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Hurricane Recovery Work May Have Boosted Employment Levels Slightly, But Overall Conditions Remain Strong for Construction Sector Even As Employers Work to Address Growing Labor Shortages

Construction employment increased by 11,000 jobs in October to the highest level in nine years, while the industry’s unemployment rate fell to 4.5 percent, the lowest October rate since 2006, according to an analysis of new government data by the Associated General Contractors of America. Association officials said that while hurricane recovery work may have helped boost employment in the sector, most of the gains are occurring because of strong demand for many types of private-sector projects across much of the country.

“The construction industry continues to contribute to the nation’s economic expansion, adding jobs at double the rate of the overall economy,” said Ken Simonson, the association's chief economist. “While some of the job gain may reflect hurricane recovery work in Texas and Florida, recent spending and regional employment data show the job growth spans both residential and nonresidential projects, and is occurring in most states.”

Construction employment totaled 6,930,000 in October, a gain of 11,000 for the month and 187,000, or 2.8 percent, over 12 months—twice as great as the 1.4 percent rise in total nonfarm payroll employment. Residential construction—comprising residential building and specialty trade contractors—added 13,300 jobs in October and 98,500 jobs, or 3.8 percent, over the past 12 months. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment dipped by 2,000 jobs in October but increased by 89,100 positions, or 2.2 percent, over 12 months.

The construction sector’s 4.5 percent unemployment rate and the number of unemployed former construction workers in October, 418,000, were the lowest October figures since 2000, the economist noted. He added that his association had recently released an analysis of September jobs data that showed construction employment increases had occurred over the past 12 months in 250 (70 percent) of the nation’s metro areas.

Average hourly earnings in the industry climbed to $29.06, an increase of 2.3 percent from a year earlier.  The economist noted that construction pays nearly 10 percent more per hour than the average nonfarm private-sector job in the United States, which pays an average of $26.53 per hour.

Construction officials noted that construction firms continue to expand to keep pace with growing private-sector demand for construction. But they cautioned that public-sector investments in infrastructure and other construction projects are down for the year. They urged Congress to include new infrastructure funding as part of any final tax reform measure. And they added that Congress also needs to ensure that pass-through businesses, including the majority of construction firms, benefit from tax reform.

“Private-sector demand for construction will not keep growing if our infrastructure continues to deteriorate,” said Stephen E. Sandherr, the association’s chief executive officer. “If members of Congress are serious about passing tax reform that boosts our economy, they need to include new infrastructure funding and lower rates for the many pass-through construction firms that are doing much of the new hiring.”