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Rising Labor Cost Undercut Construction Profit
According to the Bureau of Labor Statistics, a 6.3% increase from a year ago and the highest gain in 40 years, average hourly earnings for production and nonsupervisory employees in construction rose to $32.19 in May, which was 17.8% higher than the private sector as a whole. Contractors pay their workers more compared with other fields as this industry are recruiting more worked into what they often perceive as a more dangerous job, while other fields' jobs with perks of remote work, climate-controlled offices or more flexible hours. Construction employers get fewer skilled workers for the higher wages they pay, said Anirban Basu, chief economist for the Associated Builders and Contractors. The unskilled laborers seems to get the greatest wage gains, that contractors aren't benefiting from increased productivity, which means constructors' profits are eaten away. Even as contractors anticipate hiring more workers in the months ahead, they don't anticipate profits going up, as they normally would while adding more employees to take on more jobs.