The state Employment Development Department’s Labor Market Information Division (LMID) has a wealth of data on employment in California (www.labormarketinfo.edd.ca.gov) . LMID is a starting point for most employment issues, including the current construction employment meltdown, and the impacts of transportation, infrastructure and other public works projects.
The numbers on construction employment are striking. In December 2006 California had 937,000 construction jobs. Over the past 30 months that number has steadily declined, so that the state was down to 642.000 construction jobs in June 2009.
The more revealing LMID numbers are in the sub-sectors. LMID divides construction employment into three main subsectors: (i) “Construction of Buildings” (residential and commercial buildings) (ii)“Specialty Trade Contractors” (building equipment contractors, building foundation, finishing and exterior contractors) and (iii) “Heavy and Civil Engineering Construction” (the public works jobs). Although it is often thought that most construction jobs are in public works, this is the smallest of the three sub-sectors by wide margin.
By far the largest number of construction jobs are with the Specialty Trade Contractors, though this sub-sector has thinned considerably in the past year. Specialty Trade Contractors had 529,000 payroll jobs in June 2008. A year later, this number was down 19.4% to 426,300 jobs. Construction of Buildings, as might be expected, took a similar sharp decline. Constuction of Buildings had 191,700 workers in June 2008, and was down 20% to 153,300 workers in June 2009. Interestingly, the decline in non-residential construction jobs was slightly higher (down 21.8%) than residential construction jobs (down 19%).
The public works Heavy and Civil Engineering jobs numbered 84,700 jobs in June 2008, and declined to 73,800 jobs in the June 2009 numbers. Only the Highway, Street and Bridge construction jobs showed a slight gain over the past month, from 22,900 jobs to 23,400 jobs. Public works jobs are by no means making up for the loss of construction jobs elsewhere.
The limits of public works jobs in combating unemployment can be traced to two main factors. First, public works projects have become increasingly capital intensive over the past forty years. Second, the Stimulus funding is just now beginning to reach construction hiring. Even though infrastructure projects may have been “shovel ready” in April or May, the bid processes usually take several months. Construction hiring is only beginning for the first Stimulus infrastructure projects in July and August.
Nonetheless, the infrastructure projects are key to construction hiring. These jobs pay the middle class wages that all Stimulus projects are seeking. They generate a range of non-construction jobs, both in pre-construction engineering, environmental, architecture, traffic control, surveying and lighting work, as well as in construction management and program management. Most bascially, of course, they generate a public capital for future economic growth.
One main challenge for any facilities or infrastructure project today is how to maximize the employment impacts of the project on the regional and local economy. I’ll have more to say on this in future postings on California employment.