White House Hosts Building Supply Chain Meeting
NAHB facilitated a meeting at the White House to discuss home building materials supply chain issues. NAHB said that many diverse groups were involved in the discussion, which marked an important step forward to finding solutions that will end production bottlenecks. NAHB thanked Commerce Secretary Gina Raimondo for working closely with them and understanding the need to address the supply chain disruptions that are holding back housing and economic growth.
The NAHB-sponsored meeting helped spur a virtual home building supply chain roundtable hosted by a bi-partisan group of senators and the Commerce Secretary. Representatives from the building supply chain included NAHB members. The purpose was to address skyrocketing building materials prices and the impact of the labor shortage.
The sponsoring senators called for action on the lumber issue. In May they delivered a joint letter to Congress that called for the elimination of Canadian softwood lumber tariffs and an increase in the production of domestic lumber. They noted that pandemic-driven supply chain shortages have driven up prices and the volatility in the lumber market is pricing hundreds of thousands of potential home buyers out of the market. While framing lumber prices have dropped in recent weeks, overall prices of wood products used in home building continue to soar, and supply chain issues delay projects and raise costs.
How Much Construction Workers Earn
Half of payroll workers in construction earn more than $50,460 with the top 25% making at least $71,000, according to the 2020 Bureau of Labor Statistics Occupational Employment Statistics Survey data and analysis by the NAHB. In comparison, the US median wage is $49,150, while the top 25% of US workers make at least $67,410.
However, overall construction wages did not register the sharp gains that would be consistent with a strong pace of home building and persistent labor shortages that are weighing down residential construction.
Year over year, median wages in construction rose 3%. However, wages of multiple entry-level construction trades increased more quickly. Median wages of helpers of various construction tradesmen went up 5%.
Among construction trades, first-line supervisors of construction trades make the second-highest wages, with half of them making over $67,560 and the top 25% earning at least $87,160. In general, construction trades that require more years of formal education, specialized training or licensing tend to offer higher annual wages.
Becoming a carpenter requires less formal education than some trades, but the median wages of carpenters still exceed the national median. Half of carpenters working in construction earn over $49,730.
Americans Trying to Buy Homes
A survey NAHB conducted in the second quarter showed that 17% of adults planned to buy a new home. Now the most recent survey shows that more than half of those adults (61%) have moved beyond just planning and are now actively trying to buy, according to NAHB. This share of active buyers has increased for six consecutive quarters, a trend that began after the final quarter of 2019 when it stood at 43%. In the past year and a half, several factors have contributed to turning more prospective buyers into active ones, including low mortgage rates, desire for more space and wanting to move to the suburbs/exurbs. Furthermore, the share of prospective buyers who are actively searching for a home has grown in every region of the US. From the final quarter of 2019 to the second quarter of 2021, the share went from 46% to 66% in the Northeast, 40% to 50% in the Midwest, 43% to 58% in the South and 40% to 72% in the West.
Online Sales Expected to Grow
The National Retail Federation (NRF) forecast that non-store and online sales are expected to grow between 18% and 23% this year, helping to fuel overall retail sales growth of between 10.5% and 13.5%. That would translate into online sales between $1.09 and $1.13 trillion, up from $920 billion in the sales explosion in 2020 that was fueled by the pandemic.
Emarketer forecast that Amazon will account for 41.4% of all US retail ecommerce sales this year and will contribute more than 50% of US growth in online sales from 2019 to 2021. Emarketer estimates Amazon’s ecommerce sales will reach $386.40 billion by the end of this year.
According to their analysis, Walmart is the number two player, with a 7.5% share and The Home Depot comes in at number five, with a 2.3% share.
Emarketer projects that ecommerce will account for 18.9% of total holiday sales this year, or about $206.88 billion, up from $878.26 billion in 2020, when ecommerce accounted for 17.5% of holiday sales. A number of retailers, including Walmart, have already announced their stores will be closed Thanksgiving Day. Prior to the pandemic, ecommerce sales Thanksgiving Day hit $4.13 billion. This year they are expected to reach $6.21 billion. Growth of Black Friday ecommerce sales is expected to slow since stores will be open. The digital push is also expected to get the holiday shopping season off to an early start once again.
Online sales did not plummet when the economy began reopening as many analysts had expected. The recent return to restrictions and mask mandates may now cause projections to be revised upwards. Logistics firm ShipBob’s 2021 Ecommerce Shipping and Fulfillment Benchmarks Report covered April 2020 through March 2021. It predicts that between 20% and 30% of the global pandemic-related shift to online shopping will become permanent.
Most Companies See Labor Shortages
An astonishing 95% of companies are currently hiring and 85% are experiencing labor shortages, according to a survey of more than 170 human resource executives and business leaders conducted by Challenger Gray online in July. Nearly 74% of responding companies said 74% of respondents said a desire for more flexibility was the principle reason they were leaving, followed by burnout, cited by 59%.
Walmart Tests Alternatives to Plastic Bags
Walmart is one of the major retailers behind the three-year “Beyond the Bag” initiative which is focused on reducing the use of plastic bags while still making shopping convenient for shoppers. Plans call for winning submissions to begin pilot testing at stores in Northern California. Options being tested include reusable bag models and technologies that extend the useful life of retail bags and provide visibility into the bag’s actual lifecycle. ChicoBag’s solution is designed to enable customers to borrow bags on-site, eliminating the need for customers to remember their reusable bags. Pilots are slated to run through early fall with an objective of refining the winning solutions. Other companies are also developing alternatives to single-use plastic bags. More than 100 billion single-use plastic bags are currently used every year in the US. Other retailers participating include CVS, Target, Dollar General, Walgreens, Kroger and Albertsons.
In Search of Goldilocks
The Fed is always in pursuit of a Goldilocks economy; not too hot and not too cold. Too hot, and demand and shortages push up prices. Too cold, and there’s not enough demand. Right now, supply chain bottlenecks, labor shortages, skyrocketing home prices and rising wages and labor shortages are all causing the economy to heat up. If it gets too hot, the Fed might feel the need to raise interest rates in order to cool things off. However, most economists think the spike is temporary, and will resolve on its own as supply chain problems and shortages are resolved and more people go back to work. The Biden administration recently stated that they are going to take steps to lower prices at the pump and the grocery store by cracking down on what some major players are doing that is keeping prices artificially inflated. The administration is also bringing port operators, shipping lines and labor unions together to find ways to speed up the ports’ operations.
Biometrics Help Stop Hackers
Amazon is implementing oversight technology that monitors keyboard strokes and mouse movements of customer service workers to prevent rogue workers, imposters and hackers from accessing confidential customer data. Amazon’s security, finance and legal teams have all agreed to use a behavioral biometric system from a cybersecurity company, according to Motherboard. The system doesn't monitor worker communications or other things that would violate worker privacy. Decreased security capabilities for Amazon customer service agents working from home because of CV19 and more customer service jobs outsourced to foreign countries with less stringent security measures has forced Amazon to take these steps.
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