Remember Rick Dalton, the former executive with two home-building giants, Taylor Morrison Inc. and Pulte Homes Inc., in Jacksonville, Florida, who went out on his own in 2009? We've followed his exploits every couple of years as we updated the new-home sector of the housing market. [paragraph] The last time we heard from him was two years ago, when he was trying to get back into home building. After folding the building company he started at the height of the Great Recession, buying and selling a restoration franchise, trying his hand in the energy field and working for a company that built manufactured modular plants, he was out of work. [paragraph] But he was ever hopeful. "I'm trying to stay optimistic," he said at the time. "I know something will come around."
We tried to catch up with Dalton to find out if he made it back to the business he loved. But sadly to report, he is nowhere to be found. His phone number has been disconnected and internet searches have been futile. After years of looking to find work in the housing business, he has seemingly dropped out of sight.
Granted, Dalton was an executive-- not a skilled tradesman. Nevertheless, his disappearance stands as a metaphor for one of the major problems facing the new-home sector as it rebounds strongly from the recession--the lack of qualified craftsmen to build houses. In fact, of all the challenges facing builders these days, the cost and availability of workers is at the top of their lists.
Missing in action
Dalton isn't the only one missing in action. So are many of the residential construction firms that once plied their trades prior to the 2008 meltdown.
The total number of single-family and multifamily builders and remodelers fell to about 689,000 nationwide in 2012, the last time the Census Bureau took a count. That's 12 percent fewer than in 2007. (Census does its Survey of Business Owners in years ending in 2 and 7.) The contraction was greatest among those with paid employees, but sole proprietorships and one-person independent contractors also felt the sting.
According to the latest survey of its members by the National Association of Home Builders (NAHB), Washington, D.C., a whopping 76 percent of the builders left standing say they face labor issues, up 5 points from 71 percent in 2015. Just four years ago, when the business was still struggling to recover from the recession, only 21 percent of survey respondents said finding qualified workers was a problem.
In May, the latest figures from the Bureau of Labor Statistics (BLS) showed that over the previous 12-month period, home builders and remodelers added 134,000 jobs on a net basis. And since the low point of industry employment following the recession, residential construction has gained nearly 600,000 positions.
Still, the count of unfilled jobs remains elevated. In March, the number of open construction-sector jobs hit a post-recession high of 215,000, the BLS reported. It's come down a bit since then, to 188,000 in May. But Robert Dietz, the NAHB's chief economist, says the overall trend is increasing, which is consistent with his own survey data.
Part and parcel with the NAHB's worries about the lack of qualified people to build houses is its concerns about the nation's immigration policies. The NAHB doesn't know how many illegal immigrants work in the construction trades. But its research shows that foreign-born workers make up a substantial portion of the home-building workforce.
The NAHB says the latest count shows that some 28 percent of those working in the building trades are immigrants. That's up from 22 percent in 2011. The concentration is particularly high in carpentry, painting, drywall and tile installers, brick masons and even laborers.
Laborers and carpenters make up about 30 percent of the construction labor force, and more than one-third of all laborers and 28 percent of all carpenters are foreign-born. The concentration of immigrants is even higher among plasterers (59 percent), drywall installers (49 percent) and roofers (43 percent).
Of course, the reliance on immigrants is more pronounced in some markets as opposed to others. In California, 41 percent of all construction-site personnel are foreign. In Texas, the number is close to 40 percent. It's 35 percent in New York and 33 percent in Nevada. And it exceeds 30 percent in Florida, New Jersey and the District of Columbia. All of these are traditional magnets for new immigrants, and among the locations with the largest number of housing starts.
The NAHB also has been able to pinpoint where its immigrant workforce hails from. Mexico produces the most at 53 percent, while 31 percent comes from the Americas. If you're any good at math, you can see that a whopping 84 percent of the foreign-born people working in the construction trades come from south of our southern border. Europeans make up close to 9 percent, while the remaining 7 percent come from Asia.
The high number of unfilled jobs has pushed wages significantly higher. According to the latest BLS figures, the average annual pay in the residential building sector was $50,800 in 2015, a 19 percent jump from 2010 when wages were at their lowest level since the recession.