There was already a shortage of construction workers, especially in the South, before the hurricanes slammed Texas, Louisiana and Florida. No doubt demand for construction workers in these areas will skyrocket in the weeks and months just ahead. More on this below.
Across all industries, unfilled job openings hit another new record high in July, even though we have the lowest unemployment rate in years. The Labor Department’s Bureau of Labor Statistics reported on Tuesday that job openings edged up to 6.17 million in July from 6.12 million in June. It’s the first time job openings topped six million for two straight months since the government began keeping records in 2000.
Employment has rebounded dramatically since the bottom of the 2007-2009 recession when unfilled job openings plunged to 2.2 million. Almost 17 million new jobs have been created since 2010. So why is the number of job openings at a record high and climbing?
The main reason many companies aren’t hiring more rapidly is a growing shortage of workers with the skills they need. Those who are still unemployed after eight years of economic recovery tend to have less education, and/or they’ve been out of the workforce so long their skills have eroded.
This explains in part why the US has apprx. 24 million able-bodied men and women of prime working age who are not part of the labor force. They simply lack the skills required by today’s open jobs. Now let’s return to the shortage of construction workers.
Even before the hurricanes, construction firms around the US reported trouble finding enough workers. The Bureau of Labor Statistics reported 238,000 construction job openings in July, up over 30% in the last year and 125% since 2012. According to a survey this month by the Associated General Contractors of America, 86% of construction firms nationwide said they need to hire more workers in the next year.
The worker shortage was especially acute in fast-growing metro areas in the South such as Atlanta, Houston and Miami – before the hurricanes. In Texas, 69% of contractors said they struggled to fill positions. About 60% of contractors in the South are having trouble finding carpenters and concrete workers while over half need more day laborers.
Older construction workers have left the workforce since the last housing boom. About a third moved to higher-paying industries such as energy and manufacturing. Meanwhile, fewer young people are pursuing the construction trades or a vocational education, and some can’t pass a drug test.
The Big Labor lobby says employers simply need to increase wages. But in Texas 57% of contractors reported increasing base pay while a quarter offered bonuses – and they’re still struggling to recruit workers. Between 2013 and 2016, the base pay for a day laborer increased 30% in Houston.
Carpenters there earn about $25 an hour, 55% more than three years ago. Large contractors with government contracts can perhaps pay more, because they can often pass that cost along. Yet this means that smaller firms then find an even greater shortage of skilled workers.
The hurricanes have exacerbated the shortage. Harvey destroyed about 30,000 homes in the Houston area. The National Association of Home Builders estimates that some 20,000 additional workers will be needed just to rebuild homes after Harvey – and many more to repair businesses, schools and infrastructure.
After Hurricane Katrina in 2005, much of the clean-up and rebuilding was done by immigrants, many of whom were illegal. The Bush Administration temporarily waived worker-ID requirements after Katrina. That saved money and sped up the recovery.
Undocumented workers currently make up 29% of construction workers in Louisiana, 23% in Texas and 15% in Florida, according to the Pew Research Center. Yet today all employers must complete an employment eligibility verification form, and those who hire undocumented workers risk losing them in immigration raids.
Congress should authorize more guest-worker visas for construction as part of the Harvey and Irma relief bill, and undocumented workers already here who assist with rebuilding should receive one.
As a conservative, I hate to say this. Yet the country faces a massive labor shortage crisis in the wake of the hurricanes. Consider this a first step toward solving the economy’s larger labor shortage.
Let’s hope Congress can come together, for the sake of the country, and craft a new comprehensive immigration bill, which will address the labor shortage, in the six months President Trump has given them. Of course, that remains to be seen.