May 10, 2013 in Business

Too few workers for housing surge

Alex Veiga Associated Press
 

The resurgent U.S. housing market has sent builders calling again for Richard Vap, who owns a drywall installation company. Vap would love to help. And he would – if he could hire enough qualified people.

“There is a shortage of manpower,” said Vap, owner of South Valley Drywall in Littleton, Colo. “We’re probably only hiring about 75 or 80 percent of what we actually need.”

More than six years after the housing bust stalled construction and led many companies like South Valley Drywall to slash payrolls, the reverse is occurring: As demand for new homes has risen, builders and the subcontractors they depend on can’t hire as fast as they’d like.

Builders would be starting work on more homes – and contributing more to the economy – if they could fill more job openings. In the meantime, workers in the right locations with the right skills are commanding higher pay.

The shortage of labor ranges across occupations – from construction superintendents and purchasing agents to painters, cabinetmakers and drywall installers. The National Association of Home Builders says its members have complained of too few framers, roofers, plumbers and carpenters. The problem is most acute in areas where demand for new homes has recovered fastest, notably in Arizona, California, Texas, Colorado and Florida.

The problem results largely from an exodus of workers from the industry after the housing bubble burst. Some experienced construction workers found other jobs – in commercial building or in booming and sometimes higher-paying industries like mining and natural gas drilling – and aren’t eager to come back.

Hispanic immigrants, largely from Mexico, who had filled jobs during the boom were among those who left the industry and, in some cases, the United States.

Dave Erickson, president of Greyhawk Homes in Columbus, Ga., lost an employee who took a job this year in Texas. The former employee is now installing fiber-optic cable and earning 30 percent more than he did as a construction supervisor.

“I think he’s frustrated with the cycle we went through in recent years,” Erickson said.

A shortage of labor in a well-paying industry might seem incongruous in an economy stuck with a still-high 7.5 percent unemployment rate. But it reflects just how many former skilled construction workers have moved on to other fields.

In 2006, when the boom peaked, 3.4 million people worked in homebuilding. By 2011, the figure had bottomed at about 2 million. As of last month, about 2.1 million people were employed in residential construction.

Jobs in the industry did rise 4.1 percent in April from a year earlier, faster than overall U.S. job growth. But they’d have to surge 24 percent more to reach 2.6 million, their 2002 level – “the last time the market was normal,” said David Crowe, chief economist for the National Association of Home Builders.

For now, the industry is building faster than it’s hiring. In February, builders began work on single-family homes at the fastest pace in five years. And in March, they broke the 1 million mark for the first time since June 2008. Permits for future construction are also near a five-year high.

In the 12 months that ended in March, housing starts surged 47 percent. Yet over the same period, the industry’s employment grew just 3.7 percent.

Normally, a rebound in home construction helps propel an economy after a recession. But even with the steady gains in housing starts, sales and prices since last year, the industry remains below levels considered healthy.

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