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Idaho’s construction industry on the rise

Idaho’s construction industry practically doubled employment over the past 10 years from 2011-2021, growing by 94% or 28,525 more workers. This is the largest percentage growth among Idaho industry sectors.

The construction industry stalled nationally and in Idaho during the Great Recession of December 2007 to June 2009. A slow construction recovery finally kicked in after jobs bottomed out in 2011 and 2012, with just under 30,000 in statewide employment.

Employment

Construction has always been a volatile industry with seasonal swings based on weather and business cycles affected by financing, consumer confidence and the national economy. Idaho’s construction employment history in Chart 1 cites longer expansionary periods than downturns over the past 20 years. The Great Recession recovery coincides with competitive hiring among most industries contributing to a well-documented labor shortage.

Chart showing growth of Idaho private construction jobs 2001-2021

Workforce Indicators

One industry trait is the dependence on a young workforce to fill skilled trades and labor jobs. Reasons include a strong back and the stamina to work in rain, snow, heat and cold. This is particularly challenging with the huge demand on the industry from Idaho’s continued record growth in population and jobs.

According to Quarterly Workforce Indicators produced by the U.S. Census, Idaho’s construction industry is aging in correlation with a decline in the younger cohort, as shown in Chart 2. This leads one to wonder where the workers are coming from as industry associations struggle to attract new entrants to the workforce which historically are high school seniors.

The industry hopes to attract these young people by showing them the diversity of the industry’s occupations and the breadth of job opportunities — locally or in the global construction arena. Boise State University’s construction management program links students to internships for 95% of its 50-60 annual graduates. The Idaho Associated General Contractors and the College of Western Idaho are collaborating to grow a workforce from within by organizing eight-week training sessions at jobsites, with a career fair after completion.

Chart: Idaho construction workforce share by age: 25-44 years, 55 and older

Industry Hires

The Bureau of Labor Statistics Job2Job Hires program tracks the flow of workers as they move to a new job. With the current low unemployment rate and a high demand for labor, most new hires are moving from job to job, not from persistent periods of unemployment. Chart 3 maps the flow of almost 12,000 construction workers who took construction jobs in Idaho during the period leading up to the pandemic through 2021, showing the number of workers who relocated to Idaho and from which state. Washington, with its loss of the new Boeing plant, unrest during the pandemic and higher cost of living in key coastal areas, was the biggest contributor to Idaho’s construction workforce, losing 3,127 workers to Idaho, while California was second in volume at 1,902 and Utah third with 1,141.

US Map showing states where construction workers were from who moved to Idaho

The second quarter 2021 earnings before and after the move from one job to another indicates a jump in wages of $2,725. Annualized that is an earnings boost of more than $10,000. Other industries show similar upticks in earnings when workers moved  between jobs. This set of data forms the basis of the Federal Reserve Bank of Atlanta’s illustration tracking the  Great Resignation beginning early in 2021 in Chart 4. The wage differential between job switchers and job stayers has continued to widen as inflation persists and job opportunities abound.

Chart: wage growth difference between job stayers and job stayers

Construction Industry Outlook

There are indicators of slowdowns in the single family home building niche. Mostly, the diminished demand to purchase a new or existing home can be directly tied to the interest rate hikes of the federal funds rate in 2022.*

In Idaho, mortgage payments have risen at a faster pace than individual or household income and were driven by a population surge during the pandemic that created a demand for housing that outstripped supply, upping prices significantly. An article about Idaho was published in the New York Times Feb. 12, 2021, leading with the headline “The Californians Are Coming. So Is Their Housing Crisis.”

In Ada County, the Intermountain Multiple Listing Service reported the median price of a home in April 2020 at approximately $375,000 versus 2021 when April’s median price was $481,000, an uptick of 28%. In 2022, April’s median price was reported at $595,000, a year-over-year rise of 24% or a two-year valuation increase of 52%. Not every Idaho county was as red hot as Ada, yet most counties experienced increased demand for housing to a degree not realized since the lead-up to the Great Recession.

According to the 2021 U.S. Census’ American Community Survey, owner-occupied housing units with mortgages — and ratios of home value to household income at 4.0 or more — were estimated at 32% for the nation. Idaho’s share of owners with a similar situation of home values at four times the household income was 50%. Yet housing demand continues to be relatively robust.

The National Association of Realtors released a report in 2021 that estimated the nation faces a housing shortfall of 5.5 million units and may take a decade to alleviate. Affordable or community housing is in the planning stages throughout Idaho’s larger cities and in most of Idaho’s tourism areas. This will hopefully provide many middle-income residents of Idaho homes to rent or purchase with a monthly payment or mortgage less than 30% of one’s income.

With the already huge investment in residential and commercial projects in Idaho, this past summer yielded a monthly average of 600 unique construction job postings online. The pipeline is full of federally funded roads, bridges and broadband expansion that has not even reached the hiring stages yet. The outlook is favorable for construction workers certainly and other industries as well. Should there be a cool down nationally, Idaho’s economy continues to be a bright spot.

*Note: This is the rate that is applied to commercial banks and lenders across the nation, usually for shorter term financing. It is passed on to the consumer and when combined with consumer sentiment, typically can impact the 10-year Treasury Bond that applies to home mortgages, essentially longer-term financing.

— By Jan Roeser, regional economist for Idaho Department of Labor. This piece was originally published on idahoatwork.com.

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