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By Procore Editorial staff
May 9, 2016
Despite encouraging statistics, hiring talented people remains a big challenge for plenty of companies. December 2014 was the third highest month of unfilled construction jobs since the end of the recession, according to the National Association of Home Builders and the Bureau of Labor Statistics. Even more worrisome, the Associated Builders and Contractors estimates the construction industry will face a shortage of nearly two million skilled workers by 2019.
The troubling stats keep pouring in. Home builders have reported taking longer than usual to finish jobs because they are unable to staff their crews with skilled workers. The Associated General Contractors of America (AGC) reports 83% of contractors can’t find qualified skilled labor to meet the demand. But it’s not only looking grim for the construction industry; the Bureau of Labor Statistics warns that slower labor force growth will have a limiting effect on the United States’ overall potential economic growth.
Some of the bad news is disguised by optimistic reports—the recent sudden and steep drop in oil prices means consumers can spend their money elsewhere, which helps boost the economy. However, it means less work for the companies and workers in the oil field, though that isn’t necessarily a problem because contractors in shale-oil regions had been having trouble finding workers anyway. The circuitous good news/bad news cycle doesn’t end there: as consumers spend more, they will want better stores, new hotels, nicer homes, and bigger schools—increasing business for construction companies—and in turn making labor shortage even more of a problem.
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It seems like an insurmountable issue: how can a company hire skilled workers during the labor shortage with seemingly everything stacked against them? To answer that, it’s important to understand the underlying causes of the shortage.
Few industries were hit harder by the recession than construction, which slipped into decline earlier and recovered later than any other job sector. Since 2006, the construction industry was forced to lay off more than two million workers; many left the field altogether to find more secure work, or have retired from the workforce. Further complicating things, the 2012 Census reported that roughly 44% of the construction workforce was 45 years of age or older, with nearly 20% being 55 and above. These numbers point to a minimum of 1.1 million construction workers who are likely to retire within ten years. This, coupled with anemic job gains, has led to two words that no business owner in construction wants to hear: labor shortage.In recent years, there has been a big push to focus on college preparatory programs in high schools as the U.S. economy shifts from manufacturing to knowledge-based work. Construction isn’t seen as a desirable career path for most students graduating from high school, and fewer schools than ever before are offering classes in career and technical skills, due in part to the federal funding for such declining 29% over the last eight years. Additionally, there is declining participation in union apprenticeship training caused by a variety of factors, including an overall societal push towards students obtaining a college degree and legislation that restricts unions and open-shop contractors from creating apprenticeship and training programs.
The threat of a labor shortage means a variety of issues that will plague not only construction businesses, but also the general public. Understaffed construction firms may be forced to propose slower schedules for vital projects, which can slow the speed of economic development. Infrastructure, commercial, industrial, and institutional projects will languish to the detriment of the public that would use them upon completion. Fewer companies will bid on projects due to understaffing, and the reduced competition means that owners are likely to spend more money on a project—dampening both the enthusiasm as well as the budget for future projects.Complicating the issue are the unemployment rate and the number of job seekers. It seems that an easy solution to a labor shortage would be to hire more of these job seekers, but many of those who respond to job openings in the construction industry lack the necessary experience. As the field evolves, so does its job requirements. In 1950, 60% of manufacturing jobs could be handled by unskilled labor. In 2005, only 15% of manufacturing jobs were unskilled. This trend indicates that just adding warm bodies to the workforce won’t suffice— they need to be trained and qualified.
Thus, the industry is left with a twofold challenge: an aging workforce and an inexperienced workforce.
The situation isn’t as dire as it seems, however. There are a number of things that can be done on both a national and local level to protect companies from the labor shortage, which organizations like the Associated General Contractors of America and commercial insurance and risk management company, Gibson, have put forth.The AGC calls for the reformation and reinvigoration of the Carl D. Perkins Career & Technical Education Act, which would increase funding for high-quality training programs in response to labor market needs. They also recommend that Congress enact legislation that would expand antitrust exemption to open-shop contractors, allowing them to work together to provide funding for craft training programs. As it currently stands, the legislation in place restricts what construction companies can and can’t do.The AGC is also pressing Congress to improve the Workforce Investment Act by removing barriers preventing Workforce Investment Boards from operating more closely with registered apprenticeship programs as well as designating those programs as “Eligible Training Providers.” This makes it easier to provide the tools and supplies they need. Additionally, they request at least $20 million over a three-year period to help sector partnerships align needed skills with local job opportunities.
On the national level, the AGC calls for enacting immigration reform, requesting that Congress provide undocumented workers an easier path to legal status, which will help ll unfilled jobs. Though it’s a polarizing issue, it would provide many business owners with access to labor they hadn’t been able to hire before (or make their undocumented workers legal, which, by recent estimates, is around 14% of the nation’s construction workforce).Lastly, the AGC wants to provide community college career and technical programs to high school students for free, as well as make it easier to establish public schools focused on career and technical education. By introducing more young workers into the industry, the loss of veteran workers to retirement won’t have as dramatic an effect on the future of construction.
Want to read more? Click here to download the free eBook, "How to Hire Talented Workers Even During a Labor Shortage."
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