Demand for New Homes Sparks Demand for Skilled Construction Workers

Demand for New Homes Sparks Demand for Skilled Construction Workers

Home builders in the United States are welcoming the budding recovery of the housing market, but they are facing an obstacle that is a bit difficult to believe. According to a September news report by CNBC, skilled construction workers have been in short supply since last summer. A recent update to that report cites data from the U.S. Department of Labor, which shows that 20,000 construction workers lost their jobs in October.

This shortage of skilled workers could become a setback for the nearly 800,000 housing starts awaiting completion. There are various reasons for this unusual shortfall, starting with the bursting of the housing bubble and the two million workers who were left jobless. The majority left and never returned to home building once they experienced months of disappointing news with regard to their industry.

Many of the construction jobs lost belonged to immigrants who returned to their countries due to immigration policies and the poor economic opportunities in the U.S. during the Great Recession. Other skilled construction workers were self-employed professionals or small business owners who are now dismayed at how much housing costs have gone up. 

Regional and Labor Issues

House hunters are taking advantage of low prices and low mortgage interest rates, but they are overwhelmingly attracted to new homes in certain regions of the country. The housing market recovery has been largely uneven, and construction labor shortages are greater in those areas where demand for new homes is high. 

With so many skilled construction workers no longer willing to work in the home building industry, labor costs have significantly gone up in some regions. In the past, home builders have been able to meet their own demands for labor by setting up their own on-the-job training programs. That is not possible at this time, however, due to the increased cost of building materials and the fact that the demand for new homes needs to be higher to merit training new laborers to become skilled construction workers. 

Should the housing recovery continue improving at a gradual pace, the labor market is bound to correct itself in order to accommodate demand. Until then, however, there is the fiscal cliff to consider. If banks are reluctant to fund business loans for independent home builders, the contractors will not be able to hire the workers they need to complete a project.

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