Storm recovery apt to lift construction industry

Contractors may encounter a shortage of skilled workers to repair hurricane damage, economists say. Above, an electrical substation in Hoboken, N.J., was being repaired.
John Minchillo/Associated Press
Contractors may encounter a shortage of skilled workers to repair hurricane damage, economists say. Above, an electrical substation in Hoboken, N.J., was being repaired.

NEW YORK — Hiring in the long-depressed US construction industry will get a boost from post-Superstorm Sandy rebuilding. Those jobs, in turn, could modestly raise economic growth in early 2012, analysts say.

Construction companies, contractors, and local governments will hire to rebuild and renovate homes, buildings, roads, and bridges.

‘‘This is going to be a net positive, particularly in the mid-Atlantic,’’ said Sophia Koropeckyj, managing director at Moody’s


Sandy is estimated to have inflicted up to $50 billion in losses from property damage, lost business, and additional living costs, concentrated near the New Jersey and New York City coastlines.

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Construction jobs are especially vital to the economy. Pay is higher than average: At $25.86, average hourly pay tops the average of $23.58 for all US private-sector jobs and is far above the averages for retail ($16.43) and leisure and hospitality, which includes restaurants and hotel jobs ($13.35).

In addition, job growth in construction typically spurs other hiring, such as of architects, real estate agents, and sellers of appliances, building materials and office equipment. The stocks of home-improvement retailers like Home Depot (up more than 3 percent) and Lowe’s (up nearly 6 percent) surged last week even as overall stock prices were flat.

Boats and cars destroyed by Sandy will have to be replaced, too, probably leading to some increased manufacturing.

Yet economists caution that construction hiring may be modest and will probably boost the economy only slightly. And the storm damage could slow growth a bit in the October-to-December quarter. Factories, oil refineries, restaurants, and stores that were closed or disrupted will cut hours or jobs. Some consumers will earn and spend less as a result. And some construction projects will have to be canceled or put off.


In the current quarter, the storm will slow the economy’s annual growth rate by two-tenths of 1 percentage point, predicted Mark Vitner, senior economist at Wells Fargo. But Vitner said reconstruction will speed the economy by the same amount in the first and second quarters of 2013. Last quarter, the economy grew at an estimated 2 percent annual rate.

Any help for construction could help invigorate the economy. Since the Great Recession ended nearly 3½ years ago, economic growth has been slowed by lost construction jobs and diminished residential and commercial building.

Most of the rebuilding won’t start right away, analysts noted. Insurance claims must be settled. Government money will need to be allocated in some areas. And if the Northeast winter is severe, much work will have to be put off until spring.

Once construction companies step up hiring in the first few months of next year, Koropeckyj predicted, there will be a beneficial ripple effect.

‘‘Not only will it help construction directly, but also the building supply stores, wholesale trade. It’s going to be helping the automotive industry by boosting demand for utility trucks and pickup trucks.’’


Some contractors could face a shortage of skilled workers. After the housing meltdown, nearly 30 percent of the industry’s jobs vanished. Their loss has been a drag on the economy. Typically, once recessions end, construction booms. That did not happen after the recession ended in June 2009.

Construction has begun to recover, however. Last month, US home construction reached its fastest rate in more than four years — a seasonally adjusted annual rate of 872,000. That’s more than 82 percent above the recession low. Yet it’s still well short of the 1.5 million annual rate considered healthy and the 2 million-plus homes that were begun at the peak of the housing boom in 2007.

‘‘It’s going to be harder for construction firms to find these by-definition experienced workers,’’ said Ken Simonson, at Associated General Contractors of America. ‘‘Given that it’s been six years of no net gain in [construction] employment, I think a lot of them would be hesitant to say ‘I’ll drop the job I’ve now found or give up on the training that I’m getting and go back to construction.’ ’’