In September, the U.S. Bureau of Labor Statistics reported that construction employment increased nationally by 16,000 jobs. And during the past year, the industry added 230,000 jobs on net. Louisiana itself has been no stranger to construction job growth.
Louisiana Economic Development reported that there are more than $50 billion in industrial plant expansion and construction projects in the works over the next few years, spurring growth in both commercial and residential construction and thus growth in construction employment. In fact, the Associated General Contractors of America (AGC) recently reported that Lake Charles, a city tucked in the southwestern corner of Louisiana, had the largest year-over-year percent increase in construction jobs in the country in August: 27 percent, or 2,900 net jobs. Baton Rouge, the state capital, was the fourth-largest contributor to construction jobs in the nation during the same period: 18 percent, or 8,000 jobs.
Despite the upbeat construction job growth picture in Louisiana, the AGC acknowledged that the overall industry has been inconsistent through the recovery. Their report indicated that nationally firms are having a hard time finding enough qualified workers, with one in four firms having to turn down projects because of worker shortages.
For quite some time now, business contacts in our Regional Economic Information Network have echoed the same sentiment (see past editions of Southeastern Insights), describing difficulties finding qualified workers in various industries. Contacts from the construction industry in particular have conveyed these challenges for a little over a year, often stating that projects were being delayed because of the difficulty finding the quantity and quality of skilled contractor labor. Continuing this theme, the Atlanta Fed’s latest commercial construction poll results revealed an increase in the share of industry contacts who reported a more difficult time filling positions relative to a year earlier (see the chart).
However, three-fourths of these contacts indicated that they plan to increase hiring during the next quarter (see the chart).
So how will the construction industry and labor market in Louisiana fare, considering permits were issued for a myriad of construction projects in the pipeline in Louisiana and that more than 13,000 construction jobs are expected to be needed in the near to medium term? Hopefully concerns about the tight labor market and potential labor shortage will be diminished by various efforts happening in the state to provide training in trade skilled crafts to help address the fast-growing workforce needs of the construction industry. Examples of such training programs are currently administered by the Associated Builders and Contractors and Louisiana’s Community & Technical Colleges. Given the significant job growth and positive outlook in the construction industry in Louisiana, construction might be an industry that could merit additional training programs and workforce development efforts.
By Gail Psilos, REIN director, and Rebekah Durham, economic policy analysis specialist, both in the New Orleans Branch of the Atlanta Fed