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September Construction Insider: US housing starts’ 12-year high, construction job surge, more

September Construction Insider: US housing starts’ 12-year high, construction job surge, more

September 30, 2019

Construction Insider is a monthly roundup of the latest news and insights in construction.

US housing starts reach 12-year high in August

US homebuilding soared to a 12-year high in August as both single- and multi-family housing construction improved to their highest levels since June 2007. CNBC

  • A 12.3% jump was recorded for housing starts in August, totalling to a seasonally adjusted annual rate of 1.364 million units, as reported by the Commerce Department.
  • A 7.7% increase was also reported for building permits, which surged to a rate of 1.419 million units last month.
  • The improvement in housing construction starts suggested that lower mortgage rates were finally giving the struggling housing market a boost.
  •  A recent survey found that builders have expressed confidence in housing demand, but they “continue to grapple with ongoing supply-side challenges that hinder housing affordability.”

US-China trade war slashes jobs in lumber sector

Lumber mills from some of the largest domestic producers of hardwood lumber have closed down following the continuing trade war between US and China. WSJ

  • Northwest Hardwoods Inc. of Tacoma, Wash., had closed some of its lumber plants while Baillie Lumber Co. of Hamburg, N.Y., had removed dozens of jobs.
  • The 25% tariffs that Beijing placed on imports of lumber and other US wood products resulted in a 40% dip in lumber exports to China this year.
  • “It’s a crisis the likes of which we just never had to deal with before,” said Matthew Gutchess of Gutchess Lumber Co. in Cortland, N.Y.

California contractors face uncertain future following new labor law

Assembly Bill 5 (AB5) was signed into law last week and California contractors will soon be expected to go through a more stringent classification process. Construction Dive

  • The new law seeks to reduce misclassification of construction workers in California and to ensure benefits and protections are given to the proper parties.
  • AB5 is expected to take effect on January 1, 2020 and is predicted to limit the use of independent contractors in the construction sector.
  • California Governor Gavin Newsom wrote in his signing message that worker misclassification as independent contractors “erodes basic worker protections like the minimum wage.”
  • Groups like the Associated General Contractors of California will continue to oppose some of the elements of AB5 that they find questionable, including provisions that could create “scheduling nightmare.”

Construction jobs rise by 14,000 in August

Around 14,000 jobs opened in August while 177,000 jobs were added in the last 12 months, according to the data analysis by the Associated General Contractors of America (AGC). AGC

  • A recent AGC survey reported that 80% of contractors still struggle to hire qualified hourly craft workers amid the surge in construction employment.
  • “Construction employment gains would likely have been higher if firms could find even more people to hire,” said AGC chief economist Ken Simonson.
  • Average hourly wage and salaries in construction rose by 2.7% in the last year to $30.84, which is higher than the $28.11 rate offered in the private sector.

Lumber group supports DOL overtime salary increase

The National Lumber and Building Material Dealers Association (NLBMDA) welcomed the Department of Labor (DOL) ruling to increase the weekly overtime salary limit from $455 to $684. NLBMDA

  • The lumber group released a statement calling the DOL final ruling a “victory for the [lumber] industry.”
  • The new salary limit is equivalent to an annual salary of $35,568 for a full-year worker.
  • The new DOL ruling would also increase the total annual compensation requirement for “highly compensated” employees to $107,432 per year from the previous rate of $100,000.
  • Employers would also be allowed to use nondiscretionary bonuses paid annually to satisfy up to 10% of the base salary level, based on the new pay rules.