The State of Construction Unemployment: A Deep Dive into the Numbers for August 2023

August 16, 2023

The construction industry, a vital sector for the U.S. economy, has been experiencing fluctuations in employment rates across different states. According to a recent news release by the Associated Builders and Contractors (ABC), the not seasonally adjusted national construction unemployment rate has seen a slight decrease from 3.7% in the previous year to 3.6% in June 2023. This data, derived from a state-by-state analysis of the U.S. Bureau of Labor Statistics, reveals that 15 states have experienced a drop in unemployment rates over the same period, seven remained unchanged, and 28 states saw an increase. Impressively, all states reported an unemployment rate below 8%.

Factors Influencing Construction Employment

The construction sector has shown resilience, with national NSA payroll construction employment witnessing an increase of 199,000 compared to June 2022. By June 2023, seasonally adjusted construction employment surpassed its pre-pandemic peak of 7.6 million. While residential construction employment had already exceeded its pre-pandemic peak by October 2021, nonresidential construction employment only recently achieved this milestone in February 2023. Bernard Markstein, president and chief economist of Markstein Advisors, attributes the robustness in construction activity and employment to various factors. Residential construction has benefited from home builders catching up on their projects and the rising demand for new homes, given the limited inventory of existing homes for sale. On the other hand, nonresidential construction has been bolstered by federal programs such as the CHIPS Act and the Infrastructure Investment and Jobs Act, which provide funding and tax incentives.

However, the construction industry is not without its challenges. The Federal Reserve’s potential future hikes in the target federal funds rate and the tightening of lending standards for commercial construction projects could pose significant headwinds for upcoming construction ventures and employment.

A Closer Look at State-wise Unemployment Rates

In June 2023, 35 states reported lower construction unemployment rates compared to the pre-pandemic levels of June 2019, while 15 states experienced higher rates. The states boasting the lowest estimated NSA construction unemployment rates in June 2023 included Maryland at 0.4%, North Dakota at 0.6%, and a tie between Maine and Wyoming at 1%. On the flip side, states with the highest unemployment rates encompassed Hawaii at 5.7%, Nevada at 5.9%, and New Jersey at 6.4%.

The Broader Picture: Construction Labor Situation in August 2023

While the ABC report provides a snapshot of the construction unemployment scenario, it’s essential to understand the broader labor situation in the construction industry as of August 2023. According to various sources, the construction industry has been grappling with labor shortages for several years. The COVID-19 pandemic exacerbated these challenges, with many workers either retiring early or leaving the industry altogether. The demand for skilled labor in construction has outpaced the supply, leading to project delays and increased costs.

Training and apprenticeship programs have been initiated across various states to address the skill gap. These programs aim to equip workers with the necessary skills to thrive in the modern construction environment, which is becoming increasingly technologically advanced. Additionally, efforts are being made to attract younger generations to the industry by highlighting the potential for lucrative careers and the satisfaction of creating tangible, lasting structures.

While the construction industry faces challenges, the resilience it has shown, combined with proactive measures to address labor shortages, paints a hopeful picture for the future. As the U.S. continues to invest in infrastructure and development, the construction sector will undoubtedly play a pivotal role in shaping the nation’s economic landscape.

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