A Boom Erects New Pressures : More Construction Jobs Are Hammering Housing and Wages

If plentiful construction jobs are a sign of better times ahead, then San Diego has something to look forward to. But ironically, the economy might be improving a little too fast in this region devastated by aerospace and defense cutbacks in the early 1990s: Inflationary pressures are starting to build on wages and housing.

With a bevy of infrastructure and tourism-related projects underway or soon to break ground, construction employment is on the upswing and is expected to keep rising in 1997. That’s good news for any local economy because each construction job creates two more in affiliated services, while pumping fresh dollars into the economy.

Although still far below the 1989 peak of 55,000, the San Diego County work force as of September totaled 46,000 construction workers, a gain of 3,000 since December. And the Greater San Diego Chamber of Commerce expects 4,000 more construction jobs to be added over the next several months.

That helped cut San Diego’s unemployment rate in October to 4.8%, the first time since 1991 that it has been under the national rate, which was 4.9% last month.

Driving the construction are such major contracts as the Lindbergh Field airport expansion, a sewage treatment facility at the U.S.-Mexico border and an extension of Interstate 15. Even bigger projects loom in 1997, including expansions of Jack Murphy Stadium, the San Diego Convention Center and the downtown Hyatt and Marriott hotels.

But shortages of skilled labor, particularly welders, carpenters and concrete workers, are already causing problems for general contractors, said Douglas Barnhart, chief executive of Douglas Barnhart Inc., a local contractor building a new terminal at Lindbergh Field. He said he has raised wages for some skills by 10% so far this year to attract labor.

Welders are especially scarce, and steelworker unions have put out nationwide calls to locals in Las Vegas, San Francisco and other hubs of activity. John McMahon, president of C&B; Steel, a Chula Vista steel fabricator, said he now pays qualified welders an average of 18 hours of overtime a week, adding up to an average wage of more than $1,600 per week.

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Ahousing shortage is also developing in San Diego County as the job picture brightens, raising the question of where all the new construction workers will live.

The countywide vacancy rate dipped recently to just 2.1% in apartment projects of 10 units or more, and rents are beginning to climb after five years of stability, said Kelly Cunningham, the Chamber of Commerce’s economic research manager.

Little relief is on the horizon for renters in terms of added apartment supply: New apartment construction is still dormant, Cunningham said. In fact, total 1996 housing construction in the county--apartments and single-family houses--is expected to come in at 5% below the 6,795 units permitted in 1995.

“The last five years have been the worst for housing construction since the 1940s,” Cunningham said. “These trends make you clearly see that rents are going to rise and there will be more pressure to build more housing.”

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Employment in San Diego County’s biotechnology industry has remained stable over the last three years, in the 20,000-jobs range, Cunningham said, an indication of the slowdown in the pipeline of new, approved bioengineered products.

And San Diego’s manufacturing employment has declined 1% over the last year, as the county continues to suffer the effects of defense and aerospace cutbacks and consolidation. Meanwhile, manufacturing jobs across the border in Tijuana are growing at a 10% annual clip, and they now exceed San Diego’s.

Chris Kraul can be reached via e-mail at chris.kraul@latimes.com

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San Diego County construction employment is recovering. Jobs, in thousands:

1997**: 50,000

* Through September

** Projection

Sources: State Employment Development Department, Greater San Diego Chamber of Commerce