In considering the persistence of unemployment after the late recession, Cardiff Garcia at FT Alphaville argues that the decline in construction employment is solely cyclical:
There’s a decline that immediately precedes or coincides with each recession, and an increase (at what appears to be a very similar slope) that begins shortly after each recession ends. And each time, construction employment climbed to levels well above the previous peak.
Far from being bubblicious, this is simply what you would expect in a developed country with a growing population and generally rising living standards. And although the US faces some difficult demographic issues, they’re not so dramatic just yet that you should anticipate a radically different trend in this recovery
Take a look at the post which has plenty of charts, graphs, and links to support the claim.
I’ve taken the liberty of producing a graph of my own:
This represents total construction workers related to population over the period 1952 to the present. I’ve also introduced two trend lines, one linking peak to peak, the other trough to trough. They’re obvious enough in the graph over at FT but there are three anomalies in the cyclical construction employment story: the sharp deviation from trend on the upside in the 1990s and continuing until the Great Recession, the deviation from trend on the downside in the early Aughts, and the very sharp downwards decline following the last recession. I don’t see a cyclical explanation for any of them and, particularly, I think the growing population is clearly irrelevant. If anyone can produce a cyclical explanation for those anomalies, I’d welcome it.
My explanation is that there are both cyclical and structural forces at work in the present situation in construction employment and the present decline is approximately a reversion to the old trend. If that’s the case, it suggests that construction employment will, indeed, grow in the coming years but is unlikely to return to its heights of before the late recession.