Consider the following costs (some are estimates of our projects) which of course does not accrue to all the workers:
1. A gallon of premium paint - $50 per gallon
2. Replace brick work on stoop (not even the entire stoop - just about 50 or so loose bricks) - $2,000
3. Replace cross-hatching below our deck - $3,500 (perimeter of about 50 feet)
4. Convert a garage into a mudroom - $30,000.
If it weren’t for the subprime mess I would have considered construction jobs to be ‘good’ jobs in the sense that they are pretty much non-offshore-able and that they pay pretty decent wages - especially here in metro DC. They aren’t immune to competition from migrant workers but all in all I would consider them ‘middle-income’ jobs. They’re not middle-income in Washington, DC itself but out in the exurbs where most of the workers seem to commute from they probably would be.
Yet the workers are hurting because of the drop in construction work. How much of this is caused by the misallocation of resources due to the subprime bubble? I would guess that before the bubble the workers had a decent idea how to ride the ups and downs of the cyclical nature of the industry but the bubble shifted their expectations (and spending) upward thereby coming back down to earth has been difficult.
The 'real' effects are the higher expectations that translate into consumption - habit persistence or hand-to-mouth consumption must play a large role in order for bubbles to have large real effects.