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Another Analysis Wonders If Labor Supply Might Slow Housing’s Recovery
John Caulfield / BUILDER / May 13, 2013
Fannie Mae foresees a 1-million-worker shortage, vis-a-vis construction demand, by 2016
These are the conclusions of a May 6 analysis of supply and demand in housing and employment by Fannie Mae’s Economic and Research Group. The analysis adds to the growing body of research that raises questions about the housing industry’s ability to sustain its recovery.
The Fannie Mae paper can be seen as a response to an analysis of residential construction jobs released last February by Kris Dawsey and Hui Shan of Goldman Sachs. In their paper titled “Housing Sector Jobs Poised for a Comeback,” the researchers estimate that the housing industry’s construction employment fell by 1.5 million, or 42%, between 2006 and 2011. They also introduced the controversial notion that builders “hoarded” workers during the recession—that is, companies didn’t lay off as many workers as they could have, given the collapse in construction activity.
This hoarding premise is based on a calculation of the economic value added per worker, which Goldman estimates fell to $60,000 in the fourth quarter of 2012 from $80,000 in 2006. But productivity among construction workers has been gaining, leading the researchers to infer that hiring would again account for a larger share of future increases in residential investment output.