One of the greatest mysteries of the housing slump is why there have been so few layoffs in residential construction.
The mystery deepened today when the Bureau of Labor Statistics announced a seasonally adjusted employment decline of just 800 jobs in May. That’s less than a rounding error, meaning that essentially there was no change in the number of people building homes in spite of the widely reported decline in construction.
To be precise, according to the BLS, residential construction employment fell to 996,200 in May from 997,000 in April. In May of 2006, employment was 1.02 million, so we’re down by only a little more than 2% from a year ago.
The most plausible explanation for this that I’ve heard is that lots of the workers who were laid off were illegal immigrants working off the books, who weren’t counted by the government in the first place. But that doesn’t fully explain things, because why would builders lay off lots and lots of illegals but almost no regular employees?
Your theories welcome.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.