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Can Someone Tell Homebuilders How to Raise Wages?

Friday, 25 July 2014 16:50

The Washington Post told us that homebuilders are having a hard time attracting workers, which is keeping construction of new homes down.

"Labor is scarce. As the housing crisis dragged on, the workers that builders relied on found jobs in other industries, including the energy sector. It’s been tough luring those workers back, Crowe [David Crowe, chief economist for the National Association of Homebuilders] said. Meanwhile, the workers that hung in there are aging, and the industry is having trouble attracting a younger generation."

When labor is scarce we expect employers to be trying to get workers by raising wages to pull workers away from competitors. This should mean that wages are rising. In fact, real wages in the construction industry have been stagnant for the last three years and are still down by around 3 percent from the peaks hit five years ago.

If no one teaches employers how to raise wages then we are likely to have serious imbalances in the economy for some time into the future.


Note: This was corrected from an earlier version which put the peak as before the recession.

Comments (14)Add Comment
Cannot Find Help In This Country
written by James, July 25, 2014 8:23
Using your term, I cannot find a trial lawyer to represent me. Cannot find a family practice doctor. Cannot find a new home to buy (despite the June sales gone way down).


Trial lawyer - I willing to pay $10 per hour
Doctor - without any insurance, willing to pay $10 per visit.
New home - willing to buy it for $10,000.

We need more lawyers, doctors, and new homes built.
written by JDM, July 25, 2014 11:04
Is our employers learning? Apparently not.
Graphically Confused
written by Larry Signor, July 26, 2014 8:14
After 45 years working in the construction industry, my gut feeling is that Dean is correct,but...the graphs I am finding do not support my "gut feeling". Can someone tell me what I am missing?

Bad link?
written by Larry Signor, July 26, 2014 8:18
An Unfortunate Side Effect of Union Busting
written by sherparick, July 26, 2014 8:33
Traditionally, building trade unions would run apprenticeship programs to train young workers in the trade. Crushing the unions for years, particularly in the "Right to Work" state eliminates these programs, and heaven forbid that these companies would actually run training programs at their own cost. Also, from my own observation of the building trade during the late end of the bubble (2005-07), most of the workers were immigrants from Mexico, Guatemala, and Honduras of lets say questionable legal status. When they lost jobs, they did not get unemployment and mostly went home and the Obama border is lot harder to cross than the Bush border, another fact that the Tea Party cannot compute.

And yes, it is strange that no reporter will ask these clowns the question: "Have you tried offering higher wages?"
Wages higher now than bubble peak
written by Rob, July 26, 2014 9:47
I'm surprised by the chart, one would think that at the peak of the bubble in 2006 that you'd see higher wages. Instead, wages spiked during the recession as building was decreasing? And then leveled off at a wage that is higher than it was in 2007 during peak employment?

Seems counterintuitive, any explanation?
The data arereal wages
written by Dean, July 26, 2014 10:09

your Fred graph is nominal wages, mine is real wages.
It's adjusted for inflation..
written by Goldy, July 26, 2014 10:15
The hourly wages in the chart are adjusted for inflation. The spike you see in 2009 is due to a negative Consumer Price Index during that period:
So wages are 1 to 2% or so higher than during the housing boom....
written by pete, July 26, 2014 11:10
But that's apparently not enough. Clearly, however, the fall from the high wage recession has been significant. Indeed, the falling real wages conincide with recent gains in employment, as would be predicted by Akerlof/Yellen. In the recession, as evidenced by the graph, real wages went up a lot, which seriously delayed the recovery. All Keynesians know this to be due to sticky nominal wages, and why the classical model fails. Amazing amount of information in this graph.
In related news
written by flounder, July 26, 2014 3:42
I have inquired with two different contractors that I trust about redoing the roof on my dilapidated garage. Both are too busy to get back to me.
You misunderstand, Dean
written by ifthethunderdontgetya™³²®©, July 26, 2014 7:41
They are having a hard time attracting workers who will labor for peanuts, as proles in this John Galt economy should.

written by carpenterguy, July 27, 2014 3:41
formerly well-paid construction jobs have been outsourced to low-wage foreign nationals, working for next to nothing in fear of being reported and deported

just the way corporate America wants it to be

written by carpenterguy, July 27, 2014 3:47
and the existence of that cheap labor pool drives wages for the entire industry down

just as corporate America wants it to be
Even with a 5th grade education
written by Jeffro d'Bodine, July 28, 2014 7:18
Busting your butt in the hot sun or freezing temps for less than 12 an hour? Who needs it?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.