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Construction Employment, Contractors, Jobs

Posted By Barry Ritholtz On August 28, 2007 @ 7:15 am In Consumer Spending,Employment,Real Estate | Comments Disabled

As I mentioned in earlier this year, we sold our house [1], and moved late March.

Since settling in, we started some work on a house that was 50 years old, pretty much all original condition. We extended a half bath into a full bath, renovated the upstairs bathroom (Mrs. Big Picture called it "The ugliest bath in America"). We put in Central A/C; In the den, we had to replace the rotting sheetrock in one wall, and we added high hats, tiled the floor with slate, lots of other little items. An old tree that was hanging dangerously over the main part of the house had to be pulled down, and as long as we were doing that, we yanked out all of the overgrown shrubs in the front of the house.

What’s been amazing — and very different than the last renovation work we did 3 years ago — is just how quickly and easily contractors have been to find:

• The tree folks removed two big old trees, and ground the stumps down to sawdust — a week after we hired them;

• The bathroom and tile guys were supposed to start late August – and due to cancellations, they began work a month early. They are just about done — 4 weeks before they were scheduled to start;

• Keyspan Energy installed the Central A/C — only a week after giving us an estimate, a crew of 6 guys came to the house and installed a 3 1/2 ton Trane unit, and all the venting;

• On Friday, we spoke with the painter, who was highly recommended by friends. We needed them to pull down old Wallpaper, spackle, prep, and paint the full interior. When are they going to start work? They began yesterday. Oh, and they were exceedingly reasonable;

In short, every contractor we spoke with, booked, or began work was unbelievably available, flexible on time, negotiable on price.

Perhaps this recent headline has something to do with it: Construction job losses could top 1 million [2]

While BLS is reporting that construction job losses are de minimis,  the reality int he real world is that Job losses  in the construction sector are significant. Unlike what you may have heard, I do not believe   nonresidential commercial construction is anywhere near offsetting the loss on the residential building side:

"Construction employment fell about 15 percent in both the
1990s and 1980s recessions, and it dropped about 18 percent in
the recession of the mid-1970s, according to the Bureau of
Labor Statistics (BLS).

In each case, the sector’s declines were far steeper than
overall job losses, and recovery took longer. But in the 2001
recession, declines were relatively modest as consumer-led
demand offset weak business spending.

About 7.7 million Americans are employed by construction
companies, according to the BLS, down about 75,000 from a peak
in September 2006. The sector’s unemployment rate of 5.9
percent compares with 4.6 percent for the overall labor force. A 15 percent decline now would mean more than 1 million
jobs lost."

According to BLS economist,  Chris Goodman, there is a closely correlation between construction spending and nonresidential commercial construction job cuts — on about a 6 month lag. "Construction spending in June fell for the first time since
January, while private residential construction posted its 16th
straight monthly drop.
"

~~~

During the boom, contractors were unbelievably busy, non-negotiable — and bit difficult, given all the demand. Not surprising, that is no longer the case these days.

Anecdotal evidence for sure — but the degree and severity of the change has been quite astonishing . . .

>

Source:
Construction job losses could top 1 million [2] 
Nick Zieminski
Reuters, Sun Aug 26, 2007 12:34PM EDT
http://www.reuters.com/article/ousiv/idUSN2636970820070826


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URL to article: http://www.ritholtz.com/blog/2007/08/construction-employment-contractors-jobs/

URLs in this post:

[1] sold our house: http://bigpicture.typepad.com/comments/2007/03/rules_for_real_.html

[2] Construction job losses could top 1 million: http://www.reuters.com/article/ousiv/idUSN2636970820070826

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