Growth in Polk County construction jobs slowing after 2021 peak

All while the shortage of construction workers lingers nationally and locally, the booming residential and commercial building in Polk County has resulted in nearly twice as many construction jobs over the past 10 years, according to the U.S. Bureau of Labor Statistics.

The BLS annual construction jobs for Polk shows in 2012 there were 8,937 workers in this field. By March of this year, there were 14,174 construction workers, which was down from the peak in July 2021, when there were 14,588 jobs in this category.

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For Polk County, this could be a temporary blip in terms of job growth for construction jobs according to at least one home builder and real estate experts.

"As far as workers, we see nothing but a huge demand and a shortage of workers in the construction industry in Polk County," said Ken Warren, president of custom home builder AR Homes in Lakeland.

Subcontractors he works with installing plumbing, air conditioners, electrical systems and his framing all have shortages of workers, he said.

"I don't see a softening in the labor market for work, I see a continue strong demand in the construction industry for labor," Warren said.

Carol Bowen, chief lobbyist for Associated Building Contractors in Florida, said a nationwide construction worker shortage dates back to before the pandemic.

Fifty percent of the industry's workers are 50 years old or older in age or approaching retirement, Bowen said giving one reason for the deficit. It is also very market driven with boom-and-bust cycle, as well as being hard work, which can deter industry newcomers to invest in time and resource for training.

Overall employment data from the BLS released in November showed nonfarm payroll employment was 153,548,000 nationwide, representing a monthly increase of 263,000.

The intersection of job data from the BLS and real estate is tracked and analyzed locally by Gary Ralston, managing director and partner at SVN Saunders Ralston Dantzler Real Estate in Lakeland.

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"The market was expecting a lower number and we could expect an immediate negative market response," Ralston said. "However, I expect the response to somewhat moderate."

"It is good to keep in mind that the economy is slowing," he added. "November’s 263,000 was roughly in line with the average growth over the prior 3 months (+282,000), but the November gain was about 33% below the average monthly job growth in 2022 (year-to-date) of 392,000 and over 50% below the 2021 monthly job growth average of 562,000."

Ralston also noted that the Labor Force Participation rate is 62.1% and employment represents about 46.2% of the population.

"Another interesting statistic to consider is that about 21.2% of the population (70,521,000) is receiving Social Security, including supplemental security income," said Ralston, showing the numbers of workers potentially retired from the workforce. "Construction jobs were 7.6% of the gain … we expect this to slow measurably in 2023."

Ralston also tracks commercial real estate categories and their jobs data. The November numbers also showed that retail jobs were down by about 30,000.

"You may recall the headlines that Walmart was laying off employees," said Ralston. "Keep in mind that Walmart, the largest U.S. employer at about 1,700,000 employees, represents almost 1.5% of private jobs nationally."

Another big slice of Polk County's employment picture is logistics. It is also interesting to note that transportation and warehousing jobs were down over 15,000, he said.

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Recent mortgage rate increases are another factor for slowing real estate and jobs in construction as less households can afford take out a home loan and pay higher monthly payments.

Nationwide according to Realtor.com, a Freddie Mac fixed rate for a 30-year loan havs "declined to 6.49%, as investors welcomed (Fed Chairman) Jerome Powell’s remarks about a potential moderation in the pace of the Federal Reserve’s rate hikes as soon as the December meeting."

"The Fed is indicating that the aggressive rate hikes this year have been enough to start slowing inflation. Markets also welcomed today’s PCE price index — the Fed’s preferred inflation metric — which showed that growth is slowing," the website said.

According to Realtor.com the retreat in mortgage rates from the 7.0% territory brings a measure of relief to homebuyers who watched their budgets shrink dramatically over the past year. At today’s rate, the buyer of a median-price home is looking at a $2,150 monthly payment — before taxes and insurance — an improvement from just a few weeks ago when that figure was about $2,300.

Just a small drop in price for home loans has meant a positive response from buyers, driving mortgage applications slightly higher. Buyers could also have more homes to choose from as less buyers in the market could help increase inventory.

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"For real estate markets, mortgage rates compounded the relentless increase in prices over the past two-and-a-half years, pushing many buyers to the sidelines," Realtor.com said. "The reprieve in the relentless surge is welcome news."

However, financial pressures continue to make the path to homeownership an expensive one for many households as the outlook for 2023 calls for housing costs to remain elevated, they said.

In Florida, third-quarter results of single-family home sales statewide show a 22.5% drop in closings compare to year over year data, a Florida Realtors report said. But Polk County's home closings have dropped much less at 6.3%, with third quarter closings at 3,345 this year compared to 3,571 for the same quarter in 2021.

"Everybody is going to be a bit different depending on the market they're in." said Warren at AR Homes.

"We are a custom, semi-custom home builder so our business is a little different to a tract home builder," he said. "We're a little more immune to the interest rates because the higher end buyer is not as interest rate sensitive as a new home buyer."

Warren also said he has a backlog of home to be built into 2024, further insulating the builder from the broader economic climate.

At Atlantic University, Ken H. Johnson, an economist at Florida Atlantic University's College of Business, said the construction job losses are not surprising to him as they follow similar data from past housing slumps.

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"Most of this is a double edge sword," Johnson said. "People are coming to Florida in massive numbers. It's spiking our rents, its spiking our home construction costs but at the same time it's bringing economic opportunity."

Most new residents come from the Northeast and Midwest United States, bringing jobs with them, he said.

"But there is still a lag, they're showing up and putting a stress on the number of units available and so that is causing a spike and we cannot build fast enough," Johnson said.

In terms of construction labor in the short term, a large pool of workers are going to southwest Florida to rebuild after Hurricane Ian, he said. Inflation, supply chain issues and interest rates also are a factor in short term job losses.

"But long term, Florida is one of the few places that is growing at extraordinary rates," Johnson said. "Long term the construction industry is going to be here, we are going to have the jobs for people and we are going to see that sector comeback fairly quickly because until people stop moving to Florida we are going to need to build."

Paul Nutcher can be reached at pnutcher@gannett.com.

This article originally appeared on The Ledger: Polk County construction jobs expected to decrease as economy slows