The construction industry added 22,000 jobs in August, while total construction spending rose 0.7% in July, despite a downturn in most infrastructure investment categories, according to a recent analysis of new government data by the Associated General Contractors of America (AGC).
Association officials cautioned that progress on many public infrastructure projects was likely being undermined by the added layers of red tape the Biden administration continues to add for new public works efforts.
“Today’s reports show there is no letup in demand for construction workers or private-sector projects,” Ken Simonson, the association’s chief economist, said in a news release. “The industry is raising pay faster than other sectors amid persistently low unemployment. But contractors are frustrated by the slow pace of new public project awards.”
Construction employment in August totaled 7,993,000, seasonally adjusted, an increase of 22,000 from July and 212,000 or 2.7% from a year earlier. That outpaced total nonfarm job growth of 2.0% over 12 months. Nonresidential construction firms—nonresidential building and specialty trade contractors along with heavy and civil engineering construction firms—added 21,000 employees for the month and 169,700 (3.7%) since July 2022. Employment at residential building and specialty trade contractors grew by 1,400 last month and 42,400 (1.3%) over 12 months.
Average hourly earnings for production and nonsupervisory employees in construction—covering most onsite craft workers as well as many office workers—jumped by 5.7% over the year to $34.40 per hour in August. Construction firms paid a wage “premium” of 18.6% compared to the average hourly earnings for all private-sector production employees. However, contractors report difficulty finding qualified workers amid an unemployment rate of only 3.9% in August for jobseekers with construction experience.
Construction spending in July totaled $1.97 trillion at a seasonally adjusted annual rate, an increase of 0.7% from June and 5.5% from July 2022. Private residential spending climbed 1.4% for the month, while private nonresidential spending rose 0.5%. But public construction spending slid 0.4% as the largest infrastructure categories declined from June. Highway and street construction spending fell by 0.6%, transportation by 0.9%, and sewage and waste disposal by 1.2%.
Association officials noted that public construction activity has been hampered by a flurry of regulatory measures that are causing confusion and slowing approvals on projects. They noted that this week alone the administration issued new rules that will add to the confusion around what constitutes a water of the U.S. and others that seek to apply federal wage rates to projects funded by the so-called Inflation Reduction Act.
“It appears that the Biden administration can’t decide if it wants projects to get built or prefers to suffocate them with red tape,” AGC CEO Stephen E. Sandherr said. “At some point, people are going to begin wondering what happened to all those projects the administration promised would be built.”