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Bay Area construction stages big rebound

The Bay Area's construction industry is enjoying its strongest job growth in years, a remarkable turnaround for a sector that was battered by the vicious meltdown of the housing market and the implosion of commercial real estate.

The construction sector added 13,800 jobs in the Bay Area during the 12 months that ended in March, its best performance in seven years.

"The Bay Area construction market is punching above its weight class now," said Scott Anderson, chief economist with Bank of the West.

Over the most recent 12 months, the construction industry added jobs at nearly four times the pace of overall job growth in the Bay Area.

Much of this is tied to increased demand to buy homes, along with tech firms hungry for office space.

"Housing has really turned the corner," said Jordan Levine, an economist and director of research at Beacon Economics. "We are seeing more homebuilders jump into the fray."

The Bay Area in March had 144,800 construction jobs. That's 26.4 percent fewer than March 2001, the year the construction sector had its highest levels of employment.

To be sure, high tech remains the employment leader that hauls other industries forward, as shown by the gains produced by two sectors considered to be proxies for the high-tech sector.

Professional, scientific and technical services added 22,600 jobs during the 12 months that ended in March, a 6.2 percent increase. Information services and products gained 4,600 jobs, up 3.8 percent.

But the rebound in the building industry broadens the types of workers who benefit from the Bay Area's strong economy.

"Construction is a very big part of blue-collar job and income growth," said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy. "It brings a whole different set of people into the economic recovery. It makes the rebound more than just high tech."

Technology, though, appears to be playing the key role in the construction boom.

Numerous tech companies, including Google (GOOG), Apple (AAPL) and LinkedIn, have been striking lease deals or buying property in a quest for offices to contain their fast-expanding operations.

In tandem with this tech growth, the South Bay is the strongest job market for construction.

Over the 12 months that ended in March, the building industry in Santa Clara and San Benito counties added 4,000 jobs, a 12.3 percent gain. Another tech-oriented region, the San Francisco-San Mateo-Marin area, added 3,100 jobs for a 9.3 percent gain during the year.

Even the East Bay (Alameda and Contra Costa counties), which was especially hit hard by the housing recession, gained 4,800 jobs during the 12 months, for a 10.1 percent annualized gain.

"The trades like electrical, plumbing and framing Glazier Matthew Dulaney works to install windows at the Moffett Towers office building going up in Sunnyvale on April 16, 2013. Construction is back in the Bay Area. Over the past 12 months, the construction sector, long given up for dead because of the mortgage meltdown, has surged and is growing twice as fast as the entire job market in the Bay Area. (Patrick Tehan/Staff) seem to be picking up the best," said Daniel Stout, a San Jose


The big problem amid the upswing: Wages remain soft.

Over the most recent 12 months available -- ending in March 2012 -- average pay for construction workers rose more slowly than the average pay for all workers in the Bay Area, according to an analysis by this newspaper of data compiled by the state's Employment Development Department.

The average pay for all workers in the Bay Area is $65,878, the department figures show, while construction workers' average pay was $61,211. For all workers in the Bay Area, pay rose 4.2 percent a year, while for construction workers, the increase was 0.3 percent over the 12 months that ended in March 2012.

Stout would often work for $25 to $50 an hour just a few years ago, before the recession. Now, general contractors want to pay around $15 to $25 an hour.

"Things are picking up, but it's never going to be to the point where we were eight or 10 years ago," said Bow Peterson, a San Jose resident and construction and project manager. "Back then, clients didn't look at my prices. They just wanted to know when the job would get done."

Still, the combination of the housing rebound and the surge in commercial real estate suggests the construction upswing has some staying power.


By George Avalos
Oakland Tribune


Updated:   04/23/2013 06:13:17 AM PDT
23 April 2013, 17:16

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