Construction Employment Slips By 20,000 Jobs in May

The construction industry is spinning its wheels as material shortages continue causing non-residential construction to sputter.

According to the latest jobs report from the Bureau of Labor Statistics, construction employment in the U.S. dropped by 20,000 in May. This marks the third time in four months that construction employment has declined, weighed down by continued losses in the non-residential construction sector.

“Steadily worsening production and delivery delays have exceeded even the record cost increases for numerous materials as the biggest headache for many nonresidential contractors,” said Ken Simonson, chief economist for the Associated General Contractors of America (AGC). “If they can’t get the materials, they can’t put employees to work.”

While non-residential construction has struggled to regain momentum since the start of the pandemic, residential construction has seen much more positive growth in that same time period. But even with some regions in the U.S. experiencing historic levels of demand for residential construction, employment in the sector only rose by 1,900 jobs in May.

“The decline in construction employment is likely less about a lack of demand as it is about the challenges contractors are facing in meeting that demand,” said Stephen Sandherr, chief executive officer of the AGC. “Supply-chain problems and labor shortages are holding back what should otherwise be a much stronger recovery for the construction sector.”

Though residential construction growth has been slow, it has also been steady, with the sector largely recovered from pandemic employment losses. Total residential construction employment in May 2021 was 35,000 workers higher than February 2020, when pre-pandemic employment levels peaked.

Non-residential construction, on the other hand, remains 260,000 workers behind its pre-pandemic peak. Limited demand for industry services and supply-chain constraints likely will continue limiting growth for the foreseeable future.

“Contractors are being told they must wait nearly a year to receive shipments of steel and four to six months for roofing materials,” said Simonson. “These delays make it impossible to start some projects and to complete others, leaving contractors unable to keep workers employed. In addition, soaring prices for steel, lumber, and other materials are deterring owners from committing to going ahead with projects.”

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