The Construction Workforce Shortage is Expensive

The Construction Workforce Shortage is Expensive

By Dewey Pearman, Executive Director, Construction Advancement Foundation (CAF)

The construction industry has a marked need for an infusion of young blood into the workforce.

Across the country, the number of young construction workers declined by nearly 30 percent over the eleven-year period between 2005 and 2016, according to U.S. Census data compiled by BuildZoom, a contractor website with access to hundreds of millions of permits and license records. This rapid decline has been detrimental for contractors and project owners alike, as the labor needs have made a significant impact on costs.

 

The Scope of the Problem

While contractors across the entire country are affected by this issue, the problem is a bit more compounded for certain specialties and regions. Last year, the U.S. Chamber of Commerce and USG Corporation published data on construction’s workforce needs using material from Dodge Data and Analytics, a market intelligence platform for the industry. Their findings show that:

  • Nearly two-thirds (61 percent) of all U.S. contractors report difficultly finding skilled workers.
  • Over two-thirds (69 percent) of small firms reported difficulty finding skilled workers, compared with 59 percent of midsize firms and 50 percent of large firms.
  • A significantly higher percentage of contractors in the U.S. Midwest (60 percent), West (60 percent) and South (58 percent) are concerned about adequate skill levels than contractors in the Northeast (41 percent).
  • Almost all contractors (93 percent) say they are concerned about the cost of skilled labor.
  • Top categories of skilled labor with the greatest shortages:
    • Concrete
    • Interior finishes/millwork
    • Masonry
    • Electrical
    • Plumbing
  • Almost half of all contractors surveyed said they expect this problem to worsen.

 

How This Affects Us All

The most obvious way this workforce shortage is impacting the average citizen is by driving up costs. It’s doing this on multiple fronts: in both the direct construction costs for consumers and secondary costs passed on to consumers by other market sectors. For example, when an airport costs more to build, eventually those expenses will find their way down to passengers’ wallets.

The ripple effect is much more pronounced when you realize that increased building costs for places like laboratories, hospitals, schools, municipal buildings, businesses, roadways, and much more, will all eventually translate into increased costs for everyone.

It’s also making projects take a lot longer. Even routine phases of projects, like estimating, are typically taking more time than they should if given adequate staffing. Several national construction associations have reported it can take as long as eight to 10 weeks to find available workers when in the past it could have been achieved in a single day.

The shortage’s impact on the housing market is probably the biggest example of how a lack of labor is directly driving up consumer costs. Currently, U.S. home prices are rising at a rate much faster than average incomes are rising, partly fueled by a decrease in supply. New home construction is near one of the lowest levels its been in the last 60 years of record keeping, according to the Federal Reserve Bank of Kansas City. Home builders are reporting they simply don’t have enough workers to meet the demand, and thus prices of existing homes are creeping higher.

The National Association of Home Builders predicts about 900,000 single-family houses will be built this year (2018). About 1.2 million homes will be needed to keep up with consumer demand, however, resulting in a significant shortfall and higher price tags for the homes that are part of the available inventory.

 

Are They Just All Lazy?

It would be way too simplistic to chalk up the disinterest of younger workers to any single root cause, particularly with regard to frequently-cited stereotypes about the demographic. Construction presents quality careers with very livable wages – things that every employee desires. What is quite notable about this situation though is the relative indifference young people seem to have about careers in the industry. Perhaps the problem is not one arising out of laziness, but the ways in which careers in the field are marketed to prospective employees.

Young people are not being enticed into the construction industry in the same ways they’re drawn into other fields. They see construction as dangerous hard work, often in unforgiving conditions. When weighed against an example like the technology sector, which boasts comparably high wages to construction, typically safer indoor working conditions, and a cultural perception as being progressive and forward-thinking, it’s plain to see why many individuals never consider construction.

What the industry needs – alongside our existing workforce development endeavors – is a rebranding. We need to emphasize that construction has all the attributes that young workers are seeking: opportunities for continued development, great wages and benefits, increased use of advanced technology on the jobsite, better safety records than ever before, solid job placement rates, and job security.

It’s not that the construction industry lacks anything that young job seekers want, it’s that young people aren’t being shown all it has to offer. If we’re going to have any hope of closing the gap on our workforce shortage, we’re going to have to shift cultural perceptions of the industry from dirty, difficult, and dangerous to smarter, safer, and stronger.