What's happening in the world of construction labor data?
We’ve been talking for a while about the challenges ahead in 2022 for the construction labor market. IN this monthly wrapup of data we look at the key indicators in the market and what they’re telling us.
Total Available Construction Labor (TACL) in December 2021
TLDR: TACL is at near all-time lows for December and is a negative sign for construction labor availability.
Total Available Construction Labor (TACL) is a metric that shows how many unemployed construction workers are left after all open jobs are filled. This gives us a macro look at whether there are enough people in the construction labor market to fill the total jobs in the market.
The latest release of TACL is from December with a value of 120,000. This number is 2nd lowest all-time December TACL with only December of 2018 at 100,000 being less.
The year that followed the December 2018 low TACL was the most constrained labor year on record. All seven (7) months between April and October of 2019 were negative TACL. That means that for those months, there were more open construction jobs than people available to fill them.
If historic trending holds up, 2022 is going to compete with 2019 for the most labor constrained year on record. We know that labor will get less and less available each month between now and September. We expect January and February TACL to be in the 200,000 range for each month with a significant decline in March and then TACL numbers around 0 (or below) for the remainder of 2022.
Construction employment in January 2022
TLDR: January construction employment was the third highest all-time number. 2022 could get construction employment back to its highest levels since 2006.
We watch non-seasonally adjusted employment numbers because they better reflect the current employment situation. Construction is a seasonal business and if you’re trying to make business decisions off the data, you should be considering which part of the season it is.
That said, January employment was 7.182 million people. This is tied for third all-time highest January employment tied with 2006 and trailing only 2007 and 2020.
How should we interpret that number?
In 2006 between January and August the construction industry added 863,000 additional jobs. That’s a huge number.
In 2007 the construction industry added 637,000 jobs between January and August.
In 2020 (COVID year) employment peaked in October and through COVID the industry still added 263,000 jobs.
From the year 2000 through 2021 the construction industry adds, on average, 802,000 jobs between its trough employment month (January or February) and its peak employment month (August or September).
So if the industry adds an average number of jobs, we’d expect employment to peak close to 8 million this year and return to all-time highs in employment.
Construction Unemployment Rate in January 2022
Given how the other data points are faring, this number is not as low as we’d expect. At 7.1% this is the third lowest January unemployment rate going back to the year 2000. This could be an early sign of an easing market, though we see this as unlikely.
Another way to look at this is that with labor still being difficult to find even given a higher-than-expected unemployment rate, things will only get more difficult as the unemployment rate inevitably falls over the coming months.
Open Jobs in December 2021
Open jobs in December were the second highest for a December going back to 2000 at 273,000. The highest December open jobs of all time was in 2018 when there were 293,000 open jobs. From that number 2019 went on to become the most constrained year for labor ever recorded. Could this be telling us a similar fate awaits us in 2022?
Total Construction Jobs Market in December 2021
The total construction jobs market is a combination of employment and open jobs. This metric shows total demand for workers in the industry. December 2021 was the highest all time TCJM 7.738 million. For reference in the December (2005) before construction’s all-time peak employment year (2006) the TCJM was 7.542 million. This metric clearly shows strong demand for labor heading into 2022.