Working Shorthanded: The Construction Labor Shortage

by Brian Frederick
November 13, 2017

Is the labor shortage a new reality for construction?

Everyone in the construction industry remembers the Great Recession. Starting in December of 2007, largely thanks to the subprime mortgage crisis, the bottom fell out of the economy and construction practically ground to a halt.

With everyone was worried about keeping their business afloat, many workers had to be cut loose. Now, closing in on a decade later, construction is back to normal with one major exception: a lot of the workers haven’t returned.

According to a survey conducted in June 2016 by the National Association of Home Builders (NAHB), the labor shortage contractors have been experiencing is actually getting worse. In 2012, a post-recession low of 21% of contractors reported a labor shortage. By 2016, that number had skyrocketed to 56%.

The problems caused by labor shortages

It’s immediately obvious that not having enough skilled craftsmen causes a myriad of problems in the construction industry. Contractors have struggled both to staff their own workforces and to find subcontractors for jobsites, including electricians, plumbers and masons.

In an attempt to stem the delays caused by missing workers, many companies have logically started offering higher wages, but this resonates through many aspects of every job. In order to offset the higher cost of labor, it’s been necessary to increase bids, which in turn, leads to fewer jobs being undertaken. Some companies are even being forced to turn down jobs they would have accepted just a few years ago.

Where have the workers gone?

There’s no clear answer as to where the labor force has gone. Some workers have left the industry, taking jobs in other industries. Another reason could be the loss of immigrant workers. Prior to the recession, many foreign-born workers made their homes in the U.S. When the economy tanked, many returned to their native countries and simply have not returned.

Certain job types have been particularly hard hit by this repatriation. Plasterers, painters and hazardous waste removers tend to have significant immigrant share, and as a result have suffered by this loss of workforce. This is doubly true in areas that depend heavily on foreign-born workers, including Texas, Louisiana and California.

Other experts tie the loss of workers into a steady decline in union representation. Without a strong labor voice in the industry, well-trained workers have been marginalized to some degree. Rather than pay higher wages to highly skilled workers with years of training and on-the-job experience, many contractors have shifted towards nonunion employees, many of whom never completed an apprenticeship. These lesser-skilled workers often more readily transition to non-construction jobs than craftspersons who have spent years honing their skills.

What to expect for the future

For skilled crafts to make a sizable comeback, it may require a shift in how high school students are educated. Rather than pushing everyone towards college, regardless of aptitude, as is the current norm, it may require a shift to a system more like that of Germany, where technically minded students begin to learn a trade in their teens.

Loosening immigration restrictions to attract skilled laborers from other countries is another option, but the current administration seems to be hostile towards this idea. And while construction employment is recovering following the recession (as shown on the chart below), employers are still struggling to fill skilled labor positions like plumbers and electricians.

via U.S. Bureau of Labor Statistics

In the end, overcoming the labor shortage in the construction industry may come down to one factor: technology. Harnessing the power of machines, particularly those equipped with predictive intelligence and the beginnings of artificial intelligence will allow contractors go complete jobs with less need for old-fashioned human labor.

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