Construction industry builds up steam, adds 14,000 jobs
The drills, saws and sanders that fell silent during the economic slowdown are beginning to whir again. For the first time in years, U.S. builders are hiring laborers.
The nation’s construction industry added 14,000 jobs nationwide in April, according to the Labor Department, marking the first back-to-back monthly gains in that sector since 2006.
In all, 29 states gained construction jobs that month, according to data released Friday by the Associated General Contractors of America. The U.S. industry has been bolstered in part by federal stimulus funds for infrastructure and the slow but steady improvement in the housing market.
Although building jobs have not yet begun to pick up in California, the industry here is showing improvement. The value of permits in California’s private building industry totaled $2.2 billion in March 2010, up 8.1% from the same period last year and 29% from February, according to the Construction Industry Research Board. The number of residential building permits issued in the first three months of the year was up 29% from the same period last year.
That’s a relief to industry veterans such as John Sourapas, 55, of Fullerton, who is back on the job after 10 months of unemployment.
On a recent afternoon at a site in Irvine, the construction supervisor checked blueprints inside a trailer as activity buzzed around him. Men wearing masks laid bricks while others hammered nails onto the rooftops of new homes, their yellow hardhats framed against a bright blue sky. A bulldozer cleared dirt on what would soon become the street of a subdivision.
“I was ready to go back to work,” Sourapas said.
Times are still tough in California, which lost nearly 400,000 construction jobs since the 2006 peak. Although the state lost 1,900 jobs in April, that was still considered good news because the loss was a lot less than in previous months.
Sluggishness in California’s construction industry could continue for the rest of the year, which means the state’s economic recovery will lag behind the rest of the nation, said Esmael Adibi, an economist at Chapman University in Orange. Although construction jobs make up only about 5% of the state’s nonfarm workforce, the sector has a large multiplier effect, meaning that money spent on building helps boost sales of furniture, appliances and other goods and services.
“Can we recover without construction?” Adibi said. “Yes, we could. But it’s not going to be a strong recovery.”
Still, the Orange County site where Sourapas’ employer, New Home Co., is building 31 houses is no anomaly. With inventory of existing homes shrinking and home prices stabilizing, builders are breaking ground on new projects. The Standard & Poor’s/Case-Shiller index of home prices in 20 metropolitan areas posted a 0.6% gain in February of 2010 from the previous year, the first year-over-year gain in more than three years. In March, the median price paid for a home in California jumped 14.3% over the same month in 2009, MDA DataQuick said.
“We believe we have reached some kind of a bottom, which gives us confidence to start new projects, knowing the prices aren’t going to continue falling,” said Mark Buckland, president of City Ventures, a home builder with three projects and a total of 69 units under construction in San Diego and Santa Ana.
Public works have also received a boost from federal stimulus spending. In California, 516 transportation projects worth $2.5 billion have been awarded contracts to begin work. Every $1 billion spent on transportation projects supports 18,000 jobs, said Matt Rocco, a Caltrans spokesman. Nationwide, the American Recovery and Reinvestment Act set aside $27.5 billion for highway and bridge projects, said Ken Simonson, chief economist at Associated General Contractors of America.
“Most contractors are singing the blues unless they have won a stimulus project,” he said.
The slowdown has been tough on laborers such as Jesus Perales, a hardscape foreman who was on unemployment for six months before he started working in Irvine in February.
“Now I can pay my bills, and pay the bills that I missed,” Perales said. The 52-year-old said his wife’s factory job supported the family when he was jobless. Now that he’s drawing a paycheck, he can help with his daughter’s beauty school tuition.
For many of those working, however, hours are shorter and pay is lower. In California, the hourly wages of workers in the construction industry have fallen 11% from their peak.
“With some of these jobs, I could have made more on unemployment,” said plumber Salvador Madrigal, a subcontractor working on the same site as Sourapas.
Just a few years ago, competition for experienced hands was fierce. Riverside concrete subcontractor Martinez Construction covered housing expenses for its employees working on projects in Arizona and Nevada, said president Dave Martinez. Now, Martinez has postponed expansion and cut salaries at his company 10%.
Dave Keehmer, of Keehmer’s Construction in Whittier, used to do major home remodels. Now, hardly any job is too small. He recently put in what he thought was a low bid — $5,900 — to do work on a bathroom remodel. The winner bid $3,900.
“A number of companies seem to be underbidding contracts, to a degree that their prices don’t seem fathomable,” said Brad Diede, chief executive of the California Professional Assn. of Specialty Contractors.
He said some are cutting costs by paying workers off the books to avoid payroll tax and shorting them on overtime or taking safety shortcuts. In March, Cal/OSHA halted work at a construction site in Riverside after it found that the employer didn’t provide proper safety equipment. California’s labor commissioner recently sued a Florida contractor for wage violations on a project in Pacifica.
Frustrated over sporadic employment and sometimes poor working conditions, some workers have left the industry. Alvaro Castillon, a supervisor with First Quality Painting in Chino, said about half the painters he worked with regularly had left the area or moved into other fields. About 30% of the contractors that New Home Co. supervisor Pat Dibble used to work with have gone out of business. Brent Brinlee, a vice president at Hakes Sash & Door in Murrieta, said his company cut 70% of its staff.
Gerardo Hidalgo, a drywall foreman, is just grateful to be back at work.
Taking a lunch break on the building site in Irvine, he said his family of eight can now occasionally eat out and buy nicer things. He’s still pinching pennies, though; he ate home-cooked eggs and chiles out of a frying pan that some friends had set up over a portable stove. But he’s not complaining.
“We’re living much better now, thank God,” Hidalgo said. “It was pretty bad.”