The state’s construction industry added 300 new workers in December 2021, but without changes in labor and material shortages, there could be a negative impact on the state’s economic recovery.
“The supply chain issues across many segments are real and tangible,” said Donald Klepper-Smith, chief economist and director of research for DataCore Partners. “You’re seeing that in all parts of manufacturing in Connecticut. It caps the ability to put goods in the marketplace.”
Contractors and subcontractors competing for the same goods inflates the real estate market where it costs 10 to 12 percent more to build the same house from two years ago. The labor shortage has been a longtime issue caused by retiring workers and a lack of enough replacements. Disruptions caused by the pandemic exacerbated the problem.
“It’s stressed existing workers, amplified it,” said Johnny Carrier of By Carrier Inc. “It’s even hard from a hiring standpoint, especially among contractors. There are increased workloads...Everyone is at 110 percent.”
The state added 600 jobs in December 2021, after a revised 2,800 November gain, and the state’s unemployment fell to 5.8 percent, the state Department of Labor reported last week. The unemployment numbers don’t include those who have dropped out of the labor market.
Connecticut remains behind the nation and other New England states in jobs recovery. On Friday, the U.S. Department of Labor reported the U.S. economy added 467,000 jobs in January as the omicron variant spiked, with the labor market performing better than many expected two years after the pandemic began.
The national unemployment rate ticked up slightly to 4 percent, from 3.9 percent the month before.
"An assessment of the aggregate economic data for Connecticut In late 2021 shows a ‘good news, bad news’ story,” Klepper-Smith said. “The good news is that total non-farm employment has rebounded sharply from the lows of April 2020, gaining back 218,000 jobs as of December 2021. The bad news is that, despite these gains, the current level of employment remains almost 100,000 jobs away from the peak level of 1,720,900 jobs recorded in March 2008.”
Going forward, economic fundamentals suggest that Connecticut is unlikely to reach its former job peak anytime soon, Klepper-Smith continued. However, the state will clearly benefit from federal monies received from President Biden's $1.9 trillion federal stimulus package and his $1 trillion infrastructure plan, which includes $550 billion in new money for transportation, broadband and utilities.Supply chain, inflation
But without changes in supply chain woes, the projects could be stalled, workers sidelined and economic recovery slowed in many cities and towns.
“If you look at the numbers of workers in December it’s still the inflation and the cost of materials,” said Joseph Toner, executive director of the Connecticut Building Trades Council. “We’re still in a bit of a perilous spot. Some of the projects are halted right now in Hartford because some of the materials are not available. If it continues at this rate, it might put a pinch on opportunities in construction.”
“It’s a big unknown and a significant concern we’ve been talking about,” said Chris DePentima, president and CEO of the Connecticut Business and Industry Association. “There are a lot of folks in state government — up to 500 folks— set to retire. The engineers and workers at the state DOT (Department of Transportation) are at the beginning of the process. Even if the private sector is fully staffed we won’t be able to get the projects out to the street.”
CBIA is lobbying the state legislature to ensure it works with state non-profits to ready more workers. It is also calling for no taxes on state pensions to entice retiring workers from leaving the state and seeking employment in the private sector. The pension tax was to sunset in 2025 but Gov. Ned Lamont has proposed accelerating it. CBIA is also asking that the state recognize out-of-state trade licenses to ensure the state has enough certified professionals and engineers.
DePentima doesn’t think raising interest rates to lower inflationary costs will help the materials shortage.
“This is a 12 to 16 month supply chain issue,” he said. “I don’t think it’s going to be interest rates, it’s still the labor shortage clear across the world. We have way more demand than supply and more money floating around. It’s the limited supply and the infusion of infrastructure funding will only increase that.”
The trade unions are addressing the workers shortage through neighborhood outreach to enroll participants in a certificate program that can get them into a credentialed apprenticeship program.
“We’re reaching out and recruiting and training folks for construction jobs,” Toner said. “There isn’t a shortage of people who want to work, we have 300 to 400 people applying for 20 positions, there is a shortage of people who don’t want to work for less.”