| In
this photo, Richard Vap, owner of South Valley
Drywall, poses for a photo at a home
construction site with one of his crews working
in the background in Lakewood, Colo. The
resurgent U.S. housing market has sent builders
calling again for Vap, but Vap says he is having
trouble hiring enough qualified people. |
 |
The
resurgent U.S. housing market has sent builders
calling again for Richard Vap, who owns a drywall
installation company. Vap would love to help. And he
would — if he could hire enough qualified people.
"There
is a shortage of manpower," says Vap, owner of
South Valley Drywall in Littleton, Colo. "We're
probably only hiring about 75 or 80 percent of what we
actually need."
More
than six years after the housing bust stalled
construction and led many companies like South Valley
Drywall to slash payrolls, the reverse is occurring:
As demand for new homes has risen, builders and the
subcontractors they depend on can't hire as fast as
they'd like.
Builders
would be starting work on more homes — and
contributing more to the economy — if they could
fill more job openings. In the meantime, workers in
the right locations with the right skills are
commanding higher pay.
The
shortage of labor ranges across occupations — from
construction superintendents and purchasing agents to
painters, cabinet makers and drywall installers. The
National Association of Home Builders says its members
have complained of too few framers, roofers, plumbers
and carpenters. The problem is most acute in areas
where demand for new homes has recovered fastest,
notably in Arizona, California, Texas, Colorado and
Florida.
The
problem results largely from an exodus of workers from
the industry after the housing bubble burst. Some
experienced construction workers found other jobs —
in commercial building or in booming and sometimes
higher-paying industries like mining and natural gas
drilling and aren't eager to come back.
Hispanic
immigrants, largely from Mexico, who had filled jobs
during the boom were among those who left the industry
and, in some cases, the United States.
Dave
Erickson, president of Greyhawk Homes in Columbus,
Ga., lost an employee who took a job this year in
Texas. The former employee is now installing
fiber-optic cable and earning 30 percent more than he
did as a construction supervisor.
"I
think he's frustrated with the cycle we went through
in recent years," Erickson says.
A
shortage of labor in a well-paying industry might seem
incongruous in an economy stuck with a still-high 7.5
percent unemployment rate. But it reflects just how
many former skilled construction workers have moved on
to other fields.
In
2006, when the boom peaked, 3.4 million people worked
in home building. By 2011, the figure had bottomed at
about 2 million. As of last month, about 2.1 million
people were employed in residential construction.
Jobs
in the industry did rise 4.1 percent in April from a
year earlier, faster than overall U.S. job growth. But
they'd have to surge 24 percent more to reach 2.6
million, their 2002 level — "the last time the
market was normal," said David Crowe, chief
economist for the National Association of Home
Builders.
For
now, the industry is building faster than it's hiring.
In February, builders began work on single-family
homes at the fastest pace in five years. And in March,
they broke the 1 million mark for the first time since
June 2008. Permits for future construction are also
near a five-year high.
In
the 12 months that ended in March, housing starts
surged 47 percent. Yet over the same period, the
industry's employment grew just 3.7 percent.
Normally,
a rebound in home construction helps propel an economy
after a recession. But even with the steady gains in
housing starts, sales and prices since last year, the
industry remains below levels considered healthy.
The
National Association of Home Builders says nearly half
its members who responded to a survey in March said a
scarcity of labor has led to delays in completing
work. Fifteen percent have had to turn down some
projects.
"I
can't find qualified people to fill the positions that
I have open," says Vishaal Gupta, president of
Park Square Homes in Orlando, Fla. If not for the
labor shortage, "I would be able to build more
homes this year and meet more demand than I can handle
today."
Gupta's
company is facing a side effect of the labor shortage:
Demand for higher pay from qualified workers. On some
occasions, he says he's been outbid by rivals that
need contractors for their own projects. Gupta's
preferred paint contractor left for a rival that paid
more. His new cabinet contractor is about 10 percent
more expensive than the one Gupta used before.
The
higher pay they're handing out helps explain why
builders have been gradually raising prices on new
homes. The median price was $246,800 in February, up
about 12 percent from the same month in 2011, the
Commerce Department says.
The
industry may have to look more aggressively for
workers at vocational schools, federally funded
programs like Job Corps and elsewhere, says Crowe of
the homebuilders group.
"We'll
have to recruit more," he says.
Vap,
owner of South Valley Drywall, rode out the downturn
after the housing crash in part by relying on
commercial construction projects. He cut his
residential construction staff from 244 in 2006 to 80
in 2009.
This
year, Vap has hired 15 field employees for residential
construction and says he needs to hire 35 more to do
the work he foresees in 2013.
During
the 2005-2006 housing boom years, Gupta had to bring
in workers from Texas because there weren't enough
employees in Florida to keep up with construction. He
doubts many of those veterans will return.
"A
lot of people who are from other states or from Mexico
are not willing to come back here as fast as they did
last time because of what they experienced,"
Gupta says.
Between
2005 and 2010, 1.4 million Mexicans moved from the
United States to Mexico — roughly twice as many as
in the previous five-year period, according to the Pew
Research Center. Though an estimated 11 million people
remain in the United States illegally, the influx of
illegal immigration from Mexico has essentially
stopped, says Douglas Massey, a professor of sociology
at Princeton University.
"The
Mexican economy is doing quite well, with strong
growth in manufacturing and both skilled and unskilled
services," Massey notes. "If construction
demand picks up, we may see an uptick in Mexican
immigration, but I think the boom years are likely
over."
Crowe
and other economists predict that as demand for new
homes strengthens further, higher wages will woo back
many laborers who took up other jobs during the
downturn.
The
home builders association is pushing Congress to let
more immigrants enter the country through a worker
visa program. The association cites census data
showing that foreign-born workers make up about 22
percent of the U.S. home construction work force. It
estimates there are 116,000 unfilled jobs.
Still,
even if builders find more workers to hire, two other
factors could hold back the industry for a while: A
tight supply of building materials and ready-to-build
land. Surveys by the National Association of Home
Builders show that builders have grown concerned about
those obstacles.
In
part, that's why Crowe, the association's chief
economist, thinks employment in single-family home
building won't return to its 2002 total until 2016.
And he isn't unhappy about that.
"In
a perverse sort of way, the mild housing recovery is
probably a good thing, because we need to rebuild the
infrastructure of the industry," Crowe says.