The Los Angeles construction sector was riding a historic building boom. Then it caught COVID-19 and nearly died.
Now, it seems finally to have regained its momentum. In March, the city of Los Angeles issued the greatest number of building permits—16,157—since November 2019, according to data from the city Department of Building and Safety. (April 2020, the first full month of the lockdown, was the low point, with 6,644 permits dispensed.)
Yet, the construction business could likely be hitting higher levels if it didn’t feel some of the drag that is hampering the economy at large: labor shortages, inflation and sluggish supply chains.
Permits are required for everything from breaking ground on a new residence to any significant home alteration, such as adding a bathroom or rewiring a garage (though some people try to get around the hassle of securing a permit). Counting up the number of permits issued can offer a broad measure of how much building is taking place, an important driver of the local economy.
In the first quarter of 2022, there were 42,461 building permits issued in the city. That represents a 17.8% increase from the same period last year.
Though the pace is picking up, many in the field say they are being held back by a chronic lack of qualified workers.
“There are jobs I won’t bid on because I just don’t have the workers,” said Andy Howard, who runs a contracting business. “And it’s not just workers: It’s subcontractors all the way down the chain.”
This is a nationwide problem. In February, the trade organization the Associated Builders and Contractors said that the construction industry will need 650,000 additional workers to match the high demand. In greater Los Angeles, there are 257,000 people working in construction, a 2.8% increase from a year ago, according to the Bureau of Labor Statistics.
That growth is not nearly enough to keep pace with demand in Los Angeles, said Gary Mkrtichyan, the president of Opus Builders, a Northeast Los Angeles-based residential and multi-family project construction business.
“There’s still a significant labor shortage,” he said. “We’re looking for more people to hire, but there aren’t people who are willing to work.”
Though business has been picking up, so have costs, said Mkrtichyan, such as wages. That has also slowed down the sector.
One of the unanticipated side effects of the pandemic was a spike in a variety of home construction and improvement projects. The months that people spent on their own property prompted many to look for ways to better the experience.
That led to a wave of people building pools. Los Angeles saw a record number of pool and spa permits issued in the second quarter of 2021.
The most frequently requested type of permit in March was for electrical work, which is required for a broad range of construction. A total of 5,497 of these permits were issued, a 20% increase from the previous month.
There were 1,141 permits issued in the first three months of the year for new buildings. That is a 42% increase from the same period a year earlier, and a 1.5% rise over the first quarter of the pre-pandemic year of 2019.
How we did it: We examined publicly available data on permits issued by the Los Angeles Department of Building and Safety from Jan. 1, 2018-April 22, 2022. For neighborhood boundaries, we rely on the borders defined by the Los Angeles Times. Learn more about our data here.
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