After three years of a slow climb out of the enormous recession of 2008—or three years of economic depression, if you prefer—Jobs Report Friday has turned into a national obsession. Like a monthly Groundhog Day, on the first Friday of every month we check the TV or a news app on our phones to see if the numbers mean we’ll have a shortened economic winter or if we should save our acorns and hibernate for a while longer. This past winter, it appeared as though our recovery was finally going to kick in and the sun was going to shine. Beginning in March, however, job growth began to stagnate, and April, May, and now June have shown the labor market freezing up again.
The June report by the Department of Labor’s Bureau of Labor Statistics (BLS) shows that only 80,000 jobs were added to the economy last month, with the unemployment rate stuck at 8.2 percent. The participation rate (meaning those who are either working or are actively looking for work) also remained unchanged at 63.8 percent. Treading water seems like the best analogy.
Taking a closer look at the figures, the design and construction industry is faring worse than the national average—and has been since the beginning of the financial crisis. The current and historic data (in seasonally unadjusted numbers) in the following graphs give us an idea of how the sector is recovering.
Recovery is happening, but slowly. The unemployment rate for the construction industry has been falling, albeit inconsistently, since 2010, when it peaked at 26.5 percent in February of that year. The average unemployment rate in the construction and extraction occupations was 19.7 percent for 2009, 20.1 percent for 2010, and 16.6 percent for 2011. In the June report, it came in at 13 percent.
But does that mean that the construction industry is recovering? Construction spending has been higher this spring, rising 0.6 percent in April and another 0.9 percent in May. The June BLS report also shows that the reported number of unemployed in the sector has been dropping since 2009, and has dropped each month of this year as well.
That should signal good news. The problem is that while the number of unemployed has been dropping, so has the number of employed in the construction field. And, as you can see below, this number has dropped considerably since its peak in 2007.
The numbers for May and June have seen a recent uptick in construction employment. This is certainly encouraging. But the lower unemployment rate in the industry is clearly because workers have been leaving for other work since 2007. Take a look at the total workforce chart below.
Total construction workforce participation, employed and unemployed, has been dropping since 2007. There’s no surprise here, given the housing crash and the stalling of new construction over the past three years. What might be surprising is the size of the workforce that has left, either looking for jobs elsewhere in the economy, retiring, or simply giving up. From the 2007 peak to the June numbers, that is nearly 2 million individuals, or a fifth of the total workforce.
If the construction industry workforce were the same size today as it were in 2007, my humble calculations would have the unemployment rate at about 32 percent. So while the unemployment rate may be dropping, and construction spending may be up, there is a long way to go to fully repair the damage done to the design and construction industries by the Great Recession.