Construction’s Rebuild in Lane County is Still Incomplete

by Henry Fields

July 31, 2019

At a recent meeting, I mentioned that Lane County still doesn’t have as many workers in construction as before the recession. Several people attending were surprised – with the all the new work underway around the county and the difficulty filling construction jobs, surely that can’t be true?

As shocking as it is, Lane County construction is still recovering from the recession. Unlike the state, which regained the number of lost construction jobs by 2018, and Lane County employment overall, which passed its previous peak around the end of 2016, Lane County is still below the historic high water mark for construction employment.

How can that be, when construction has been the fastest growing employment sector statewide and locally for several years?

The answer starts with the massive impact of the Great Recession. Local construction employment contracted by one third over just three years. Even after several years of healthy growth, it takes a long time to make up that ground.
Total wages and employment have both grown rapidly in recent years. Although they’re both slightly below the level seen in 2007, if growth continues, we’re likely to surpass the mark sometime in the next few years.

Slower to rebound has been the number of construction businesses. Many employers went under during the recession, and new business establishment in the sector is taking much longer to recover. We not only have fewer employer and nonemployer establishments than 2007, we still have yet to get to the same level we had at the millennium.

In particular, the number of nonemployer businesses (such as sole proprietors, certain independent contractors and the like) is flat in recent years. This means that one theory for what’s happened to construction businesses – that everyone became an independent contractor instead – isn’t likely.

More workers concentrating in fewer firms may not be a bad thing in itself. In an industry like construction, though, the decline in smaller businesses and nonemployers could contribute to a loss of specialization and subcontractor expertise.

I’ve heard anecdotally from employers that finding reliable subcontractors is as hard as it’s ever been, and this may be one reason why.

There is also a brighter interpretation to most of these data: that we still have plenty of room left to grow.

Construction job growth is likely to continue over the medium term. We still aren’t building as much housing as we did in the 1990s and 2000s, and as people continue to move to the area, residential construction is likely to drive continued demand. The next recession, when it comes, is unlikely to be so concentrated in the housing market.

The fact that many construction jobs, especially skilled trades, are difficult to fill is undeniably a headache for employers, but it’s a boon for workers. Those with the right skills can command higher wages and more opportunities than they could a few years ago.

Even fewer business establishments present some upside potential. Entrepreneurs who want to start a construction business will likely find the field less crowded than it has been historically if they can find a niche.

For the time being, however, growth in construction hasn’t put us back to where we were more than a decade ago.

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