New York City’s Construction Sector Faces Significant Decline

Categories: New York State Business NewsNew York State News

A construction site in New York City showcases the diverse workforce in the industry.

News Summary

New York City’s construction sector is experiencing a notable decline with employment levels significantly lower than pre-pandemic figures. As of 2024, jobs in construction are down 11% compared to 2019. Although residential construction remains robust, driven by remodeling projects and tax incentives, the non-residential sector continues to struggle. Industry leaders are calling for measures to support job growth and address operational challenges to ensure a resilient workforce moving forward.

New York

New York City’s construction sector is experiencing a significant decline, with employment levels well below those seen prior to the COVID-19 pandemic. As of 2024, the city recorded an average of only 143,100 construction jobs, reflecting an 11% reduction from the 161,300 jobs available in 2019. This downturn is echoed across New York State, where construction employment continues to lag at 4% below 2019 numbers, making it one of the slowest recovery states in the nation, second only to West Virginia.

Key factors contributing to this sluggish recovery include a pronounced decrease in demand for non-residential construction projects. According to a report from Comptroller Tom DiNapoli, which analyzed data from the New York Building Congress and state labor sources, spending on non-residential construction in 2023 totaled $22.2 billion, marking a 3% decline from 2019. Projections indicate that non-residential construction spending could decrease even more in 2024, falling by an additional $572 million.

In contrast, residential construction has shown resilience, surpassing pre-pandemic levels with a total of $22.8 billion in spending during 2023. Much of this growth is attributed to an increase in remodeling and alteration projects, which have outperformed other sectors of construction. The anticipated introduction of tax incentives, such as the 485-x tax break for multifamily projects and the 467-m incentive for office conversions, is expected to bolster further growth in the residential sector.

Looking ahead, the Building Congress is optimistic about a rebound in non-residential construction, predicting a return to pre-pandemic levels by late 2024, primarily driven by declining interest rates. In the pipeline are several megaprojects poised to create new jobs within the construction industry, including a $10 billion project to rebuild the Midtown Bus Terminal, the reconstruction of Penn Station, and the Metropolitan Transportation Authority’s $68 billion capital plan for upgrades and repairs to various transit facilities.

The construction workforce in New York City is notably diverse, with immigrants representing 61% of the sector’s employees—more than double the national average. This high percentage of immigrant workers may be at risk as federal immigration policies shift under the Trump administration, which could potentially result in a net decline in immigration for the first time in decades. The impact of these policies on the city’s construction workforce remains a critical concern for industry stakeholders.

The financial landscape of construction jobs in New York City is relatively strong, with construction workers earning an average salary of $95,800 as of 2020—the fifth-highest paying sector in the city. However, job recovery has been uneven, with a notable influx in lower-paying sectors, such as home healthcare, while high-wage industries like finance and technology have seen more significant wage growth.

Administrative challenges further complicate the situation, as evidenced by a drop in construction-related employees at the Department of Buildings—from 662 in March 2021 to just 519 by March 2024. Permit approval times have also surged, increasing by 70% from June 2021 to June 2024. These operational delays not only hinder the construction process but also exacerbate existing labor shortages within the industry.

In summary, while New York City’s construction industry shows signs of potential recovery, particularly in residential sectors, significant challenges remain. Industry leaders are calling for actionable measures to support local job growth in construction, with a focus on addressing external factors influencing the sector’s future. Proper planning and management strategies will be essential for navigating these turbulent times and fostering a more robust construction workforce in the city.