Volume 50, Issue 1 - January 2015


Stage Set for Labor Cost Increases in Construction Industry

As the U.S. construction industry continues its recovery, the much-discussed labor shortage will also change its scope—and with it will come an increase in pay for workers, according to Associated General Contractors of America (AGC) chief economist Ken Simonson.

Simonson joined CMD chief economist Alex Carrick and American Institute of Architects chief economist Kermit Baker in December to discuss that topic, among others, during a webinar titled, “Is the Pace of Construction Investment Set to Quicken?”

Simonson said construction unemployment fell sharply over the past four years, but employment in the industry rose at a lesser rate.

While the stretch of October 2010-October 2014 saw a 903,000-person decrease in construction unemployment, by October of 2014, the industry had only hired back fewer than 600,000 in that span.

“More than 300,000 have either retired, gone back to school, gone to other industries or left the workforce,” he said. “They’re not sitting at home waiting for contractors to call them back. And that’s why so many contractors are having a hard time finding construction workers now.”

According to a recent AGC survey, 83 percent of firms with craft employees report they’re having trouble filling one or more craft positions. As a result, Simonson expects a “sharp upturn” in employment costs, which will result in workers entering or re-entering the industry.

“There is growing evidence that contractors are starting to raise either base pay, signing bonuses, completion bonuses with a job or per diems for traveling,” he said.

The Bureau of Labor Statistics’ (BLS) Employment Cost Index rose 2 percent in 2013, and Simonson projects it will increase 1.5-2.5 percent in 2014 and another 2.5-5 percent per year from 2015 through 2017.

Meanwhile, according to the U.S. Census Bureau and the BLS, construction spending has increased 19 percent over the last four years, while jobs have increased at nearly half the rate at 10 percent.

Simonson said the spending increase is a result of contractors charging more, as indicated in a Producer Price Index increase of 11 percent in nonresidential building, as well as a higher rate in hours per worker. According to the BLS, aggregate hours in that four-year span have increased 13 percent, a 2-percent increase per employee. He said, “Further spending growth will trigger larger hiring—but will workers be available?”

In terms of total employment in the U.S., Carrick said May was a “turning point,” as the employment finally rose back above where it was pre-recession.

While Carrick reported that employment in architectural and engineering services is “almost back to where it was at its last peak,” the construction employment level is far from its peak pre-recession due to many people leaving the industry.

Specifically, U.S. construction employment as of September is 21 percent lower (minus 1.6 million) than its April 2006 peak. Simonson said North Dakota and Louisiana were the only two states to hit their peak in 2014.

Aside from a few rare one- or two-week spikes, initial jobless claims in the U.S. on a week-to-week basis have continued to decline since its peak of just under 700,000 in the early part of 2009. Over that same period of time, U.S. construction unemployment has decreased overall on an up-and-down step pattern.

Nearly 30 Glaziers
Among Recent FTI MAR Program Graduates

The Finishing Trades Institute of the Mid-Atlantic Region (FTI MAR) held its Second Annual Commencement Ceremony in conjunction with Mountwest Community & Technical College and the National Labor College on November 6, 2014.

Approximately 50 men and women earned an associate’s or bachelor’s degree through the unique programs offered by the FTI MAR and U.S. Department of Labor Grant Funds, and nearly 30 of the graduates were glaziers.

To date, FTI MAR has facilitated 100 associate’s degrees, with nearly 250 more just one or two classes away from achieving the same. The number of graduates has more than doubled since 2013 graduation.

AAMA Releases
Guide for Fenestration Certification

The American Architectural Manufacturers Association (AAMA) released AAMA 103-14a, Procedural Guide for Certification of Window, Door and Skylight Assemblies, on December 1.

According to AAMA, the document has been completely re-written and re-formatted to comply with new ANSI accreditation requirements. Additionally, a new feature of the document is the enlargement of the initial certification period from four to five years, plus the option to extend the certification of qualifying products for another five years if additional quality checks are added to the licensee’s Quality Management System.

“The addition of the five-year initial certification term to AAMA’s window and door certification program will allow our licensees to see a larger return on their testing dollars,” says Jason Seals, AAMA’s certification manager. “Additionally, those participating in the five-year extension program can see an even larger return on their investment, while also gaining additional benefits from the enhanced quality control program and ten year total certification term.”

AAMA was formerly accredited to ISO/IEC Guide 65, published in 1996. Now, it will be accredited to the new ISO/IEC 17065, titled Conformity Assessment – Requirements for Bodies Certifying Products, which was published in 2012.

AAMA 103-14A, along with other AAMA documents, will be available from AAMA’s Publication Store.

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