Labor shortage hampering rebound of Utahs housing construction

Labor shortage hampering rebound of Utah's housing construction By Paul Beebe | The Salt Lake Tribune First Published Aug 17 2013 http: //www. sltrib. com/sltrib/money/5673410279/construction-ivory-workers-labor. html. csp

Several Utah companies did not survive recession, forcing workers to find new jobs. http: //www. sltrib. com/sltrib/money/5673410279/construction-ivory-workers-labor. html. csp

Labor Shortage Threatens Home Builders • A shortage of workers threatens Wasatch Front homebuilders just as buyer demand picks up after several brutal years of decline that pushed several construction firms out of business. • Builders say the deep recession in Utah forced many skilled and unskilled workers to find other ways to make a living or decamp to energy states like North Dakota, where homebuilding is on a brisk pace to keep up with the influx of oil workers. http: //www. sltrib. com/sltrib/money/5673410279/construction-ivory-workers-labor. html. csp

Workers Went Elsewhere Threatening Workmanship & Prices • Many Hispanic construction laborers went home • the labor shortage is slowing down the pace of construction, raising fears of poor workmanship, and driving up the price of new single-family homes http: //www. sltrib. com/sltrib/money/5673410279/construction-ivory-workers-labor. html. csp

Shortage of Skilled Workers • "Particularly in areas of skilled labor, " [Clark Ivory, CEO of Ivory Homes, the largest homebuilder and land developer in Utah] … said. "It is not challenging now to find the guys that are unskilled. It is more difficult to find the journeymen — plumbers, electricians, the framers and the really skilled drywallers. " http: //www. sltrib. com/sltrib/money/5673410279/construction-ivory-workers-labor. html. csp

Skilled Workers Went Back to Mexico • Ivory said many competent construction workers have gone into other industries. A lot of the highly skilled Latinos employed by his company or by subcontractors who work for Ivory Homes have returned to Mexico or other Latin American companies. None who worked for Ivory was undocumented, he said. http: //www. sltrib. com/sltrib/money/5673410279/construction-ivory-workers-labor. html. csp

Voc. Tech Schools Not Graduating • The dearth of skilled craftsmen is being magnified by a shortage of people graduating from technical schools, Ivory said. When the construction industry turned down, he added, fewer young people decided to go to school to learn a trade. • Gordon Wood, who owns Professional Building Group in Saratoga Springs, said many skilled workers who moved to other occupations during the construction downturn are afraid to return to their old jobs. http: //www. sltrib. com/sltrib/money/5673410279/construction-ivory-workers-labor. html. csp

Questions • What Is a Labor Shortage? • How bad was the Great Recession? Was it worse for construction? • How many workers left construction in the US? In Utah? • What happened to wages?

Sources of Labor Market Information • St Louis Federal Reserve – http: //research. stlouisfed. org/fred 2/graph/ • US Dept of Labor, Bureau of Labor Statistics – Bls. gov • Utah Economic Data – http: //jobs. utah. gov/wi/

Sources for Newspaper Information • Marriott Library – http: //www. lib. utah. edu/ – Research Databases tab • Browse Database by Type dropdown tab – Newspapers » Lexis. Nexis Academic • Put in your u. NID and password; login

What Is a Labor Shortage? • “A sustained market disequilibrium between supply and demand in which the quantity of workers demanded exceeds the supply available and willing to work at a particular wage and working conditions at a particular place and point in time. ” – Barnow, Trutko and Piatak, Occupational Labor Shortages: Concepts, Causes Consequences and Cures (2013) 11

Types of Labor Shortages • • Seasonal Cyclical Regional Sectoral – Residential, Commercial, Industrial, Civil • Generational – Baby boomers • Occupational – Skilled vs. unskilled; particular trades; welders • Structural – “Nobody wants to be a construction worker anymore. ” 12

WAGE RATE LABOR SUPPLY LABOR DEMAND NUMBER 13 OF WORKERS

WAGE RATE LABOR SUPPLY $10/hr. LABOR DEMAND NUMBER OF WORKERS WILLING TO WORK AT THIS WAGE 3 WORKERS NUMBER OF WORKERS WANTED BY EMPLOYERS AT THIS WAGE 10 WORKERS NUMBER 14 OF WORKERS

WAGE RATE LABOR SUPPLY $10/hr. LABOR DEMAND LABOR SHORTAGE OF 7 WORKERS 3 WORKERS 10 WORKERS NUMBER 15 OF WORKERS

WAGE RATE LABOR SUPPLY UPWARD PRESSURE ON WAGES $10/hr. LABOR DEMAND LABOR SHORTAGE OF 7 WORKERS 3 WORKERS 10 WORKERS NUMBER 16 OF WORKERS

WAGE RATE LABOR SUPPLY $15/hr. LABOR DEMAND NUMBER OF WORKERS WILLING TO WORK AT THIS WAGE EQUALS 8 WORKERS NUMBER OF WORKERS WANTED BY EMPLOYERS AT THIS WAGE NUMBER 17 OF WORKERS

Where Is the Upward Pressure on Wages? Construction Employment Since 1980 Hourly Wages of Construction Workers/Hourly Wages of All Workers Since 1980 18

What Should Shortage Policy Be? Hypothetical Business Cycle 19

Policy 1: Train for Peak Demand Never Any Shortage: Lots of Unemployment Growth of construction labor supply 20

Policy 1 A: Guest Workers Whenever Demand Grows: Never Any Shortage Disposable Workers Unemployment Someone Else’s Problem Growth of construction labor supply 21

Policy 2: Train for Trough Demand Never Any Unemployment: Lots of Shortages Growth of construction labor supply 22

Policy 3: Train for trend Demand Balance of Unemployment and Shortages Growth of construction labor supply 23

Balanced Approach=Best for Industry Employer perspective Worker perspective Industry perspective • Extremes lead to either loss of workers due to excess unemployment or loss of projects due to labor shortages • Better solution=smoothing demand through macroeconomic policies and better information 24