Already tight Spokane-area construction labor market made worse by pandemic

Struggling to find workers to build homes before the pandemic, the recent surge in housing prices and demand for new housing has made Spokane-area construction firms even more desperate to find help, sources say.

According to the U.S. Commerce Department earlier this month, crews began work on 1.74 million homes in the U.S. in March. That’s a big move up from 1.46 million housing starts in February. The March figures marked the highest level of housing starts since July 2006, when the housing bubble began to unravel.

A combination of low interest rates, more millennials starting families and changes in where people and businesses can locate as a result of the remote-work revolution suggests the need for new homes will only increase.

Freddie Mac estimates that as of the end of last year the country needed 3.8 million single-family homes to meet long-term demand, according to recent report in the Wall Street Journal.

The WSJ report noted that following the housing bubble of the Great Recession, the U.S. Census Bureau counted 32,158 speculation-home builders in 2007. Ten years later, that count fell to 15,483 in 2017.

Joel White, executive director of the Spokane Home Builders Association, said Spokane saw some construction firm leaders leave the area to find work in North Dakota oil fields, but the area has not seen the dramatic drop in construction companies reflected in national statistics.

“We haven’t seen a loss of members,” White said. “They just can’t grow at this point in time because they have so much work and only so many workers.”

He noted that Coeur d’Alene was just ranked the top emerging housing market by the Wall Street Journal/Realtor.com Emerging Housing Market Index. Spokane ranked fifth.

“We were not prepared for that with the number of workers,” White said. “Nobody is moving in from other areas to work here, because other markets are busy as well.”

Data released Wednesday by the Associated General Contractors of America seemed to confirm what White was saying. The association represents all contractors except those that build homes.

According to the AGC, construction employment has dropped in 57% of the country’s metro areas. However, the Seattle-Bellevue-Everett area led the country with 5,700 new construction jobs from March 2020 to March 2021. Spokane’s metro area added about 200 new construction jobs.

Because of the high demand on the state’s West Side, local Spokane-area contractors have been forced to increase wages to try to keep the skilled laborers in the local market, White said.

“It’s worse than it was prepandemic,” he said. “There’s various reasons. But part of it is tied to people who chose not to go back to work. That just exasperated the issue. But the wages are going up. But there is only so much you can pay because the prices are escalating so fast on the homes.”

Grant Forsyth, chief economist for Avista, said recent studies have shown that some workers were able to make as much, if not more, than their pay before the pandemic by receiving state and federal unemployment benefits. But, the construction worker shortage also reflects other factors.

“The decision to return back to work is multidimensional,” Forsyth said. “It’s not just about what you are getting paid by unemployment.”

Some workers are taking this time to consider new careers and others continue to struggle with other factors, such as child care and fear of exposure to COVID-19, as they decide whether to re-enter the workforce.

“Let’s say we didn’t have the pandemic,” Forsyth said, “but the housing market continued to forge ahead. You’d still see a pretty tight supply of workers in that industry.

“You layer this pandemic on it, and the disproportionate effect it’s had on the labor market, it probably makes those labor-supply constraints even tighter.”

White and Forsyth agreed that construction firms have workers who are getting older, while at the same time they struggle to find younger replacements.

“It’s a generational challenge,” White said. “These are good, valuable jobs. Getting youths to look at construction as a viable career option isn’t easy. We are not going to fix this in six months or a year.”

As a result, industry leaders are reaching out and working with Community Colleges of Spokane and area high schools to try to highlight those opportunities. White said his organization is helping to sponsor a career fair May 22-23 at Mead High School with direct-hire opportunities for students in the construction trades.

Forsyth said other factors also are working against those efforts. He noted the pandemic has brought the lowest population growth since the 1930s.

“We already have an aging population, and we have an event lowering the birth rate even more,” he said. “As a result, a lot of these occupations will continue to see a tight labor supply because of the demographic situation.”