Impact of Recession on Southeastern Idaho’s Construction Industry

Idaho’s construction industry was one of the hardest hit during the Great Recession. At the start of the recession in 2007, there were 650 construction industry employers in southeastern Idaho with an average of at least one employee. By 2013, more than half had no employment records, meaning most likely the employer went out of business or moved out of the region. The number of start-up construction companies in southeastern Idaho also declined in the same period.

Southeastern Idaho Construction Industry Post-Recession

Since the trough of 2013, southeastern Idaho construction employment has been in recovery and the number of construction start-ups have been on the rise, but the industry has a long way to go. Between 2013 and 2017, construction employment grew by 17 percent – a net growth of 460 jobs. The 3,167 construction jobs in 2017, however still is 20 percent – or nearly 800 jobs – below the employment levels of the industry’s peak in 2007.

With Idaho as the fastest-growing state in the region, construction employment is expected to continue this growth trajectory. Construction permits, an indicator of future industry growth, are showing a gradual recovery. New housing structures authorized by building permits have increased 37 percent since 2013 to 442 – fewer than half the permits issued pre-recession. According to preliminary estimates, there were 203 permits for single-family homes in the Pocatello metro area alone, up 150 percent from a 2011 trough where only 81 permits were issued. But it is still lagging behind the 629 building permits of 2006.

Construction Labor Shortage

Despite the growing number of construction permits, the housing supply still lags behind demand. Builders often cite a labor shortage as a major impediment to construction growth. The demand for construction work[1], as reflected in the number of available job openings, saw a significant decline during the recession from an average of about 60 monthly help wanted ads in 2006 (pre-recession) to 20 monthly job ads post-recession in 2010. Since then, the average monthly construction job ads saw a steady rise, reaching a peak in 2015, and began to decline. This pattern is replicated statewide and across all occupations.

The recent decline in demand for construction workers – and all workers on average – has occurred despite reports of steady employment growth. This discrepancy is an indication that the decline in help wanted ads is not a function of a weakening construction industry. Rather, it is more likely that the declining number of ads is a reflection of a tightening labor market. Employers are increasingly unable to find workers so they are reluctant to post more job ads.

Analysis of the monthly job postings show construction jobs in southeastern Idaho tend to remain unfilled for longer compared with the rest of the state. On average, in 2015, 14 percent of all monthly available construction job ads were classified as “hard-to-fill,” remaining unfilled for 90 days or more. Statewide, the share of hard-to-fill construction jobs was about 8 percent in 2015. By 2017, the share of unfilled jobs had jumped to an average of 21 percent in southeastern Idaho and 12 percent statewide.

The Construction Combine: A Creative Solution

Construction training fair

One effort to counter the worker shortage took place this spring. The Pocatello/Chubbuck School District 25 and Idaho State University partnered with The Home Depot in Chubbuck and the Idaho Department of Labor to host Construction Combine, a two-day event where high school students and community members received training in construction work – framing, concrete, electrical, roofing, drywall and flooring – from local contractors. Close to 20 employers and various community stakeholders participated in the event and about 80 students and local residents signed up for the program.

The event exposed students and others in the area to the possibilities of working in construction. The demonstration culminated in a hiring event. Fourteen participants has job offers during the “draft,” which was held the evening of the second day. The rest of the participants were encouraged to contact the employers who were present for potential employment opportunities.

The combine was a team effort that involved much of the regional community. Both in-kind and cash support came from multiple partners including local construction companies and restaurant chains, the National Guard, Idaho Central Credit Union, Neighbor Works, Southeast Idaho Builders Association, the city of Pocatello and the Shoshone-Bannock Tribes. The event was so successful that the Home Depot has indicated they wish to expand this model throughout the nation after they have conducted similar events in undetermined locations throughout Idaho.

[1] Construction workers here include supervisors, construction trade workers and their less skilled helpers, as well as other construction workers that include highway maintenance workers and building inspectors., regional economist
Idaho Department of Labor
(208) 236-6710 ext. 4331