The real estate bust idled hundreds of thousands of construction workers. Now, with housing on the mend, builders are hiring again.
Trouble is, many workers aren’t coming back.
Years of sporadic employment drove many from the industry. Incomes aren’t what they used to be. Laid-off workers remember the sting of lost livelihoods; some have had enough of boom and bust.
Former house painter Alan Schaffer has hung up his paintbrush to pursue a degree in business administration. The Riverside County resident says he’s looking for a livelihood that’s stable.
“I love construction, I love building,” said Schaffer, 45. “But I can’t have a job that pays me $50,000 one year and zip the next. I need to be more financially secure.”
With home prices surging in Southern California and across the country, builders are again seeing big opportunities. Housing starts and new-home sales are up. But even as California unemployment remains stuck above 9% — among the highest in the nation — construction companies say they’re struggling to find enough qualified workers to keep up with demand for new homes.
“We’re starting to see spot shortages of labor,” said John Nunan, president of Unger Construction, a commercial building contractor that does work in Northern California.
Many experienced union workers retired during the slowdown, he said. Others found new careers. Now many contractors, especially in the Bay Area, where construction is booming, can’t find all the workers they need. Nunan said the plumbing contractor he’s working with in a job in Sonoma, for example, is having a hard time hiring plumbers.
Part of the problem is pay. Workers’ earnings in the construction industry fell more sharply — and are now recovering more slowly — than those in many other industries. Hourly pay for construction workers, adjusted for inflation, was $11.22 in 2012, down 3.1% from 2009.
Normally, worker shortages push up wages. But builders say they can’t match what they paid before the recession. Costs for building materials are rising. So are land prices in many areas.
Many laborers are grateful just to be working again. Still, hard hats such as Danny Fregoso, a supervisor at Joseph Holt Plastering Inc. of Corona, can’t help but miss the fat paychecks that accompanied the housing bubble.
During the best of times, Fregoso said he made about $26 an hour, while entry-level workers were making about $17 or $18. These days he’s earning about $16 an hour.
“We used to make a lot more money,” said Fregoso, working recently at the six-story Jia Apartments project in Los Angeles’ Chinatown. “We all took pay cuts, then a lot of them left and found other jobs better than this one.”
Although housing is surging in most Western states, construction employment is still well off its peak.
In California, construction employment plummeted 42% to 544,700 workers in September 2010 from a peak of 945,100 in February 2006. The industry has since rebounded to 620,400 workers, up 14% from its bottom.
It’s much the same in Nevada and Arizona, where construction employment fell by more than half from the peak. Construction sites are stirring again, but workers aren’t rushing back.
Stagnant wages aren’t helping lure workers to job sites in Arizona’s brutal desert heat, said Brett Jones, vice president of operations at the Arizona Construction Assn. Both young and experienced workers are staying away, he said.
Arizona’s tough new immigration laws, passed in 2010, aren’t helping matters either, advocates contend. The U.S. Supreme Court later found parts of that legislation unconstitutional. Still, thousands of Latinos have left the state.
Meanwhile, the flow of migrants north from Mexico and Central America has slowed substantially, in part because of tougher enforcement along the U.S.-Mexico border.
The U.S. construction industry depends heavily on Latino labor. At the height of the boom, Latinos made up one-quarter of the U.S. construction labor force; most of them were foreign-born, according to the Pew Hispanic Center in Washington.
“The workforce has gone somewhere else,” said Richard Usher, who runs an insurance company for construction firms and is also co-founder of Arizona Employers for Immigration Reform. “They had to feed their families.”
Some older workers have left the industry as well.
When the housing market crashed, Timothy Wagner, a New Jersey painting contractor with two decades of experience, called it quits. He had grown weary of putting his body through all the bending and climbing that painting entailed. To put two daughters through college, he took a six-week truck-driving course, and now he pilots a big-rig.
“It’s so much nicer to know that I’m getting paid every week,” said Wagner, 43. “There were so many times I was late on bills because I was waiting to get paid.”
Construction has always been a cyclical business. In past recessions, skilled tradesman could hang on for a year or two until work started up again. Often slowdowns were regional, meaning workers could move to new cities. But the most recent housing bust was so severe, long and widespread that the construction labor market suffered unusual damage.
“The problem, frankly, was those skilled workers — and that whole labor pool — was not able to remain unemployed for five years,” said Mike Winn, chief executive of the California Builders Assn.
The bust has also left behind a perception of construction as an inherently unstable line of work, industry representatives said.
“There’s been pretty consistent news coverage about the fact that there are no jobs in construction,” said Brian Turmail, a spokesman for the Associated General Contractors of America. “More broadly, we have a message that says: ‘If you want to be successful, you have to go to college.’”
Turmail and his association want to see a pipeline for training skilled construction workers, with schools like those for other skilled trades. Some states, including Alabama, Georgia and Missouri, have recently heeded this call and founded programs to encourage workers to go into construction.
Dean Word, a Texas construction contractor, says many of his workers are lured away by higher wages in the fast-growing energy sector. Many oil companies pay $2 to $3 an hour more than what construction employers pay.
“The oil field is paying a premium for any labor that will pass pre-employment physicals — it’s a pretty good wage for people that meet their requirements,” Word said. “That’s tough for us to compete against.”