The Great Construction Employment Mystery Revisited

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Yesterday I wondered why residential construction employment was flat even though residential housing starts had doubled over the past 18 months. Today, a regular reader writes in to suggest that I’m just not being patient enough. Yes, housing starts are up, but on a historical scale they’re still about as low as they’ve ever been. Even with the recent doubling, starts have only barely reached the level they were at in the middle of the 1991 recession, and residential construction employment is about the same as it was then (green lines in chart below). Employment is a lagging indicator, and we just need another year or two of growth before we’re going to see a similar rebound in construction employment. Calculated Risk wrote about this a few months ago.

The chart below shows only residential construction employment, which tracks housing starts better than the overall construction employment figure. But even so, you can see the lag and you can see where we are compared to historical levels. Unless I hear something better, it sounds like this basically solves the mystery.

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