On August 4, BLS reported 305,000 open construction jobs in June. That’s up 14,000 from May and 81,000 from a year earlier, a 36% increase. It landed one day after a Census report showing total construction spending fell 3.2% month over month.
Openings up, demand down. Both numbers are real.
What the Data Actually Says
3.5% of all construction jobs went unfilled in June. New hires came to 323,300, up 41,000 from May but down 27,000 from a year ago. Total separations rose 23,000 for the month, driven mostly by quits. Layoffs fell by 2,000.
That combination matters. If contractors were shedding work, layoffs would rise and quits would fall, because nobody walks off a job in a soft market. The opposite happened. Meanwhile private nonresidential spending rose modestly month over month in June but was down 4.7% year over year.
This is the third consecutive month with the job openings rate above its year-ago level.
Two Economists, One Conclusion
Both major contractor associations published the same reading, which doesn’t happen often.
“Interpreting these data is often challenging,” said Anirban Basu, chief economist at Associated Builders and Contractors. “One could take these figures at face value and conclude that construction is thriving and driving demand for workers higher.” He doesn’t buy it.
His alternative explanation is a productivity substitution. “Many contractors view a structural shortfall of skilled labor as their primary challenge because many highly experienced, productive workers are retiring,” Basu said. “It is conceivable that these workers are being replaced with less skilled and productive workers, thereby requiring a few workers to be replaced by many.”
That’s the mechanism. If a retiring 30-year foreman gets replaced by two people who together do what he did, headcount demand rises while output stays flat. The openings number goes up and the spending number doesn’t.
Basu added a second driver: “It may be that certain people who had been working in construction were doing so without proper documentation. At least some of these workers are no longer available at jobsites, inducing faster hiring and expanding job openings as contractors work to replace them.”
Macrina Wilkins, director of market insights at Associated General Contractors of America, was more measured. “The combination of higher job openings and a lower hiring rate suggests contractors may be finding it more difficult to fill certain positions while remaining measured about expanding their overall workforce,” she said. “I wouldn’t read too much into one month’s data, but if that pattern continues it could point to employers having more difficulty filling open positions.”
The Planning Implication
If the labor gap were cyclical, it would close when spending falls. It isn’t closing. ABC’s own Construction Confidence Indicator still shows the average contractor expecting rising revenues and employment over the next six months, which is a survey of intent running against a spending series moving the other way.
For anyone staffing a multi-year job, from a campus program like the $54.7 million SC State academic building to a highway package, the practical read is that crew availability should be modeled as a structural constraint rather than something that eases when the market cools. It didn’t ease this time.