Labor Shortages Are A Key Issue for Housing

According to NAHB industry surveys, finding and hiring workers is a key challenge for home builders as construction activity grows. This issue is of such significant importance that it has been selected as a primary issue for NAHB’s 2014 legislative conference, “Bringing Housing Home,” which takes place March 17-21 as home builders and other members of the residential construction industry meet federal lawmakers.

According to the most recent NAHB survey, 65% of builders reported the cost and availability of labor is expected to be a significant challenge in 2014, up from 53% for 2013. And survey data from 2013 indicated that the limited availability of workers has produced higher construction costs (54% of builders), higher prices for new construction (54%), and created difficulties in completing projects on time (46%).

cosntr labor market

The challenge associated with hiring or contracting with workers is clear in government data. For example, in the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS), the number of unfilled jobs in the construction sector rose 38% from January 2013 to January 2014, increasing from 113,000 to 156,000.

Home building can be an engine of job creation. As of January 2014 total employment in home building stands at 2.227 million, broken down as 648,000 builders and 1.579 million residential specialty trade contractors. Over the last year the home building sector has added 101,000 jobs. And since the point of peak decline of home building employment during the recession, 243,000 positions have been added to the residential construction sector.

And this employment is spread across the nation.

Builder employment map

The issues of housing demand and labor availability are closely tied to our nation’s immigration policy. Foreign-born workers account for 22% of the construction labor force nationally. Immigration is also a key driver of housing demand. For example, over ten years, 1.2 million immigrants (annual low-end Census projection) could generate 3.4 million households, occupying more than 2 million multifamily homes, 1.2 million single-family homes, and yielding 900,000 homeowners.

For these reasons, policy debates concerning fair employer verification rules (E-Verify), market-based visa systems, and comprehensive immigration reform more generally will have direct impacts on home builders and other housing stakeholders in the years ahead.

Tomorrow we will examine tax issues and housing and on Thursday the future of the housing finance system.

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2 Responses to Labor Shortages Are A Key Issue for Housing

  1. John C Hansen, LEED AP says:

    A legislative approach to construction job creation is misguided. And, solving all of the labor shortages by focusing on immigration is missing the point that what has impacted our homebuilding industry the most is not low immigration numbers. The worst recession since the great depression killed both jobs, and homebuilders. Changes to immigration rules will not cure the economic woes that linger. Unemployment, reduced labor participation, reduced family savings, and the economic forces that drive jobs out of the country all have contributed to destabilizing the homebuilding industry. This disruption in a steady demand for workers has driven them away from homebuilding. But the NAHB has done nothing to bring them back. It seems that the NAHB and its members want to take the easy path to cheap labor by boosting the number of new immigrants. This is folly. What we need is steady jobs that pay benefits. We need something more than cheap labor to build a base of quality builders. We need more than government programs to fund multifamily low income housing. We need the leaders of the NAHB to lead us to search for better solutions and better workers. We should not be searching for the cheapest new labor from another country. This will do little more than dissuade the tradesmen who left the industry from ever wanting to return to work in homebuilding ever again. And churning the labor pool hurts us all in the long run. In twenty years, we will be looking back on the choices we make today and realize that we caused our industry and our country more problems that we solved with our misguided focus on immigration.

  2. […] published three summaries of key advocacy efforts underway on behalf of the home building sector: worker shortages, housing finance reform, and the prospect for comprehensive tax reform. Each one analyzes the data […]

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