I’ve written many times about consumer confidence, which is the backbone of our economy. American consumers represent 70 percent of annual gross domestic product (GDP). When they feel good, they spend more freely and propel growth.
Nothing drives confidence like knowing your job, as well as that of your spouse, friends, and neighbors, is secure. Such buoyancy is self-fulfilling. The business press is confirming what we all feel, which is that the job market is the strongest it’s been in 49 years and has added jobs for 100 consecutive months. Between 2006 and 2009, 8.6 million jobs were lost as the Great Recession gripped the nation. Between 2010 and 2018, 19.4 million jobs were added. The number is growing at an average 200,000 jobs per month. Life doesn’t get much better than this.
Workers are so scarce that, in many parts of the country, low-skill jobs are being handed out to pretty much anyone willing to take them and high-skilled workers are in even shorter supply. All sorts of people who previously had trouble landing a job are now finding work. Minorities, those with less education, and people working in the lowest-paying jobs are getting bigger raises and, in many cases, experiencing the lowest unemployment rate ever recorded for their groups. They’re joining manufacturing workers, women in their prime working years, Americans with disabilities, and those with criminal records in enjoying improved prospects after years of disappointment.
Construction employment is likewise enjoying record growth. Between December 2017 and December 2018, 76 percent of the 358 metro areas for which the U.S. Bureau of Labor Statistics provides data added jobs. Job growth fell in only 10 percent of metro areas. As a result, finding qualified drivers and other plant and maintenance workers is the biggest challenge our industry faces.
What could shake consumer confidence by derailing this boom? Two risks loom.
Low-skill workers who benefit most from a tight job market are often hit hardest when growth turns south. Consider what happened to high school dropouts more than a decade ago: Their unemployment rate dropped below 6 percent at the height of the housing boom in 2006 and shot up to 15 percent when the economy crumbled. Many construction, manufacturing, and retail jobs disappeared.
The unemployment rate for dropouts fell to percent last year and their median weekly wages rose more than 6 percent, outpacing all other groups. If the economy turns toward recession, such improvement could reverse quickly.
This strong business cycle might be masking long-running trends that disadvantage many workers. Research shows that automation and competition from overseas threaten workers in manufacturing and mid-skill jobs, such as clerical work, that can be replaced by machines or low-cost workers elsewhere.
For now, the job market is the foundation of a long, sustained period of expansion. The economy has churned along without serious interruption since the recovery began in mid-2009. The reigning champion is the 1990s expansion, which lasted 120 months. We’re at 114 with no end in sight.
Our firm believes job growth will steadily continue through 2023 and possibly longer. While hiring workers may be a challenge for our industry, the robust job market is driving a strong economy – which is good for construction generally and the concrete industry in particular.