Home building surges, not job growth
The resurgent U.S. housing market has sent builders calling again for Richard Vap, who owns a drywall installation company. Vap would love to help — if he could hire enough qualified people.
“There is a shortage of manpower,” says Vap, owner of South Valley Drywall in Littleton, Colo. “We’re probably only hiring about 75 [percent] or 80 percent of what we actually need.”
U.S. builders and the subcontractors they depend on are struggling to hire fast enough to meet rising demand for new homes. Builders would be starting work on more homes — and contributing more to the economy — if they could fill more job openings.
In the meantime, workers in the right locations with the right skills are commanding higher pay.
The shortage of labor ranges across occupations — from construction superintendents and purchasing agents to painters, cabinet makers and drywall installers.
The National Association of Home Builders says its members have complained of too few framers, roofers, plumbers and carpenters. The shortage is most acute in areas where demand for new homes has recovered fastest, notably in Arizona, California, Texas, Colorado and Florida.
The problem results largely from an exodus of workers from the industry after the housing bubble burst. Experienced construction workers lost jobs. And many found new work — in commercial building or in booming and sometimes higher-paying industries such as mining and natural-gas drilling — and aren’t eager to come back.
Hispanic immigrants, largely from Mexico, who had filled jobs during the boom were among those who left the industry and, in some cases, the U.S.
A shortage of labor in a well-paying industry might seem incongruous in an economy stuck with a still-high 7.5 percent unemployment rate. But it reflects just how many former skilled construction workers have moved on to other fields.
In 2006, when the boom peaked, 3.4 million people worked in homebuilding. By 2011, the figure had bottomed at about 2 million. As of last month, about 2.1 million people were employed in residential construction.
Jobs in the industry did rise 4.1 percent in April from a year earlier, faster than overall U.S. job growth. But they’d have to surge 24 percent more to reach 2.6 million, their 2002 level — “the last time the market was normal,” says David Crowe, chief economist for the National Association of Home Builders.
For now, the industry is building faster than it’s hiring. In February, builders began work on single-family homes at the fastest pace in five years. And in March, new home construction broke the 1 million mark for the first time since June 2008. Permits for future construction are also near a five-year high.
In the 12 months that ended in March, housing starts surged 47 percent. Yet over the same period, the industry’s employment grew just 3.7 percent.
Normally, a rebound in home construction helps propel an economy after a recession. But even with the steady gains in housing starts, sales and prices since last year, the industry remains below levels considered healthy.
The National Association of Home Builders says nearly half its members who responded to a survey in March said a scarcity of labor has led to delays in completing work. Fifteen percent have had to turn down projects.
Vap, owner of South Valley Drywall, rode out the downturn after the housing crash in part by relying on commercial construction projects. He cut his residential construction staff from 244 in 2006 to 80 in 2009.
This year, Vap has hired 15 field employees for residential construction and says he needs to hire 35 more to do the work he foresees in 2013.