Despite COVID, Construction Unemployment Rate Down in 20 States

According to Associated Builders and Contractors, a national construction industry trade association, U.S. construction employment was hit hard by the spread of COVID-19 and measures to limit the pandemic. However, construction performed better than many other occupational groups and has been relatively quick to rebound, though not back to its pre-COVID-19 levels.

Since February, twenty states had lower estimated construction unemployment rates in September even as the national construction unemployment rate was up by 1.6%, due to local market variances.

"After many bumps and bruises, construction has proven to be one of the better performing sectors of the economy over a difficult period. Overall, as of September, about half of the states suffered from construction job losses, while work in several areas remained steady," said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. "Construction has generally done a good job of taking measures to protect its workers from the risk of contracting COVID-19 in the workplace. The impact on construction activity comes more from local increases in COVID-19 cases and efforts to contain these outbreaks."

2020 Decline in Construction Employment, Compared to 2019

In February, on a year-over-year basis, not seasonally adjusted construction unemployment rates fell nationally and in 37 states, rose in 12 states and were unchanged in one state (New Hampshire), and national NSA construction employment was 214,000 higher than in February 2019--signifying a robust job market.

In March, the early effects of the spread of the disease and local restrictions began to appear. Only eight states had a lower construction unemployment rate than in March 2019, 41 states were higher, and one state was unchanged (Indiana). At the same time, 16 states had a rate lower than in February. Meanwhile, national NSA construction employment was still up by 125,000 from March 2019.

By April and May, a period when construction typically ramps up, the pain was being felt throughout the country. All 50 states had higher construction unemployment rates than in the same month in 2019. Over that same time frame, construction employment dropped 912,000 in April and 464,000 in May from the year before.

In June and July, construction unemployment rates were up from the same month the previous year in 49 states and were lower in just one state (Kentucky, both months). Construction employment was down 334,000 in June and 326,000 in July from the previous year.

In August and September, once more, all 50 states had higher estimated construction unemployment rates than the same month in 2019. Over the same period, construction employment fell 299,000 in August and 285,000 in September.

From February to September, the national NSA construction unemployment rate went from 5.5% in February to a peak of 16.6% in April to 7.1% in September, its lowest post-February rate, according to BLS numbers.

Recent Month-to-Month Fluctuations

Because these industry-specific rates are not seasonally adjusted, national and state-level unemployment rates are best evaluated on a year-over-year basis. However, in the current situation, with fast-changing events, month-to-month comparisons are useful, but extra care should be used in looking at those numbers.

The national NSA construction unemployment rate was down 0.5% from August to September. Since the data series began in 2000, the historical pattern of change in rates from August has been ambiguous, with nine increases, nine decreases and two unchanged prior to this year. Among the states, 35 had lower estimated construction unemployment rates than in August, while 13 were higher and two were unchanged (Connecticut and Indiana).

The Top Five States

The states with the lowest September estimated NSA construction unemployment rates in order from lowest to highest were:

1. South Dakota, 2.9%
2. Missouri, 3%
3. North Carolina, 3.3%
4. Nebraska and Utah, 3.4%

Three of these states--North Carolina, South Dakota and Utah--were in the top five in August. South Dakota had the lowest rate in September, up from third lowest in August. Missouri had the second lowest rate in September, up from tied with Wyoming for the 14th lowest rate the previous month.

North Carolina had the third lowest rate in September, down from the second lowest rate in August. Nebraska and Utah tied for the fourth lowest rate in September. For Utah, this was down from lowest in August, while for Nebraska, it was up from seventh lowest.

Most Improved Since February: Top Five States

The top five states whose NSA construction unemployment rates were down the most since February in order from largest to smallest change were:

1. West Virginia, -5.3%
2. Alaska, -4.1%
3. Kentucky and Maine (tie), -3.9%
5. Montana, -2.5%

Note that three of these states--Alaska, Maine and Montana--are cold-weather states where February weather often means an elevated construction unemployment rate. However, Montana posted its second lowest February construction unemployment rate since the beginning of estimates in 2000. Warmer-than-normal weather likely played a part in the jobs growth, as well as the state's strong energy and forestry sectors where unemployed construction workers can generally find work.

West Virginia has suffered from high construction unemployment rates during the past several years, but saw some overall improvement in this measure in the last year or so. Given the state's mountainous geography, it often experiences a high construction unemployment rate in February due to weather conditions. From May through September, with the exception of August, the state increased construction employment every month. Although an improvement, September's rate remains high for the state by historical standards.

All these states have relatively low overall unemployment rates. This suggests that for those who cannot find employment in construction, jobs may be available in other sectors of the economy. There is also the possibility that some unemployed construction workers have retired, gone on disability or stopped looking for work altogether, which would mean they are not counted as unemployed.

The Bottom Five States

The states with the highest September estimated NSA construction unemployment rates in order from lowest to highest were:

46.  Ohio, 11.2%
47.  Michigan, 11.3%
48.  Massachusetts, 13.4%
49.  Rhode Island, 21.2%
50.  Hawaii, 24.6%

All five of these states were also in the bottom five in August. Hawaii had the highest estimated construction unemployment rate in September compared to second highest in August. (Note that the unemployment rate for Hawaii is for construction, mining and logging combined.)

Rhode Island had the second highest rate in September compared to the highest in August. Massachusetts had the third highest rate in September for the fourth consecutive month.

Michigan had the fourth highest rate in September compared to a tie with Ohio for fifth highest in August. For the second month in a row, Ohio had the fifth highest rate in August.

Least Improved Since February: Bottom Five States

The bottom five states whose NSA construction unemployment rates were up the most since February in order from smallest to largest increase were:

1. California, 3.4%
2. Nevada, 5.3%
3. Massachusetts, 5.4%
4. Rhode Island, 7.1%
5. Hawaii, 17.9%

Hawaii, again a state whose unemployment rate is for construction, mining and logging combined, has suffered the worst setback. It was doing reasonably well in February with a somewhat low construction unemployment rate for the state. The pandemic and reaction to it hit the state hard with travel, and consequently tourism (both domestic and foreign), suffering severe damage. As a result, construction felt the fallout. Both the overall and construction unemployment rates shot up and, although they have fallen somewhat, remain high. With little work available on the mainland (particularly the West Coast), the usual safety valve of traveling for employment when construction in Hawaii falters was not available this time.

February and March are normally difficult for Rhode Island due to the weather. Despite warmer-than-normal temperatures in early 2020, the coronavirus hit the state's construction industry particularly hard, rocketing its construction unemployment rate in April. Since then, there has been continual but slow improvement, still leaving the rate 7.1% higher than in February.

Like Rhode Island, Massachusetts was doing well early in the year, posting its lowest January and February NSA construction unemployment rates on record. This even continued into March with its second lowest rate on record. Both states saw increased monthly construction employment from May through August. As with Rhode Island, Massachusetts' construction industry was hit hard in April, sending its construction unemployment rate soaring. Since then, the state has experienced steady progress lowering that unemployment rate. Still, its September rate was 5.4% above February's rate. With a recent surge in COVID-19 cases in the state, the progress the state has made may be reversed over the next few months.

California and Nevada have both suffered from widespread wildfires, adding to the slowdown in construction due to the pandemic. Both states had thriving construction activity at the beginning of the year, with each posting its lowest construction unemployment rate on record in January and February. Rates rose in March and peaked in April. Since then, rates have been on a downward trajectory but remain high by historical standards. Presumably, some unemployed construction workers found employment fighting the wildfires.