March 31, 2012
State of Construction: The Best and Worst (Mostly Worst)By Randall T. Perks
Let's take a look at national construction employment. According to the latest available data (February, 2012) from the Bureau of Labor Statistics Construction Sector website, national construction employment peaked in April 2006 at 7,726,000 workers. Today, construction employment stands at 5,554,000 workers. Over the last six years, 2,172,000 construction jobs have been lost. The decline is actually larger, given that the undocumented workforce is prevalent on construction jobsites but not in government records.
Looking at the construction un-employment rate is a far more deceptive thing. Beginning with a few definitions, let's take a look at the BLS national construction statistics. As BLS defines it, "[t]he unemployment rate represents the number of unemployed as a percent of the labor force[,]" and "[t]he labor force is the sum of employed and unemployed persons."
According to BLS, the national unemployment rate in the construction industry peaked in February 2010 at 27.1% with 5,533,000 employees. Two years later, in February 2012, the official construction unemployment rate has fallen to 17.1% with 5,554,000 employees. Given the construction unemployment rate and construction employees, we can calculate the labor force and the number of unemployed, as seen below.
Over the past 24 months, the government's official construction unemployment rate has dropped by 10%, and reported construction employment has grown by 21,000 jobs. However, in order to drop 10% off the unemployment rate, 890,211 workers have been removed from the construction labor force, and 911,211 previously unemployed construction workers have disappeared from the ranks of the unemployed, which now numbers 1,145,638.
The individual state construction employment figures reveal similar destruction. After downloading the most recent (January 2012) BLS historical construction employment data for all 49 states (Nebraska does not provide this data, and several other states combine Construction with Mining & Logging), we see that construction employment in most states reached all-time highs in either 1996 or 1997. Two notable exceptions are North Dakota, the only state that has gained construction jobs under Obama, due primarily to oil and gas development, and Michigan, in decline since 2000.
Looking back from January 2007, the ten states which have withstood the construction employment collapse best include:
The ten states which have suffered the worst construction job loss include:
For the years January 2007 through January 2012, the following statistics apply:
o Four states -- Alabama, Florida, Mississippi, and New York -- reached new lows in construction employment last month.
o Thirteen states -- Alabama, Florida, Georgia, Hawaii, Kentucky, Massachusetts, Mississippi, Missouri, New Mexico, New York, Texas, South Dakota, and Wisconsin -- have reached new lows in construction employment in the last three months.
o Eighteen states have reached new lows in construction employment within the past six months.
o Twenty-nine states have reached new lows in construction employment in the past year.
o Ten states are within 1% of new lows in construction employment.
o Twenty-eight states are within 5% of new lows in construction employment.
o Forty-four states are within 10% of new lows in construction employment.
o Twenty-one states have fewer construction workers today than in 1990, 22 years ago.
As the statistics above indicate, this is not recovery. The devastation of the construction industry is directly tied to the real estate collapse -- a collapse created almost entirely by poor government policy. What had historically been a stable and dependable foundation of the American dream is in shambles. With trillions of dollars of real estate value lost and 25% of homeowners underwater, recovery won't come quickly.
Our government's war on energy production and the environmental regulatory war on critical products including cement, mining, quarrying, trucks, steel, chemicals, water and air use, noise, dust, demolition, and disposal continue to raise costs and destroy jobs. Material supply and fabrication have been shipped overseas. Go-green LEED standards can double construction costs to resolve problems which never existed. Zoning and permitting have often been taken over by environmentalists. Obama's war on prosperity, the world's highest corporate tax rates, and a government debt larger than all of our money ever created further impede the industry. I can picture solar panels, windmills, and algae ponds in every backyard.
In 2009, Democrats gave us the $840,000,000,000.00 American Recovery and Reinvestment Act. The construction industry was said to be the single largest beneficiary of the spending frenzy, with a projected 678,000 construction jobs created. Like most everything else run by government, it did not quite work as they told us. As Rush has said, it was just a little-less-than-a-trillion-dollar Democrat slush fund. Government was, is, and will remain the problem, not a solution.
The two million-plus construction jobs lost are real. These were workers who actually produced something in America. The strongest, most capable producers in society have been reduced by 30%. Unlike when the BLS statistician deletes one million people from the workforce and pretends that they no longer exist, these workers remain out there. As the industry continues in decline, the long-term consequences remain unknown. You can't take one third of an industry and hit "delete" without negative consequences arising somewhere. Here we have an early look at the fundamental transformation of America at work.
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