Home building is up, but construction hiring hasn't followed

AP FILE PHOTO

Nationally, total construction spending for the first half of the year was up 7.8 percent from the same period in 2013.

While home building is on the rise in New Jersey, construction hiring in the state has actually declined over the past year. But that may change in the months ahead, as multi-family projects pick up momentum.

"We're still anticipating increased hiring in the construction trades in the second half of the year," said Patrick O'Keefe, an economist with CohnReznick, an accounting firm with an office in Roseland. "It's a little bit puzzling that we haven't seen it already."

According to the Associated General Contractors of America, a trade group, New Jersey had the steepest drop in construction jobs in the nation in the 12 months ended in June, losing 11,200 jobs, or 8 percent of the total. The job loss came at a time when home construction approvals have been running almost 29 percent ahead of last year's pace, as the industry continues to climb out of its deepest trough since World War II.

Multi-family construction, especially in Bergen and Hudson counties, has powered the housing recovery, accounting for 61 percent of the activity in the state. That's a big change from New Jersey's historic development patterns, which were long dominated by single-family construction. There's a growing demand for rentals, since many households can't qualify for mortgages because of flat incomes and still-tight lending standards. And many households, especially in the Millennial generation, prefer the flexibility and pedestrian-friendly lifestyle found in urban rentals.

O'Keefe said the stronger performance of the multi-family sector may be one reason why construction hiring has lagged behind housing approvals. In single-family construction, he said, a builder gets a permit and puts construction workers on the job almost immediately. But a multi-family project requires more site work and is built in stages, which could stretch out hiring, he said.

Another factor in New Jersey's slow construction job market is that nonresidential building has been sluggish, both in the state and nationwide, according to Ken Simonson, chief economist of the contractors' group. Public projects, such as highway and school construction, have been constrained by tight federal and state budgets.

And little new office and retail space is being constructed.

"We see much more activity related to renovation of existing space, rather than new space," Simonson said. "New shopping centers just aren't happening." And New Jersey's office market, whose vacancy rate has come down, is around 20 percent, so there's little reason to build more.

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Home building is up, but construction hiring hasn't followed