HUDSONVILLE — With a significant number of available jobs in the U.S. and persistently low national unemployment, companies looking for workers will struggle in 2019.
That’s according to Anirban Basu, chairman and CEO of Baltimore-based Sage Policy Group and the chief economist for the Associated Builders and Contractors, a national trade association.
“When you’ve got these jobs open crashing up against a 3.7 percent national rate of unemployment, workers are in demand and they’re going to become more expensive,” Basu said. “It’s already happening, but it’s going to continue to be part of the story.”
Basu spoke to executives in the construction and development industry this week during the Associated Builders and Contractors Western Michigan Chapter 2019 economic forecast event, held at the Pinnacle Center in Hudsonville.
Finding not only enough workers but the right workers will be “more of a phenomenon” in 2019, he said.
According to Basu, there are seven available jobs for each unemployed American, highlighting the labor challenges companies will continue to face.
As well, the U.S. economy added 155,000 for November, continuing a 98-month streak for job growth.
“That’s an unrivaled, unparalleled winning streak in American history,” Basu said.
Construction jobs ranked near the top in terms of jobs added in 2018 with a net gain of 330,000 jobs over last year, a reflection of the demand for construction workers, he said. Meanwhile, manufacturers added 296,000 jobs in the last 12 months.
As well, Grand Rapids performed better than Michigan and the rest of the country in terms of new job growth, he said, noting local employers added 13,500 positions.
The prospects for growth appear to be strong for the construction industry in the coming year as well, according to Basu. The October 2018 Architecture Billings Index, a indicator of projects on the boards that could eventually translate into construction activity, declined to 50.4 from 51.1, although any score greater than 50 indicates billing growth. The pace of that growth has ebbed and flowed throughout the year, but it is expected to remain positive in coming months, according to the American Institute of Architects.
“For people working on projects that involve architects, you’ll probably be even busier in the next 12 months,” Basu said.
Many contractors have a backlog that “has never been this significant,” Basu said, noting that work will keep them busy in 2019.
Overall, 2019 should reflect another good year for the U.S. economy, but beyond that, Basu remains concerned. People will be dealing with inflation and higher interest rates, which could lead to higher borrowing costs and a sharp slowdown for 2020 and beyond, he said.
“At some point in late 2019 or early 2020, I expect a potential deleveraging cycle, people withdrawing risk and capital from the market,” he said. “Asset prices begin to fall. When that cycle begins, it will be bad.”