Construction Employment

[PD]

Like many, I have been expecting construction employment to fall off a cliff. That has not materialized yet. Here is an interesting study of construction employment (which I first saw on Calculated Risk).

http://www.econbrowser.com/archives/2007/05/why_hasnt_const.html

I am wondering if any of the following could be a partial explanation for the numbers continuing to hold up:

1) Illegals are loosing their jobs and this is not being reflected in the reporting (this is brought up in the article).
2) Construction workers were putting in a lot of overtime during the boom years. While still employed today, they are working fewer hours.
3) There was pressure to work faster (shoddier) during the boom. This pressure has eased and has resulted in a slower working pace but not a big reduction in workers.
4) Builders and contractors are paying less hourly, keeping the numbers high but reducing cost.

Is there any way to measure the total number of hours for which construction workers are being paid? Anyone have any inside info on this subject?

[Bugs]

Another factor is the retail, office and industrial developers are still going strong. My brother-in-law just transitioned from working for a residential developer to a commercial developer. He’s a construction supervisor.

Those markets entered into the upswing 3 or 4 years after residential got going, so those developers are lagging on slowing down to meet the demand. Office and industrial vacancies are going to go through the roof before these guys stop building. That’ll lead to lower rents and subsequently to lower pricing. I fully expect the commercial sectors to unravel a lot faster than the residential sectors.

[Anonymous]

PD, the employment numbers are not believable. Construction employment has not fallen off a cliff in part because of the ‘birth/death’ adjustment made to it in April: 49K new construction jobs were estimated to have been created from businesses too new to be surveyed.

http://www.bls.gov/web/cesbd.htm

[Artifact]

That is an interesting model they came up with. In their defense, they do admit it’s shortcomings – particularly:

“The most significant potential drawback to this or any model-based approach is that time series modeling assumes a predictable continuation of historical patterns and relationships and therefore is likely to have some difficulty producing reliable estimates at economic turning points or during periods when there are sudden changes in trend. BLS will continue researching alternative model-based techniques for the net birth/death component; it is likely to remain as the most problematic part of the estimation process.”

It is definitely missing on this account – not only does it have the addition of 49 construction firms in April, but it also calculated the addition of 26 financial activities – that latter number certainly includes a number of things other than mortgage companies – but I think it is safe to say that it is “slightly” overestimating the number of new fincancial companies.

[PerryChase]

The stats come from the quarterly employment survey that employers complete when they file their quarterly employment returns.

1) Illegals are not reported anywhere. Lots of of small contractors use them. Roubini reported that that remittances to Latin America slowed down sharply since May 2006 because Latino in USA are loosing jobs and need to build savings cushion.
http://www.rgemonitor.com/blog/roubini/190912

2) Independent contractors such as Realtors are not reported anywhere because they work for themselves. If you don’t get a W2 then you’re invisible.

3) Reduction in work hours is not reported anywhere as lost employment.

http://www.rgemonitor.com/blog/roubini/192904

[LookoutBelow]

ANY numbers coming from govt sources are subject to extreme scrutiny…..I don't believe ANY thing that comes out of DC anymore and haven't for quite some time.

If anyone here took a class or classes on statistical analysis…then you'd know that numbers can be jiggered to mean anything, to anyone, at any time….the truth is only the side which you lean too.

Keep clear thinking a priority Piggingtonians….and for gawdsake ..keep your EYE ON THE BALL….your long term future happiness could depend on it

 

 

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