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Construction industry job openings reach post-recession high

by Roz Zweig and Geraldine Markel

construction-worker-high-rise-building-builders

For those under the age of 24, a career in construction is a rare goal. According The Wall Street Journal, many parents these days may feel they have failed their child if they do not receive a college education.

However, the reality is that the construction industry is suffering from a lack of labor, particularly young labor. Recent data from the National Association of Home Builders showed yet another increase in construction job openings in June to 263,000 unfilled positions, a post-Great Recession high. Although layoffs have seen a decrease, hiring rates remains the same despite a growing demand for construction.

In June, the construction industry saw a 3.5 percent increase in its open position rate (new job openings as a percentage of total employment plus current job openings). During the post-recession building boom, the open position rate peaked at just below 2.7 percent.

The real estate industry has undergone a significant demand for supply in the previous months, and construction companies are struggling to keep up. Single-family home starts in 2017 were under pre-recession levels, only reaching 63 percent of the average number of starts prior to the recession. When construction companies are unable to produce at the rate of market demand, buyers are stuck with growing median home prices.

“Homebuilders, facing higher costs and labor shortages, are simply not producing enough affordable homes to satisfy demand,” said Lawrence Yun, NAR chief economist.

The housing shortage is reaching significant levels in metro areas. NAR uses a monthly housing tracker index that compares number of permits issued compared to number of new construction jobs to determine which metro areas are struggling the most. Topping the top 10 list is New York, with an index of 14.8. Seven of the top 10 cities are in California. Boston has a relatively high index of 8.8, but compared to last year’s figure of 9.8, housing supply conditions are improving.

The return of vocational training programs in high schools may bring some hope to the construction industry’s lack of young workers. Allowing students to take courses and pursue internships in construction has already brought about some success. Increasing wages for construction workers could also bring more growth, but due to land, material and regulatory costs the industry is already operating on tight margins.

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