JOLTS Analysis – Construction Labor Supply Remains Insufficient
The past two years were supposed to be difficult for the construction industry. Input prices surged during 2021 and early 2022, rising more than 40% above pre-pandemic levels. Then, due to rampant economywide inflation, the Federal Reserve began raising interest rates in March 2022 and quickly hiked them to the highest rate in over two decades. With borrowing costs elevated and banks facing pressure from deteriorating commercial real estate valuations and a spate of failures in early 2023, would-be financiers tightened their lending standards, reducing the volume of projects that could go forward.
And then there are the long standing labor shortages that have frustrated the construction industry for over a decade now. A wave of early retirements in 2020 and 2021 and reduced migration levels during the pandemic exacerbated the issue of worker shortages both in the construction industry and across the broader economy. The number of economywide open, unfilled jobs spiked from slightly fewer than seven million in February 2020 to more than 12 million in March 2022. At that time there were more than two open jobs per unemployed worker, by far the highest ratio on record.
