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POLITICS: PennAve

Millions of construction jobs still missing

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Jobs,PennAve,Joseph Lawler,Economy,Minusextra,Unemployment

One bright spot in Tuesday's otherwise disappointing jobs report was strong growth in construction jobs. The sector added 20,000 employees, after six months of stagnation.

Although the boost in construction jobs is a step in the right direction, many more months of growth will be needed to recover from the recession.

Construction employment, at 5.83 million, remains well below the levels it attained before the recession started to set in, in 2007. That year may represent a high-water mark that cannot be reached again — it marked the collapse of a housing bubble that generated unsustainable construction.

But weak construction growth can't be chalked up to the fallout of the housing crisis alone: employment in the sector is still below its early 2000s levels:



Economist Stephen Bronars estimated in August that there were 2.8 million "missing" construction jobs, meaning that there would be 2.8 million more Americans working today if the recovery in construction employment were as strong as it has been in past economic recoveries.

"The magnitude of the decline in construction employment during the 2008-2009 recession was unprecedented. The absence of a recovery in construction in employment during the subsequent recovery is also unprecedented," Bronars wrote.

The recovery clearly doesn't stack up to the past performance of construction employment following recessions in 2001 and 1981. In comparison, the current post-recession trajectory of construction jobs (in green) looks like a flat line:



And construction as a percentage of total employment across the economy has also flatlined as the economy has slowly healed over the past five years:



It might not be realistic to expect construction to return to trend, given that the path of the housing industry throughout the mid-2000s was unsustainable.

But even if the number of construction jobs merely returned to its pre-recession peak of 7.7 million, that would mean an additional 1.9 million Americans at work building homes, offices and infrastructure. Assuming those workers came from the ranks of the unemployed, the unemployment rate would be 6 percent, rather than today's 7.2 percent.


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