A Labor Shortage Curbs Excitement Over the Construction Boom

31.10.18 10:19 AM Comment(s) By Cratos

An aging workforce and barriers to immigration top the list of concerns

For a nation that paved and built itself to prosperity from sea to shining sea, the U.S. now faces a construction sector in serious need of workers. In the midst of the country’s second-longest economic recovery in history, the industry is awash in work, with a whopping $1 trillion in spending on new projects at the close of 2017. But this huge demand is in a field with a chronic labor shortage.

According to the National Association of Home Builders, 82 percent of its members listed the cost and availability of labor among their top concerns in 2017. Put in perspective, only 13 percent voiced similar worries in 2011. We thought it useful to delve into the reasons for this situation and some possible solutions.

Boom in building, lapse in labor

Potential homeowners have emerged from the Great Recession optimistic about their prospects and ready to buy. In isolation, this is great news for the building industry, but even though the U.S. added approximately 210,000 new construction jobs in 2017, demand for trained workers still far exceeds supply.

In the first quarter of 2018, employers have struggled to fill an average of 225,000 construction jobs per month, a figure not seen since 2007 – right when the housing bubble was about to burst. The end result of this imbalance? Builders are increasingly unable to finish homes on time.

There are several factors that may contribute to the labor shortage:

  1. The Great Recession. More than 1.5 million workers fled the residential construction field since the dawn of this economic calamity. To make matters worse, fewer than half of those jobs have come back, and homebuilders now find themselves needing to pay more to be adequately staffed.
  2. An aging workforce. The majority of the workers who remain in the field are older than is considered ideal for the grueling physical nature of the industry. The average age across the trades today sits around 50. And the infrastructure needed to replenish the pipeline of workers is far from robust. A focus on college preparation has pushed vocational education out of high schools and has only in recent years begun to return. Add to this the tsunami of Baby Boomer retirements and you have a perfect storm to create a worker shortage.
  3. Fewer immigrants. Tougher vetting of new arrivals to the U.S. has had a negative impact on numerous industries, and construction is no exception. Immigrants make up 30 to 40 percent of construction personnel nationwide.

A way forward

Although the current state of construction labor is far from ideal, there are signs of hope on the horizon.

  1. Corporate buy-in. The Home Depot Foundation has invested $50 million to train 20,000 skilled tradespeople over the next 10 years. The Foundation plans to help revive shop classes in schools and continue an earlier company program that prepares to separate military members to transition to upwardly-mobile civilian careers in the industry.
  2. An increase in trade education. As mentioned earlier, many high schools are seeing the return of vocational education as an option for those students who may not fit the four-year college mold. In addition, institutions like the Milton Hershey School in Hershey, PA emphasize a “learning by doing” methodology, bringing students hands-on experience in their field of choice. Those in the construction and carpentry pathway get the chance to build houses from the ground up that will then be occupied by people in the community.
  3. Higher pay. Wages have skyrocketed, up 3.6 percent between May 2017 and May 2018. This sits nicely above the 2.8 percent gain across the economy. These rates will draw more workers to the industry.

Cratos Equipment can be a valuable partner in solving potential worker shortages. Our battery-powered alternative vehicles can increase efficiency and reduce the staff needed to do the job, particularly for simple, manual work such as hauling materials. To find out more, try our cost savings calendar, conveniently located at the bottom of every product page on our site.

You can also read our previous blog: “Man vs. Machine: How much can battery-powered construction and landscaping equipment really save on labor costs?

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