With much of Houston still wet, this Labor Day arrives with an urgent new draw on America’s reservoir of skilled trades.The demand for carpenters, electricians, plumbers, welders, roofers and other trades in the wake of Hurricane Harvey is likely to be so great that its influence will be felt even in northeast Indiana, more than 1,000 miles north of the heart of the destruction.
“You’re going to quickly see wages for skilled trades rise down there,” said Steve Horwitz, the John H. Schnatter Distinguished Professor of free enterprise at Ball State University. Second, “there will be a big influx of Latino immigrants” to work in reconstruction, as was the case in Louisiana after Hurricane Katrina in 2005. And the demand for labor is likely to be so strong, and the wages so much higher, he said, “I suspect we’ll see some people head down there” from Indiana, he said.
No one yet has been able to closely assess the damage in America’s fifth-largest metro area, although two companies took shots at estimating damage last week. AccuWeather, a private weather service, estimated the total damage at $190 billion. CoreLogic, which analyzes trends and values in residential real estate, estimated damage to residences in Texas and Louisiana at $25-$37 billion, 70 percent of which is uninsured.
Whatever the final tab, the hurricane and flooding appear to be the costliest natural disaster in U.S. history, causing more damage than either Hurricane Katrina or Superstorm Sandy, or perhaps both combined.
And everyone who needs demolition, repair or rebuilding done along the Gulf Coast will have to compete with a national demand for skilled trades workers that’s already more than the labor force can meet.
“There will be an effect. Their comeback and rebuilding will take longer, because the manpower resources aren’t there,” said J.R. Gaylor, president of the Associated Building Contractors of Indiana and Kentucky, which represents non-union contracting companies.
Gaylor offered a specific example: welders, essential for repairing or rebuilding refineries, chemical plants and other large industrial facilities. The American Welding Society projects a shortfall of 290,000 skilled welders below demand by 2020, he said.
One thing Gaylor doesn’t expect is a migration of Hoosier contracting firms south to Texas.
Of the companies his association represents, Gaylor said, “They’re backlogged until mid-2018. Some contractors are turning work down in Indiana.”
Darryl Esterline, president of Northeast Indiana Building Trades, a regional association of building-trades unions, declined to comment. He said the building trades he represents have not developed a response to the hurricane.
Jessica Scheurich, president of the Home Builders Association of Fort Wayne, said Thursday that she doesn’t expect home builders in Fort Wayne to try to export their expertise to the Gulf Coast. Most association members are rooted here.
Where Scheurich, who also is development coordinator at Keller Development, believes the impact is most likely to be felt is in the availability and cost of building supplies. After previous natural disasters, building material became scarcer and costlier.
Gaylor said a key variable in whether the hurricane-damage zone can rebuild will be how much federal money flows there. “That’s probably the wild card – how much of a federal influx there will be,” he said.
Horwitz agrees with Scheurich that prices of building materials are likely to rise quickly as rebuilding begins. And while federal funding for the disaster area will play a role in how rebuilding proceeds, he thinks that rising prices of both building materials and labor will play a bigger role in powering the region’s rebound.
“Rising prices attract those resources,” he said, referring to both labor and material. Suppliers can increase production of building materials, and immigration or migration within the United States can increase the Gulf Coast labor supply.
“That’s why we don’t want laws against price-gouging any more than we want laws against wage-gouging,” he said.