Disclosure Before Reading: Like previous blogs, today’s blog is based on data and I am keeping a neutral position in regards to immigration policies.
This month the Wall Street Journal wrote an article titled “How an immigration downturn has contributed to the construction worker shortage”. The article explained that the U.S. construction industry has lost more than half a million Mexican-born workers since 2007.
They examined data from the Commerce Department to determine that there are 570,000 fewer Mexican-born construction workers in U.S. in both the residential and commercial sectors.
Mexican-born construction workers in the U.S. totaled 1.89 million in 2007; contrast to the 1.32 million recorded in 2014.
Roy Weatherford, owner of Apex Foundation LLC. Said: “One thing we’re noticing here in the Houston market is that the workers from Mexico are not coming back”.
John Burns from John Burns Real Estate Consulting, recently talked about how “immigration changes are causing construction costs to surge,” as many builders are having trouble filling many positions. Mr. Burns also quoted Wade McGuinn, CEO of McGuinn Homes who said, “We’ve lost about two-thirds of our Hispanic & South American population in South Carolina, and that has had a profound effect on labor”.
The Associated General Contractors, (the country’s largest construction industry association), surveyed 1,358 construction firms on their perspectives on the labor market and recently released the results. Of the respondents, 86% reported having difficulty filling jobs for hourly craft workers, salaried supervisors and specialists.
How is this affecting the construction industry?
In a U.S. News article, “The Downside of Good Job News”, mentioned two ways in which a shortage in the labor market could impact the housing market:
“First, constrained job growth will limit housing demand, both in rental and owner-occupied housing.” They give the example of how the job growth among Generation Y will be a key factor in determining whether first-time home buying returns to normal levels over the next two years.
“The second impact of rising job openings is currently being experienced on the supply-side of the market – home building and remodeling – in the form of worker shortages among construction firms.” According to the JOLTS data, the current count of job openings in construction is among the highest monthly totals since the end of the great recession, with a job opening rate only exceeded in the last 13 years by the end of the boom period for housing construction.”
John Burns mentioned another challenge for builders in his newsletter: “Smart builders are putting big cost increase contingencies in their budgets, which makes land acquisition very challenging, as land sellers are not willing to drop prices”.
A shortage of workers will cause additional costs and longer timelines for homebuilders, which will no doubt lead to higher prices for the consumer.