The commercial construction industry has been a significant contributor to recent employment gains seen throughout the U.S. But even while commercial builders now employ more than 4.2 million Americans, a number that continues to grow, the industry still struggles to find qualified talent. This labor shortage is driving up the cost of building and renovating in many parts of the country, according to The Wall Street Journal.
“Ever since we came out of the great recession, many folks in our industry have been saying: it’s coming, it’s coming, it’s coming,” George Nash Jr., director of preconstruction for Branch and Associates, a Roanoke, Virginia, contractor, told the Journal. “Today the problem is there.”
“The labor shortage continues to worsen in some areas.”
A dearth of credentialed workers in the construction industry at large has pushed up building prices for the last several years. Even with favorable market indicators, however, the problem continues to worsen in some areas. National average construction prices have been rising at rates as high as 5 percent per year, significantly faster than inflation, according to the Journal. The Associated Builders and Contractors, an industry trade group, estimated that for now, the industry is approximately 500,000 workers short of where it should be to meet demand.
The rush to build is pinching both contractors and subcontracting businesses. The Journal explained that as recently as two years ago, contractors bidding on a job could easily expect at least two or three competing offers to come in. Now, single-bid projects are becoming common, likely because workers are in short supply. This has made it difficult for contractors to keep costs down.
Subcontractors who bid on these jobs are growing increasingly reluctant, the Journal reported, due to a lack of manpower. The owner of an electrician business in Indiana told the Journal that even though he had added 70 people to his payroll in the last two months, some 200 positions remained unfilled.
Infrastructure plan is tested
An additional wrinkle to this broad economic situation involves new proposals made by the administration of President Donald Trump. In his cabinet’s federal budget proposal released May 22 were details on what was a key part of Trump’s campaign pledges to bolster the economy: a $1 trillion infrastructure spending package.
Unlike many other proposals in the budget plan, a bill supporting infrastructure investment has broad appeal among both major political parties, according to The Hill. But the U.S. labor shortage, among other factors, will make it a difficult achievement to realize. If such a spending spree does come true, the Associated Builders and Contractors estimated that an additional 600,000 new workers would be needed.
Construction firms and contractors are approaching this problem in a number of ways. One common solution to labor shortage issues that may become more common is joint-venture projects. As one source for the Journal explained, “Typically a contractor wants to keep the whole contract for themselves. We’ll [now] see them joint-venture pieces of that contract because they don’t have enough labor.”
Another key factor in the situation is the fact that younger trainees are not replacing older workers at the rate needed. On one hand, a large number of workers either laid off or who left after the 2008 financial downturn never returned to work – overall construction employment remains below its pre-recession peak. At the same time, fewer young high school and college graduates are choosing to enter the construction trades.
To entice more students to join the workforce in an industry hurting for new talent, many construction companies are bolstering their recruitment efforts. The Journal reported on one company in Lincoln, Nebraska, that hired a full-time staff member just to canvas local high schools, trade schools, military bases and other locations, encouraging graduates to consider the trade.
Another industry professional and former ABC chairman David Chapin told the Journal that some of its best recruitment prospects have come from the tech industry, despite the vast differences between the two jobs.
“We have a lot of people who came out of the [information technology] industry. They just found out they didn’t like working inside and wanted to work with their hands day-to-day,” Chapin said, according to the Journal.
His firm is currently dealing with the biggest backlog in its history – more than 18 months of work delayed because of labor sourcing troubles. Finding new sources of talent and recruitment channels has become a major operation in businesses throughout the construction industry.
The labor shortage in construction is a continuing issue, but not an insurmountable one. Businesses and homeowners should still make it a priority to schedule regular maintenance and repairs when needed. Contact MB Technology to learn more.