Will laid off construction workers return in housing boom?

David Weinberg Jul 31, 2013

Will laid off construction workers return in housing boom?

David Weinberg Jul 31, 2013

At the height of the housing boom, many construction workers migrated to jobs in places like Florida, Nevada and Arizona to build houses. When the market went bust, those jobs vanished. Now that the housing market has rebounded, land is being cleared and prepped for new home construction, and jobs are slowly coming back — especially in California. The question is: Will all those workers come back for their old jobs?

Let’s go back to 2005, when there were so many construction jobs in California that it caused labor shortages in other industries.

“Farmers couldn’t get workers to pick their crops,” says Chris Thornberg, a financial analyst at Beacon Economics.  “All these guys who typically would do crop stuff in the Inland Empire were coming down here and were making twice as much per hour just carrying around 2X4s.”

By February of 2011, housing construction was all but dead. More than half of residential construction jobs disappeared. Foreclosures skyrocketed. But California was different than other hard-hit states.

“Even at the worst of the foreclosure crisis,” says Thornberg. “California had the lowest housing vacancy rate in the nation which people don’t even appreciate.”

To get a sense of what this boom looks like on the ground, I drove to Riverside, Calif., an Inland Empire city of about 300,000 people. While I was there I visited Jory Blake. “I’m a humble person,” Blake says. “I don’t want to sound cocky, but there’s nothing about a house I don’t know about.”

Blake has spent his entire life working on single family homes. From landscaping to contracting, he eventually worked his way up to a job in land development at Lennar Homes, one of the bigger home builders in California. 

His job was to turn empty desert land into master planned communities. “Designating the school locations, roadways, how many houses were allowed, paving things like that,” he says. “It was awesome — $140,000  a year, shorts and a t-shirt with boots and a nice vehicle and perks and benefits. Oh, it was a dream job.”

But when the market started tanking there was a round of layoffs at Lennar. Then another round. Then another. “And they were so good at it, by round 13 it was just a machine.,” he says. “Bye Jory, see you. But I was grateful for every moment I had there. I left with dignity.”

Blake did what so many people in the housing industry did. He reinvented himself. Today he’s a realtor. “I’m so planted it would be hard to get back into that,” he says of his former dream job.

That’s a problem for the recovering housing industry. Lots of people from developers like Blake to low-skilled construction workers moved on to new careers. Meanwhile home construction is on the rise, and skilled workers are hard to find.

I visited Friendly Lane, a street in Riverside where a dozen or so houses are being built. I talked with James Hayes, a carpenter. With his long gray hair pulled back in a ponytail and a drill in his hand, Hayes was installing hardware on the exterior doors of a two-story house in the 110-degree heat.

“Construction is starting to pick back up in my opinion,” he says. “It’s been dead for quite a while. It’s pretty steady now,” he says, wiping the sweat off his brow and offering me sunflower seeds.

Hayes is one worker who stayed in the construction industry. During the lean years, that meant taking a pay cut and doing low-skilled jobs like picking up nails off the ground. “You had to find side jobs and stay busy,” he says.

But now that building has picked up, high skilled workers like him are in demand. “There’s most certainly been an increase in the demand in labor in all the construction sectors,” says Mike Winn,  CEO of the California Building Industry Association. “There would have to be given the fact that we’ve doubled the amount of homes that we built from last year at this time.”

The CBIA represents thousands of companies in the industry, many of which are in need of workers. “So we’re working with community colleges, high schools, unions and others on journeymen programs to try and bring those skilled labor folks back into the workforce,” says Winn who also tracks building permit applications.

Permit applications have doubled over last year in some parts of California, and dozens of workers will be needed to turn each tof hose permits into houses.

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