Economy Watch: Two Tales of Employment Recovery
- May 12, 2015
Construction has had a fairly good run lately in terms of job creation, with the Bureau of Labor Statistics reporting last week that the industry added a net of 45,000 positions in April, after not budging much in March. Over the past 12 months, construction (both residential and nonresidential) added about 280,000 jobs, the BLS said, and current total employment in the sector is 6.38 million, up from the same time last year, when it was 6.1 million. The most recent nadir in construction employment was in January 2011, when the industry employed 5.43 million workers.
Despite the improvement over the last four years, the construction industry hasn’t recovered fully in terms of employment — not only compared with the bubble peak (and it might not be healthy to go back to that level again), but also the expansionary times of the late 1990s and the pre-bubble early 2000s. The economy was reasonably healthy then, and had yet to over-produce buildings in most sectors, especially housing, though the bubble was on the horizon. In any case, the last time construction employment was roughly the same as it is now was in late 1998 and early ’99.
Another industry with a bearing on real estate is hospitality. An increasing level of hospitality workers points to higher demand for rooms and related services, and eventually that will drive development (as well as investor interest). The trajectory of hospitality employment has been somewhat different than that of construction. In April, the industry added only 17,000 jobs, which is less robust month-over-month, especially considering that the hospitality industry employs many more workers than construction. Over the last 12 months, however, hospitality has added a much more solid 434,000 jobs.
The longer-term trend in hospitality employment is one of a full recovery from the recession, unlike construction. In fact, over the last 25 years, recessions have had a way of only temporarily suppressing employment in the hospitality sector. The pre-recession peak in employment, according to the BLS, came in February 2008, when 13.54 million worked in the industry. Naturally, the recession caused a contraction: by February 2010, the total was 12.92 million. But employment has long since bounced back over the pre-recession total: as of last month, it stands at 15.04 million.