Who Will Get the Disappearing California Construction Jobs?

Michael Bernick
Counsel with the international law firm of Duane Morris LLP, a Milken Institute Fellow and former Director of the California Employment Development Department

Construction employment in California has been in free-fall since reaching its high water mark in August 2006, as shown in the table below.

Over the past year, federal Stimulus infrastructure projects in California have moved forward and hired construction workers. This is particularly true of transportation projects, for which Caltrans is closely tracking payroll data on employees, hours, and total payroll.

What is not widely recognized, though, is that public infrastructure jobs are only a small part of total construction jobs in California. These public infrastructure jobs are the higher paid construction jobs, but amount to around 10% of construction employment.

The breakdown of construction employment by sub-sector can be seen in the chart below.

By far the greatest part of construction employment is “Specialty Trade Contractors”, at 67%. These contractors are the roofers, plumbers, carpenters, painters, who do the smaller home and business improvements. The other main part of construction at 23% is “Construction of Buildings”, which includes residential construction and commercial construction.

As might be expected, Specialty Trade and Construction of Buildings have taken the main losses since August 2006. Specialty Trade shrunk from 641,000 jobs in August 2006 to 350,100 in February 2010. Construction of buildings shrunk from 227,900 jobs in August 2006 to 122,600 in February 2010.

One optimistic way of looking at these numbers is that the bulk of construction employment has not been dependent on government spending, and can begin to rebound when the consumer economy picks up. Conversely, though, until the consumer economy picks up, and with the absence of a significant commercial or residential building market in California, the coveted public infrastructure jobs will be the subject of heightened battles among communities and advocacy groups.

These battles already are occurring in municipalities throughout California. In particular, local elected officials and advocacy groups are pushing “local hire” requirements in public projects—requirements to hire a certain percentage of the construction workers from residents of the city or even the specific zip-code of the project. In the city of Antioch, for example, local hire recently was discussed by the City Council in relation to the coming eBART rail extension. In San Francisco, the supervisors are weighing a number of local hire requirements with the City’s expanded transit, airport, and redevelopment projects.

Local hire raises a number of troubling fairness issues in the current economy. Construction union hiring halls throughout the state have 25%-30% unemployment among union workers—workers who have invested time and mastered construction skills. Should someone by virtue of living in a neighborhood be given preference over these union members for a job? Should someone who moves into a neighborhood be given the same preference as someone who has lived in the neighborhood for many years, or whose family has lived in a neighborhood for generations? What is the moral basis of job preference by residence, especially as Californians relocate with frequency?

We should expect the various claims for public works construction jobs to increase, as the range of other construction jobs in California remains constricted.

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