Housing, Economy Growth Blocked by Construction Labor Shortage

By Gretchen Wegrich

Where have all the construction workers gone? A growing shortage of labor in all facets of residential construction is preventing a full housing and economic recovery, reported the National Associat of Homebuilders.

The shortage is partially attributed to the fact that many skilled residential construction workers were forced to seek other employment during the recession and have not returned. During the peak of the recession, more than 1.4 million construction workers lost their jobs.

"The survey [showed] that since June of 2012, residential construction firms are reporting an increasing number of shortages in all aspects of the industry --from carpenters, excavators, framers, roofers and plumbers, to bricklayers, HVAC, building maintenance managers and weatherization workers. The same holds true fro subcontractors," said NAHB chief economist David Crowe.

More than half of the builders surveyed reported that labor shortages over the past six months had caused them to pay higher wages in order to secure projects, which translated to an increase in home prices.

Additionally, 46 percent reported experiencing delays in completing a project, 15 percent had turned down projects and 9 percent had lost or cancelled jobs as a result of labor shortages.

In addition to slowing the housing recovery, labor shortages are also linked to new job creation and economic growth.

Pent up demand for housing is expected to grow alongside the economy. Housing experts estimate that 2 million household formations were delayed because of the recent recession.

“We need to look holistically at the home building infrastructure to meet growing and future demand,” said NAHB charman Rick Judson, a Charlotte, North Carolina-based homebuilder. “To avoid a run-up in prices in hot markets due to labor issues, we need to complement our current training programs with a market-based visa system that would allow more immigrants to legally enter the construction workforce each year when there is a dearth of workers to fill the jobs that are needed.”

To read more about the survey results, visit the National Association of Home Builders.

Gretchen Wegrich

Gretchen Wegrich is an editor at Lender411. She specializes in mortgage basics, personal finance and green living. She graduated with a bachelor's degree in writing from University of California, San Diego and previously worked at the Santa Cruz Sentinel. Contact her at gretchen@lender411com.