Recession or Not, Austin Is Headed for a Labor Shortage
The broader U.S. economy may still be hurting, but Austin’s job market is basically already back to where it was before the pandemic, with labor shortages emerging in certain industries.
Lower employment levels in the hospitality, healthcare, and other sectors have largely been offset by gains in construction, tech, financial services, and transportation.
The number of construction workers is up more than 2% from a year ago, and a boom in e-commerce has boosted employment in the transportation sector about 2.5%, according to Labor Department statistics for the five-county area that includes Austin.
Massive investments in commercial real estate are fueling the construction boom. An estimated 3.5 million square feet of office space is under construction in the Central Business District, as developers forge ahead with highrise projects despite a culture shift toward more remote work.
Moreover, the pivot to e-commerce has upped demand for warehouses, such as an 820,000 square foot Amazon facility under construction in Pflugerville. Manufacturers are also upping their investments in Austin, with Samsung reportedly considering a $10 billion semiconductor plant, and Tesla constructing a massive factory southeast of the city.
On its website, Tesla is advertising about 300 Austin positions, though the actual number of new jobs is likely in the thousands, since some of those postings refer to positions with multiple openings. CEO Elon Musk said March 31 that Tesla needs to hire more than 10,000 people for the ‘Giga Texas’ plant through 2022 — a number that likely includes construction contractors.
Tesla is offering an $18/hour wage for general laborers with at least one year of experience. The firm is also looking for iron workers, riggers, pipefitters, plumbers, carpenters, crane operators, welders, and other specialists.
Many local firms are offering similar wages for entry-level laborers, with significantly higher pay for skilled tradesmen. For example, 3-D Construction, a home renovation company, is offering $18 an hour for laborers, plus health insurance, dental insurance, and life insurance.
Still, wages might have to go even higher in order to attract enough workers. Rising housing costs and the city’s overtaxed road network make it hard for workers to get from home to where the jobs are. Tesla’s CEO, who recently relocated to Austin, seems acutely aware of the problem that this poses to his Gigafactory; he tweeted Sunday, “Urgent need to build more housing in greater Austin area!”
Builders in Austin need to compete for laborers against other cities too, such as Dallas, where homebuilding continued at a furious pace in 2020. “The labor market trends in skilled trades may become more challenging,” said a Dallas-based recruiter.
Nationally, an estimated 220,000 construction jobs remain unfilled. The Dallas Federal Reserve, in its latest Beige Book report, referred to “accelerating” wage pressures in Texas. It said that firms are having “difficulty finding and retaining workers.”
Labor costs in the homebuilding industry are contributing to a spike in prices for new homes, according to industry professionals. A lack of skilled laborers, coupled with supply chain issues, is also causing delays in completing new homes.
The Building Talent Foundation, a national promoter of construction trades, says that workforce shortages will “surge as we move into post-pandemic recovery,” noting that labor costs in the industry reached an all-time high earlier this year.
“While higher wages will help with the problem in the short run, it’s important that we collaborate and work together to bring more individuals into rewarding careers in the construction trades.”
Economics firm Markstein Advisors, in a recent analysis for the U.S. Associated Builders and Contractors, projected that rising construction spending will generate another 1.3 million construction jobs over the next three years, with a high-end estimate of 1.9 million.
Factories are also suffering from labor shortages, and a number of factors could make these shortages worse, even as unemployment persists at higher levels than before the pandemic.
In the first place, the U.S. Congress has extended enhanced unemployment benefits, which provide $300 more per week than normal unemployment. That could encourage some workers to wait longer before returning to the workforce. Additionally, stimulus checks, local rental assistance programs, and student loan deferrals have all helped low-income and middle-income workers, resulting in a rise in net savings and a decline in consumer debt over the past year.
Finally, a second round of the Paycheck Protection Program, which is still being distributed, has allowed workers to remain employed in faltering sectors of the economy, even as booming industries struggle to recruit the talent they need. Unlike in previous recessions, this means that some firms have continued operating despite being insolvent.
Those faltering business sectors — such as retail and hospitality — are likely to lead the jobs recovery in the coming months, as they did in March nationwide. That’ll further pressure the construction and transportation sector, as competition for entry-level and mid-skill labor picks up.
For workers, this is good news. For businesses, less so.
© Honest Austin.
Originally published at https://www.honestaustin.com on April 5, 2021.
