Employment Lags February 2020 Level in 26 States; Wages Climb 3.8% in 2021 but Trail Other Industries

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Submitted by AGC.

Seasonally adjusted construction employment in December lagged the February 2020 level in 26 states, exceeded it in 23 states and the District of Columbia, and matched it in Montana, according to AGC’s analysis of Bureau of Labor Statistics (BLS) data posted on Tuesday. (February 2020 was the month in which employment peaked nationally before plunging during widespread shutdowns in March and April 2020.) New York lost the most construction jobs over 22 months (-42,000 jobs or -10%), followed by Texas (-30,200, -3.9%) and California (-22,300, -2.4%). Louisiana had the largest percentage loss (-13%, -17,200 jobs), followed by Wyoming (-11%, -2,500) and New York. Utah added the most jobs (10,000, 8.8%), followed by Washington (8,200, 3.7%) and North Carolina (7,900, 3.4%). South Dakota added the highest percentage (10%, 2,500 jobs), followed by Utah and Idaho (8.2%, 4,500). For the month, construction employment increased in 32 states and D.C., declined in 16 states, and was flat in Nevada and South Dakota. Florida lost the most jobs (-3,400, -0.6%), followed by New York (-2,900, -0.8%) and Pennsylvania (-1,200, -0.5%). The largest percentage decline, -0.9%, occurred in Alabama (-900 jobs) and Rhode Island (-200 jobs), followed by -0.8% in New York. Texas added the most jobs for the month (10,400, 1.4%), followed by Ohio (5,700, 2.4%) and Missouri (3,700, 2.9%). West Virginia had the largest one-month percentage gain (4.6%, 1,500 jobs), followed by New Mexico (3.2%, 1,600) and Louisiana (3.0%, 3,500). Construction employment reached a record high in Massachusetts, Utah, Washington, and D.C. (BLS reports combined totals for mining, logging, and construction in D.C., Delaware, and Hawaii. Because there are few, if any, mining or logging jobs in these locations, AGC treats the levels and changes as solely construction employment).

Wages and salaries in the construction industry rose 1.3%, seasonally adjusted, in the fourth quarter (Q4) of 2021 and 3.8% year-over-year (y/y), up from 2.8% in 2020, BLS reported on Friday. Wages for the total private sector accelerated to a 5.0% y/y increase–the most in the 21-year history of the series–from 2.4% in 2020. Total compensation (wages, salaries, and benefits, including required employer payments) in construction rose 1.1% in Q4 and 3.5% y/y, up from 2.4% in 2020. Total private industry compensation increased 1.2% in Q4 and 4.4% y/y, up from 2.6% in 2020. The steeper increases in sectors other than construction may be one reason contractors are having trouble filling jobs.

Inflation-adjusted gross domestic product (real GDP) rose 6.9% at a seasonally adjusted annual rate in Q4 2021, the Bureau of Economic Analysis (BEA) reported on Thursday, following a 2.3% gain in Q3. Real residential investment in permanent-site structures sagged 9.1% (single-family structures, -10%; multifamily, -2.6%). There was an 11% decrease in real gross private domestic investment in nonresidential structures (commercial and health care, -26%; manufacturing, -20%; power and communication, -13%; and other non-mining structures, -1.9%; but investment in wells and mining structures jumped 31%). Real government gross investment in structures declined 8.1%, including federal investment for defense structures, up 6.6%; nondefense structures, -24%; and state and local structures investment, -9.8%. The GDP price index increased 6.9%, with price indexes for nonresidential structures investment up 23%; residential investment, 9.5%; and government investment in structures, 14%.

At the end of 2021, the “total U.S. [hotel] construction pipeline stands at 4,814 projects/581,953 rooms, down 8% by projects and 10% by rooms” y/y, lodging data provider Lodging Econometrics (LE) reported on January 24. “While project totals have dipped slightly y/y, the number of projects in the early planning stage continues to rise. In the final quarter of 2021, projects in the early planning stage experienced an 18% increase by projects and 11% by rooms y/y, for a total of 2,021 projects/239,816 rooms….New project announcements are down in the fourth quarter; however, developers are eager to accelerate projects long-delayed by the COVID-19 pandemic. Unfortunately, they face some development roadblocks, including escalating inflation and supply chain shortages, that are causing higher prices versus ‘pre-pandemic’ costs for labor and materials. These factors continue to prolong hotel development timelines….Through year-end 2021, the U.S. opened 823 projects accounting for 105,705 rooms, for a growth rate of 1.9%. For 2022, LE is forecasting 783 projects/90,074 rooms to open at a supply growth rate of 1.6%. In 2023, continuing at a supply growth rate of 1.6%, another 820 projects/93,112 rooms are anticipated to open by year-end.”

“Engineering and construction costs rose for the 15th consecutive month in January,” data firm IHS Markit and the Procurement Executive Group reported on Wednesday. “Shipping rates continued their streak of price increases, recording their 21st consecutive gain in January. The sub-index for copper-based wire and cable prices also rose….The electrical equipment sub-index dropped[, though the reading] remains in expansion mode, indicating respondents are observing increasing prices. ‘Surging omicron case counts along with the twin energy crises in Europe and mainland China are continuing to disrupt supply chains, creating volatile pricing and exacerbating labor shortages in the U.S. and Canada,’ said John Mothersole, pricing and purchasing director, IHS Markit. ‘However, notwithstanding this early winter uptick, commodity prices in January are collectively 10.7% lower than the peak seen in May 2021. Improving logistics services will hasten the commodity price correction, benefitting downstream goods and [y/y] inflation rates are expected to slow by the end of 2022.’ The sub-index for current subcontractor labor costs [posted] another noticeable increase from December’s index figure.”

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