Points of View

Construction Was Strong in 2016: Don’t Expect That to Change Any Time Soon

Ryan Gimarc

Construction has long been an important industry sector throughout the country, but especially now in West Michigan where development is running at full steam. Earlier this week, we had the leadership at ABC/WMC walk us through the state of the industry. Today, we’re looking at some of the numbers behind this important sector.

 

Employment and Wages

In 2016, employment in Construction in West Michigan was just over 28,400, meaning that of the nearly 642,000 total private jobs in the region, about 4.4 percent of them, were in Construction. This 2016 total was the highest for the industry since 2006, before the recession of the late-2010s. From 2015 to 2016, Construction grew by over 1,800 jobs in West Michigan, a 6.9 percent expansion.

Within the industry, the majority of jobs are with Specialty trade contractors, which last year accounted for over 19,000 jobs, or about 68.0 percent of all Construction jobs. This was followed by Construction of buildings jobs (6,100 jobs) and Heavy and civil engineering construction jobs (3,000).

Wages in Construction are typically higher than the all-industry average wages seen in West Michigan, and has been especially true over the last two years. In 2016, the average annual wage for jobs in Construction was just over $56,000, significantly higher than the all-industry average of $43,900. Within the industry, Heavy and civil engineering construction annual wages led at $71,100, followed by Construction of buildings at $55,100 and Specialty trade contractors at $54,100. All three sub-industries pay higher than the all-industry average in West Michigan.

 

Age of the Workforce

Using the Quarterly Workforce Indicators (QWI) data, we can dig deeper on the Construction workforce in Michigan to see what the age breakdown looks like compared to the workforce as a whole. (Note: Michigan was used because the margins of error were too high to use West Michigan).

In Construction, a higher percentage of the industry’s workforce is in a few of the “working age” groups, primarily from 35 to 54. Employment from these age groups accounts for 49.1 percent of employment in the industry, whereas that proportion is significantly smaller for the workforce as a whole (41.4 percent). We see there are also fewer workers proportionally from the younger end of the spectrum. In 2016, just 10.2 percent of workers in Construction were under 25 years old, compared to 15.0 percent in all industries.

However, from 2012 to 2016, we see the industry beginning to move with regards to age. The proportion of Construction workers under 25 was previously 7.9 percent in 2012, meaning it has increased by 2.4 percentage points over those four years. Additionally, the percentage of workers 55 years or older also increased over this time, from 16.5 to 19.6 percent. As the industry slowly gains more workers on the high and low end of the age spectrum, it starts to get closer to the age composition of the overall workforce.

 

What to Expect in the Future

The State of Michigan projects that the Construction industry will add over 6,200 jobs through 2024, a growth rate of 23.6 percent. This is more than double the growth rate expected for the economy as a whole in West Michigan during that time at 9.8 percent. Numerically, this growth will be driven by additional employment in Specialty trade contractors, which should add over 4,000 of those 6,200 jobs. Meanwhile, Construction of buildings is expected to grow at an astounding 29.3 percent through 2024, adding nearly 1,600 jobs.

The occupations expected to buoy this growth are primarily Construction laborers (+1,010 jobs, +21.8% growth), Electricians (+675, +21.9%), Carpenters (+595, +18.2%), and First-line supervisors/managers of construction trades… (+410, +19.4%). It is further significant that nearly every occupation in Construction and extraction in West Michigan is expecting to see solid growth through 2024. All but one of the occupations in the occupation category is expecting to see some growth over the projection period, and 24 of the 29 occupations in Construction and extraction are projected to growth at higher than the region-wide rate of 9.8 percent.


This is our final blog post in our series this week on Construction. Check out Parts 1 and 2 as well!