Ajax Paving Industries, Florida LLC couldn’t be any busier this year. The company is bagging multiple contracts for re-building interstate highways and roads in Florida as the fast growing state sees skyrocketing development from building roads and airports to homes and office buildings.
“We’re hiring,” said Felipe Jaramillo, engineering director at Ajax Paving, a concrete and asphalt contractor in Florida. “If anybody basically has a heartbeat and is well in the work, they can get a job in construction, making really good money.”
Construction jobs in the United States are on the rise, defying economists’ predictions that the sharp rise in interest rates engineered by the Federal Reserve would slow the industry. But the strength of the sector also means the Fed may be forced to continue to raise interest rates despite fears such moves will bring on a recession.
A recent Bureau of Labor Statistics report for April showed that the construction sector added 15,000 jobs, a significant jump from the 9,000-job decline in March. Since the beginning of 2022 the industry has added more than 124,000 jobs, with 109,000 jobs added since March 2022, when the Fed first started hiking rates.
For housing economists, this is the next big puzzle. “Even as housing starts have gone down consistently over the past few months, construction jobs are going up,” said Jonathan Millar, senior economist at Barclays Investment Bank.
Construction jobs are growing nationally. State-wise employment data on construction jobs shows that 44 US states added jobs on a yearly basis since March 2022. Texas added 41,200 jobs, the most throughout the year, followed by New York, Florida and Indiana. Associated General Contractors for America, a trade organization, said that the demand for manufacturing construction is rising in these states, while infrastructure and energy construction is expected to boom, which will require skilled workers.
Employers are adding jobs because of a confluence of reasons like the pandemic backlog of unfinished home projects, construction in the public sector and the rise of multi-family homes like apartments and condos.
“If anybody basically has a heartbeat and is well in the work, they can get a job in construction, making really good money.” - Felipe Jaramillo, AJAX Paving
During the pandemic a lot of construction workers had left job sites in large numbers due to the challenges of COVID-19 and government aid, which dissuaded them from participating in the labor force. Construction businesses accumulated a lot of back-logs that continued to add jobs, even today. But even as things returned to normal, workers didn’t return to the labor force in full numbers, creating job vacancies for skilled and unskilled workers.
“There’s an immediate need for workers that can’t be satisfied domestically,” said Stephen E. Sandherr, chief executive officer of AGC, in a press release.
The demand for rental properties has been on the rise, which has increased demand for multi-family homes. The rental market is also proving to be robust as renters find it increasingly unaffordable.
Builders and contractors have started prioritizing construction of multi-family homes, but don’t expect the supply of apartments to meet the demand by the end of 2023. The US has seen an acute housing shortage since the 2008 housing market crash, with builders failing to meet the rising demand for homes.
The surge in public-sector construction, which is mostly non-residential, is also adding jobs. “Manufacturing-related construction, as the CHIPS Act and reshoring efforts have led to a 53.5% increase in manufacturing-related spending over the past year,” said Zach Fritz, an economist at Association of Builders and Contractors, a trade organization.
The $1.2 trillion Infrastructure Bill of 2022, that reshores efforts to build airports, roads and public transit is also set to add more jobs to the non-residential construction sector.
Companies are yet to receive the benefits of these bills. “We haven't even seen the big rollout of that,” said Jaramillo.
While residential construction is expected to slow down as the back-logged projects near completion. But for some non-residential sectors, the demand is likely to continue no matter what the Fed does. Jaramillo said Ajax Paving, which primarily deals with government funded projects, has their plate full for the next few years.
However, economists painted a picture of uncertainty for the future of this sector, because they expect the Fed’s interest rate hikes to have delayed effects in slowing construction.
“There is good reason to think it will head downward, but we’ve been wrong for a while now,” said Millar. “Nothing is in the bag.”
Edit: An earlier version of this story was writted erroneously with company name Ajax Paving Inc. The company is called Ajax Paving Industries, Florida LLC.
The story also carried Felipe Jaramillo's designation as the Director of Business Development. He is the Engineering Director at Ajax Paving Industries, Florida LLC.