About a month ago, the National Association of Home
Builders (NAHB) seized on the May Job Openings and Labor Turnover survey
(JOLTs) report as an indication that the tight construction labor market might
be loosening. The report indicated a decline in the number of unfilled job
openings. The shortage of skilled labor
has been cited by NAHB as one reason for the slow recovery of the residential
construction industry. This month, it is a different story.
Both
the June JOLTS report and results of NAHB's most recent survey of home builders
are a cause for concern. NAHB said the
report shows "the number of unfilled jobs in the
construction industry rising significantly in June." Their builders survey is more specific.
Economist Paul Emrath writes in NAHB's
Eye of Housing blog that labor and subcontractor shortages had become even more
widespread in July of 2017 than they were in June of 2016, the last time NAHB
attached similar special questions to its NAHB/Wells Fargo Housing Market Index
(HMI) survey. This year the survey asked the Association's home builder-members
questions about 15 specific occupations.
The categories were either recommended for inclusion by its workforce
development arm, (the Home Builders Institute), or ones NAHB found particularly
significant when analyzing recent Bureau of Labor Statistics data. As the
figure below shows, there were shortages reported in all 15 occupations, with serious shotages in three carpentry related fields.

While builders are finding
difficulty filling their own job openings, the availability of subcontractors
is even more problematic. Responses to
the July HMI survey indicated greater and more widespread shortages of
subcontractors than direct labor in each of the 15 occupations. As an example, NAHB said that 77 percent of
respondents reported a shortage of framing employees while 85 percent of
builders reported a shortage of this category of subs.
This has not always been the case,
Emrath says. Across the nine trades that the NAHB has covered consistently
since 1996, labor and subcontractor shortages have historically tracked each
other relatively closely. "Since 2013, however, a persistent gap has opened,
with the nine-trade shortage for subcontractors running 5 to 7 percentage
points higher."

Emrath sets forth one possible
explanation for the subcontractor deficit.
Some workers who were laid off during the housing downturn started their
own trade contracting businesses, but have now returned to work for larger
companies. This would make slightly more workers available for hire while
shrinking the pool of subcontractors.
There has been a consistent trend
that has carried the nine-trade average shortage for labor from a low of 21
percent in 2012 to 56 percent in 2016, and now 63 percent in 2017. For
each of the construction occupations covered in both years, the shortage
percentage, for both directly employed labor and subcontractors, increased
between 2016 and 2017. The percentage of excavator subcontractors remained roughly the same.
The average shortage across the nine
trades is now at its highest since 2000, a year that marked the end of an
extended period of strong economic growth and an unemployment rate of 4.0
percent. Emrath says the current shortage seems especially severe relative to
housing starts, which have only partially recovered from their post-2006
decline.

The historical pattern has been
quite consistent within each of the trades as well, with shortages for most
occupations more widespread than at any time since 2000. For some, shortages
are the worst since NAHB began tracking them. Shortages of directly employed painters for
example is at a record high as are subcontractors in painting, framing, and
electrical work. For excavator contractors the 2016 and 2017 shortages are
essentially tied for worst all time.