What Young Employees In The Construction Trades Need To Know Now

Construction Cyclicality

Cycles are common in construction employment
DR. BILL CONERLY BASED ON DATA FROM THE BUREAU OF LABOR STATISTICS AND NATIONAL BUREAU OF ECONOMIC RESEARCH

More young people are going into the construction trades, the Wall Street Journal recently reported: “Long beset by a labor crunch, the skilled trades are newly appealing to the youngest cohort of American workers, many of whom are choosing to leave the college path.”

That’s good news for the economy and good news for many of the people donning a hard hat and tool belt. But the industry contains risks that everyone in it must understand to live comfortably: it’s cyclical, often seasonal, and not always feasible into later ages.

The positives are coming into focus more clearly. In many cases, a person can enter an apprentice program and be paid while working and also get free training. After a period, such as five years, the person gains a credential or license and earns solid, middle-class income—with no college debt. Jobs have been plentiful in recent years. It’s a reasonable alternative to college, which has gotten more expensive. Many with bachelor’s degrees or even graduate diplomas don’t earn as much as their less-educated friends. Hands-on work looks more attractive now, and it’s much less prone to disruption by AI.


Construction And Recessions

The first downside to construction employment stems from the industry’s cyclicality: it’s an up and down sector of the economy, as the chart shows. Some recessions have only mild effects on construction, employment falling only four to eight percent. But the U.S. construction sector has had some pretty intensive declines: employment fell 18% in the early 1970s, then 15% in the early 1980s, and again down 15% in the early 1990s. Then in the Great Recession construction employment dropped a whopping 30%.

When employment goes down, average hours worked in a week usually go down as well. Those who keep their jobs may not get a full 40 hours of work every week. Overtime becomes rare, even for those who counted on extra hours to cover their expenses.

The severe slowdowns can last for years, much longer than overall economic recessions. I measure length of a downturn as the number of months from the peak level of employment before a downturn, until employment has returned to that prior peak. So it’s the period of declining employment plus the period of recovery to the old level. Since 1950 we’ve experienced six construction downturns that lasted more than four years.

These numbers reflect national averages. Local areas can be far more volatile.


Construction Seasonality

In many parts of the country, construction has a seasonal component. In Minnesota, for example, February employment is typically 22% lower than July employment. Florida, in contrast, has virtually no seasonality to its construction activity.

This risk is more manageable than recession risk, as it can be assessed ahead of time. And different trades will have different patterns, which can be determined before starting a career. HVAC technicians do a lot of work indoors, whereas people running bulldozers for site preparation are usually outdoors. Thus specific trades have different seasonal patterns.


Construction Over A Life Cycle

Young people starting careers should also consider how they will feel in middle age and later years. Many construction jobs involve physical labor. Even with power tools to help, some jobs require getting on hands and knees and then up again. Materials and tools must be moved to a work location. Anything that tires out a 20-year-old will be tough when the worker reaches 40, 50 or 60.

Fortunately, construction offers jobs opportunities that involve less labor but utilize the knowledge of the hands-on worker. Estimating jobs, supervising others and managing projects are all occupations that a person in the trades can grow into. Selling tools and products related to construction provides another opportunity. The old joke says that the guy with a clipboard does no work. He or she actually does valuable work, but it’s much less physically demanding.

Young people in the construction trades can prepare for that career shift by studying estimating and management. Opportunities to learn are provided by trade associations and community colleges as well as by some of the larger companies.


Advice For New Workers In Construction Trades

These facts about construction lead to practical advice for young people in the trades. Financially, the construction worker must be more cautious than friends in more stable industries such as health care and government. Many financial advisors recommend that people accumulate savings of three-to-six months of expenses. For construction workers, a full six months should be the target, and possibly more.

Debt should mostly be avoided. The young construction worker enjoying good paychecks will be tempted to borrow money for a new truck or car. That’s dangerous given the cycles that construction goes through. The best way to upgrade a ride is to buy a less-used vehicle for cash.

Geographic mobility helps construction workers. Jobs are sometimes plentiful in one state when there’s no work in another state. The ability and willingness to move cushions many tradespeople from the risks of the industry.

Finally, young workers should plan on becoming the guy with a clipboard. Talking to supervisors about job opportunities is a good starting point. Ask what knowledge and skills are needed for the less physical jobs. Taking advantage of learning opportunities for sales, estimating and management will prove valuable for many people. And saving enough money for early retirement gives people more options as they age.

The construction trades offer good opportunities for young people, but risks and trade-offs abound, as in every important choice a person makes.


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