Fewer VT construction jobs than in 2000

Last year, the total number of jobs in Vermont finally surpassed its 2007 pre-recession peak. That was something to celebrate, or at least to feel good about. But drilling down into the employment numbers shows that some parts of the economy have still not recovered all the jobs they lost during the Great Recession.

The most obvious is manufacturing, which today employs about 31,000 Vermonters, well below the pre-recession level of 36,000. And that is less than Vermont’s peak manufacturing employment of 46,000 in 2000. Despite that employment decline, Vermont’s manufacturing companies are healthy. They produce more output today than they did in 2007 or 2000. That’s because of increased productivity — they need fewer workers because they’ve replaced workers with machinery and technology.

That’s not the case in construction, which today employs about 14,500 Vermonters. The construction industry shed more than 4,000 workers during the recession and has regained only about 1,500 of the jobs that were lost. Today fewer Vermonters work in construction than in 2000 — and fewer than in the late 1980s. Unlike in manufacturing, the decline in construction employment is not due to increased productivity and the adoption of labor-saving machinery and technology. It’s primarily due to fewer houses being built.

The U.S. Census Bureau reports that in 2014 there were 1,500 building permits for new houses issued in Vermont. That’s up from 1,300 at the recession’s low point. But in 2007 construction workers were building more than 2,000 houses and in the early 2000s between 2,500 and 3,500 each year.

One major reason for the decline in building permits, new house construction, and construction jobs is that there are fewer Vermonters in their prime home buying years. Consider that in 1990 there were 144,000 Vermonters between the ages of 25 and 39—the age when most people get married, have children, and buy their first house. By 2000, there were only 124,000 in that age group and today there are only 106,000 Vermonters in their prime home buying years. That’s a 26% decline from 1990 and a 15% decline since 2000.

With fewer people in that age group, it’s not surprising that there are fewer houses being built. Some of the decline in construction jobs, to be sure, could be offset by more construction activity in the state’s ski resorts and vacation areas and from home remodeling activity. But given the construction employment decline, any increase in those activities hasn’t been enough to offset the decline in new residential construction.

That’s a problem for Vermont because construction industry jobs pay relatively high wages. The Vermont Department of Labor reports that carpenters earn a median wage of $19 per hour. Less skilled construction laborers earn $15. The operators of construction machinery—the excavators, backhoes, and bulldozers needed to prepare a home site—earn $18 per hour. Those are good wages for jobs that don’t require post-secondary education but do require a lot of technical skills. Of course, the wages are high precisely because those jobs require technical skills.

We don’t know where those thousands of people who used to work in construction are working now. Some may have retired and others left the state. May have probably taken jobs that pay less than construction. But the bigger issue is that there are fewer jobs for high school graduates who in the past could have gone into the construction industry and earned good wages. With a diminished demand for housing, there are fewer construction jobs in Vermont—another casualty of Vermont’s changing demographics.

Art Woolf is associate professor of economics at the University of Vermont.