Construction wages rise 5.2% while the hiring pool keeps shrinking
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US construction employment fell by 3000 jobs in October to 8,367,000, the first monthly decline since February, according to Bureau of Labor Statistics data released Nov. 6 and analyzed by the Associated General Contractors of America (AGC) and Associated Builders and Contractors (ABC).
The headline loss is small, and the industry is still 124,000 jobs, or 1.5%, larger than a year ago. That annual gain compares with 0.6% growth in total nonfarm payrolls over the same period.
More telling are the numbers underneath. Nonresidential contractors added 13,300 workers in the month, while residential builders and subcontractors cut 16,400. Meanwhile, the number of unemployed people with recent construction experience fell to 363,000, the lowest October figure since 2018.
Put together, the data describes an industry where one side is shrinking, the other is still hiring, and fewer experienced workers are available to fill the gap.
Residential and nonresidential construction are moving in opposite directions
Every category of nonresidential construction grew in October. Specialty trade contractors added 7900 positions, nonresidential building firms added 2900, and heavy and civil engineering firms added 2500.
Over 12 months, nonresidential employment is up 164,600, or 3.3%. Residential employment is down 40,200, or 1.2%, over the same period.
ABC chief economist Anirban Basu said the job losses were again limited to the residential side of the industry. He linked nonresidential strength to the ongoing data center boom and noted that nonresidential employment has grown more than twice as fast as economywide employment over the past year.
The group expects that pattern to continue. Its Construction Confidence Index shows nearly 50% of contractors expect to increase staffing over the next 6 months, while fewer than 12% expect to cut workers.
For firms working across both markets, the split raises a practical question. Workers released by homebuilders may not have the skills, certifications, or experience needed on data centers, industrial plants, or infrastructure projects. Moving people from one market to the other is rarely a straight swap.
A shrinking labor pool is pushing construction wages higher
The labor market is tighter than the flat headline suggests.
Among jobseekers with construction experience, the unemployment rate fell to 3.6%, not seasonally adjusted, in October. AGC said that ties 2018 as the lowest October rate in the 27-year history of the series.
Pay is responding. AGC’s analysis shows average hourly earnings for production and nonsupervisory construction employees, a group that covers most onsite craft workers, rose to $39.70 in October. That is 5.2% higher than a year earlier, compared with 3.3% for production workers across the private sector. It is also 21.2% above the private-sector average of $32.75.
ABC, using a measure that covers all construction employees, put annual wage growth at 4.7%, against 3.1% across all industries. Basu said construction earnings grew at their fastest monthly pace in more than 3 years.
“The October jobs report provided yet more evidence of reemerging construction worker shortages,” Basu said.
That creates a tension for contractors. Higher wages usually draw more people into an industry, yet the number of experienced construction workers looking for jobs keeps falling. Labor costs feed directly into bids, and contractors that priced work months ago may see margins squeezed if they have to pay more to staff those projects.
Contractors want action on training, immigration, and highway funding
AGC used the data to press policymakers on 3 fronts. It called for more funding for career-building education and training programs, a way for contractors to sponsor qualified workers from outside the US, and a new highway and transit funding bill before federal money runs out in December.
“Contractors are eager to hire more workers,” said AGC chief executive Jeffrey D. Shoaf. “That requires policy makers to expand training opportunities, pursue sensible immigration reforms and keep funds flowing to support expansion and modernization of highways and transit systems around the country.”
Each of those asks runs on a different clock. Training programs take years to turn new entrants into experienced craft workers, and immigration reform remains politically contested. The highway deadline is the nearest test. If funding lapses or is delayed, heavy and civil engineering, one of the industry’s growth areas in October, could lose momentum.
The bigger question sits further out. If residential demand recovers while data center and infrastructure work keeps growing, it is not yet clear where the extra workers will come from.
Source:
Associated General Contractors of America
Associated Builders and Contractors
