Need for More Construction Workers, Once Inflation and Interest Rates Come Down, Says Report

A historic confluence of ongoing inflation, increased interest rates, and a demand for new housing is playing havoc with the construction industry’s need for workers, says a new industry study.

According to the Construction Labor Market Report, published by the Washington-based Home Builders Institute, the fight against inflation can only be successfully waged if the housing market comes more into balance.

But with “existing home inventory at levels making up half of what would be considered a balanced market and new construction constrained by supply-side headwinds, most notably the lack of skilled construction labor, the total increase in attainable housing supply the market needs appears to be years away.”

“Ironically,” the report adds, “the higher interest rates being used to fight inflation are making this needed increase in home building that much more difficult.”

Because the interest rates also negatively impacting the chances of builders and land development firms to secure loans, “ongoing restrictive monetary policy is harming housing supply and limiting the ability of market forces to lower shelter inflation.”

Despite such obstacles, home builders remain in need of skilled labor, a need that will only increase once interest rates by the Fed are at last lowered. That lowering, says the report, “will improve housing supply and housing demand. And in turn, the nation will require additional construction workers to reduce the existing housing deficit of approximately 1.5 million homes.”

The report states that currently there are over 8.2 million paid construction workers in the country, with an ongoing industry need of somewhere in the vicinity of 723,000 new workers a year in order to keep up with anticipated demand.

In the last year, the industry has seen the hiring of some 75,600 new workers, comprising an increase of around 5,200 workers a month.

At the same time, says the report, the number of open construction jobs as of this spring was at around 400,000, with the number of workers aged 25 and younger seeing a slight increase in the last decade from 9% to nearly 11%.

​By Garry Boulard

Image Credit: Courtesy of Unsplash

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