry unemployment rate fell and a majority of companies reported difficulty finding workers, according to an analysis of new government data and an industry survey by the Associated General Contractors of America. Association officials called for education and immigration reform measures needed to ensure an adequate supply of skilled workers.

“After a strong rebound in 2012, construction hiring and spending have been stuck in neutral through most of 2013,” said Ken Simonson, the association's chief economist. “Yet the unemployment rate for former construction workers hit the lowest August level in five years, suggesting that experienced workers are leaving the industry rather than returning to it. As a result, firms are already having trouble finding workers.”

Construction employment totaled 5,798,000 in August, matching the July total, which was revised up by 5,000 from the initial estimate released four weeks ago. The August total is 3.0 percent higher than in August 2012 but has been nearly flat since March 2013. Similarly, a Census Bureau report on construction spending released on September 3 showed spending had changed little between May and July, the latest month available. Meanwhile, the unemployment rate for workers actively looking for jobs and last employed in construction declined from 11.3 percent in August 2012 to 9.1 percent last month—the lowest August rate since 2008.

“Over the past three years, the number of unemployed, experienced construction workers has dropped by half,” Simonson noted. “Unfortunately, the construction industry has been able to hire only about a third of those workers, while the rest have left construction for other industries, schooling, retirement or have dropped out of the labor force. The recent leveling-off of construction hiring means the industry risks losing more of its experienced workers, setting up a potentially grave shortfall when demand for construction resumes.”

Nearly three-fourths (74 percent) of the construction firms that responded to a survey that the association released on September 4 reported they are having difficulty filling some craft-worker positions. More than half (53 percent) of the respondents also said they are having difficulty filling professional positions.

Association officials said that the fact that hiring problems appear so widespread when overall construction employment is flat was particularly worrisome in light of the high demand for workers expected in the near future. They urged elected officials in Washington to support construction education and training programs and to treat construction equitably in guest worker provisions of immigration reform legislation.

“Construction employment has leveled off for now, but retirements and selected areas of demand mean there is still a need to address worker shortages before they become acute,” said Stephen E. Sandherr, the association’s chief executive officer. “We need to make sure there is an adequate supply of skilled construction labor to meet future demand."

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