According to Construction Dive, CNBC reports that Goldman Sachs recently released a report that states that in the residential construction industry, there is no labor shortage. In fact, the report says that since the payroll labor rates have not gone up at high enough rates to meet their criteria, there is no shortage at all.
"Economics 101 would suggest that, if labor shortages did in fact exist, upward pressure on wages would be more pronounced and payroll growth would be anemic," the report said. "Therefore, the evidence from the industry-level employment and wage data does not support the existence of labor shortages in the construction sector."
The post points to a report from John Burns Consulting, which surveyed over 100 homebuilders, which states, according to both CNBC and Construction Dive, that the lackluster performance is due to the lack of available development land and major delays in obtaining construction permits.
It is funny how fast the “worm turns.” Last summer, the same CNBC reporter posted an article in which they quoted Ken Simonson, Chief Economist for AGC and one of our bloggers. "Expanding job opportunities throughout the economy make it increasingly difficult for contractors to find experienced construction workers," said Ken Simonson. "This scarcity shows up in record workweeks for craft workers and flattening of employment totals despite higher construction spending."
Our conversations with commercial and industrial contractors support the thesis that there is a looming shortage of skilled craftspeople that will likely not be solved in the short term. Relating back to the Economics 101 statement, we will see how fast the labor rates rise when the labor supply shrinks in the commercial and industrial sectors. Stay tuned.
