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Construction rebound finds contractors shorthanded

May 16, 2013
ALEX VEIGA - AP Real Estate Writer , The Associated Press

LITTLETON, Colo. - 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 - 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."

U.S. builders and the subcontractors they depend on are struggling to hire fast enough to meet rising demand for new homes. Builders would be starting work on more homes - and contributing more to the economy - if they could fill more job openings.

Article Photos

This recent photo shows a carpenter working on a new home under construction in Matthews, N.C. (AP photo)

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, cabinet makers and drywall installers. The National Association of Home Builders said its members have complained of too few framers, roofers, plumbers and carpenters. The shortage 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. Experienced construction workers lost jobs. And many found new work - 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, new home construction 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.

The National Association of Home Builders said nearly half its members who responded to a survey in March said a scarcity of labor has led to delays in completing work. Fifteen percent have had to turn down some projects.

"I can't find qualified people to fill the positions that I have open," said Vishaal Gupta, president of Park Square Homes in Orlando, Fla. If not for the labor shortage, "I would be able to build more homes this year and meet more demand than I can handle today."

Gupta's company is facing a side effect of the labor shortage: Demand for higher pay from qualified workers. On some occasions, he said he's been outbid by rivals that need contractors for their own projects. Gupta's preferred paint contractor left for a rival that paid more. His new cabinet contractor is about 10 percent more expensive than the one Gupta used before.

The higher pay they're handing out helps explain why builders have been gradually raising prices on new homes. The median price was $247,000 in March, up about 12 percent from the same month in 2011, the Commerce Department said.

The industry may have to look more aggressively for workers at vocational schools, federally funded programs like Job Corps and elsewhere, Crowe said.

"We'll have to recruit more," he said.

Vap rode out the downturn after the housing crash in part by relying on commercial construction projects. He cut his residential construction staff from 244 in 2006 to 80 in 2009.

This year, Vap has hired 15 field employees for residential construction and said he needs to hire 35 more to do the work he foresees in 2013.

During the 2005-2006 housing boom years, Gupta had to bring in workers from Texas because there weren't enough employees in Florida to keep up with construction. He doubts many of those veterans will return.

"A lot of people who are from other states or from Mexico are not willing to come back here as fast as they did last time because of what they experienced," Gupta said.

Crowe and other economists predict that as demand for new homes strengthens further, higher wages will woo back many laborers who took up other jobs during the downturn.

Still, even if builders find more workers to hire, two other factors could hold back the industry for a while: A tight supply of building materials and ready-to-build land. In part, that's why Crowe said he believes employment in single-family home building won't return to its 2002 total until 2016, and he isn't unhappy about that.

"In a perverse sort of way, the mild housing recovery is probably a good thing," Crowe said. "We need to rebuild the infrastructure of the industry."

 
 

 

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