by Pierre G. Villere
Among the most frustrating aspects of life as we went through the pandemic, and which haunts us still today, is the employment picture. There is no minimizing the magnitude of the human tragedy, with an official tally of over 5.2 million hospital admissions and a stunning 1.04 million deaths; the sheer human loss is unspeakable.
But for the vast majority of us who managed to get by with a mild case of infection, the pandemic brought about havoc with the supply chain, interruptions in air travel and the general hospitality industry, and of course the disruptions with employment. We witnessed the “Great Resignation,” a term of art marking the number of people who just quit and dropped out of the employment market, and even the more recent “Quiet Quitting” movement that is sweeping America’s employers and really causing yet another layer of disruption to business and industry.
Yes, we know drivers and plant personnel are still in very short supply, and we have clients who bemoan that as much as 20 percent of their mixer fleet is parked due to a lack of drivers. Having said that, it appears that construction in general is better off than many other sectors of the economy where employers are still struggling to fill positions.
A bright spot in this whole employment picture is the most recent Bureau of Labor Statistics survey that was parsed by our friends at Associated General Contractors of America (AGC). It turns out that seasonally adjusted construction employment in July surpassed the February 2020 level in 33 states, lagged in 15 states and the District of Columbia, and was flat in Michigan and Ohio, according to AGC’s analysis. Remember, February 2020 was the month in which employment peaked nationally before plunging during widespread shutdowns in March and April.
Florida added the most jobs this July, followed by Utah and Tennessee. New York lost the most construction jobs, followed by Pennsylvania, New Jersey, and Louisiana. For the month, 32 states added construction jobs, 16 states and D.C. lost jobs, and there was no change in two states.
This is encouraging news and points us in the right direction. But we still have a long way to go before the remaining 17 states and the District of Columbia recover to pre-pandemic employment levels. But construction start data adds further encouragement to these trends, as AGC reported. The value of construction starts in July jumped an absolutely whopping 17% year-over-year in current dollars, and increased 16 percent year-to-date for the first seven months of 2022 compared to January-July 2021, not seasonally adjusted. Nonresidential building starts jumped an eye-watering 37 percent year-to-date, with institutional starts up 10 percent, commercial starts up 5.5 percent, and industrial (manufacturing) starts up 320 percent. Heavy engineering, or civil, starts climbed 18 percent year-to-date, with roads up 23 percent, water/sewage up 22 percent, bridges up 44 percent, dams/canals/marine up 17 percent, power infrastructure down 27 percent, and airports up 31 percent. Residential starts edged down 0.1 percent year-to-date, with single-family down 1.8 percent and apartments up 4.4 percent.
So overall, these trends point to a bright near-term future for employment, especially when we layer in the impact of the $1.2 trillion Infrastructure Investment and Jobs Act that has yet to see its largest funds unleashed, which assures that employment growth should continue as the members of the Great Retirement and the Quiet Quitters find their way back into the employment fold. The only dim light on the horizon is the housing market, which is going through its historic and predictable downward cycle as interest rates climb to tackle the fight against inflation. This has happened dozens of times since the 1930s, and strong disposable incomes and demand for homeownership can’t push against the tidal wave of affordability that higher interest rates bring.
Many state and national associations have brought the whole notion of workforce development to the forefront as not only a current issue, but something the concrete industry will have to tackle over the next decade or two. Many great ideas are being proposed, but in the end, we need to fill everything from drivers’ seats to the C-suites, and prepare our industry for the next generation of employees.
Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers & acquisitions. He has a career spanning almost five decades, and volunteers his time to educating the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at pviller[email protected]. Follow him on Twitter – @allenvillere.