Baker identifies what he sees as three main issues to the construction labor shortage: demographics, recruitment and marketing. Demographics itself encompasses two big problems to the construction workforce: a shortage of immigrant workers due to increasingly strict border policies and a dramatic lack of women in construction.
“The construction industry has traditionally relied heavily on an immigrant workforce and is second only to agriculture as an industry that relies on foreign-born workers,” Baker explains. “What’s been going on politically the last several years is not conducive to attracting immigrants to the country to staff up construction sites. Second is that women constitute half the workforce, but the share of women in skilled-labor trades is in the low single digits. That number hasn’t moved much in decades. Young people also seem not to be attracted to construction, so the labor force has gotten older. We need to attract women and young men.”
Impacts
As with the shortage of materials, the lack of qualified labor is creating issues on many projects, driving up costs and causing schedule delays.
“In the 2022 AGC of America/Sage Hiring and Business Outlook Survey, 84 percent of the more than 1,000 respondents reported that costs had been higher than they anticipated last year and 72 percent of projects had taken longer than anticipated,” Simonson says. “Contractors have already raised wages sharply and are paying a lot more for overtime to make up for the workers they haven’t been able to hire, and they’ll have to spend still more.”
Firms of all kinds are forced to do more with less and put additional resources toward recruiting and retention, which takes bandwidth away from construction and manufacturing.
Baker identifies what he sees as three main issues to the construction labor shortage: demographics, recruitment and marketing.
“Constant inflow and outflow of individuals means higher costs for training, supervision, tools and equipment,” Lien says. “Labor shortages make it harder to maintain a level of quality in the goods we produce. Companies in our industry evaluate overhead recovery in terms of hours in the plant, square foot, cubic yards or similar metrics. If we cast less product due to a shortage of labor, we are not recovering all the overhead required and potentially eroding margin to recover that gap.”
“Supply-chain disruptions have dove-tailed with labor issues to significantly slow down project activity,” Baker says. “The two are double-dipping in their impact on the profession. Sometimes it’s that you have to get the plumbers in before the electricians can start and if the plumbers are facing a labor shortage or having trouble getting the products they need to install, it slows down the whole project.”
Solutions
The lack of labor can feel like an overwhelming issue in the moment, but there are things the industry can do to improve the situation.
“Strong recruiting practices and an emphasis on continuing education and professional development are important,” Holub says. “We have invested a lot of time and effort in our people and culture. We partner with high schools to create interest in construction at a young age, and our talent acquisition team is heavily focused on college recruiting and internship pro- grams.”
“I do think work visas are an appropriate method to bring large groups into a region,” Lien says.
Although firms in the construction industry can theoretically utilize the H2-B temporary visa program for non-agricultural workers, the requirements are currently very stringent and the visas are short-term. Lien envisions something with greater stability to attract good workers. “These could be company-based sponsorships, thus creating some level of loyalty between the company and employee. In the future, more automation may help in that it will require smaller staffing levels to perform the same level of work,” he says.
“The big wild card is technology. There is a lot of potential improvement with technology,” Baker adds. “The productivity numbers for construction workers are traditionally quite low. With a labor shortage, it would encourage productivity-enhancing technology investment. That tends not to happen very quickly.”
No one really sees a scenario where the labor issue truly goes away in the short term, but there is hope for the future. It will require movement from within the industry to make stronger appeals to wider groups of workers.
“Demand for construction remains strong and, in fact, some categories will pick up money flows from the Infrastructure Investment and Jobs Act into specific projects over the next several years,” Simonson predicts. “The optimistic view is that the assurance of years of funding for infrastructure will attract more workers who want a secure, high-paying job with great career advancement opportunities and the chance to do work one can show off to friends and family.”
“Most young workers have a pretty negative image of a career in construction, but it doesn’t have to be that way,” Baker notes. “The construction industry tends to be better paying than entry-level jobs in many other industries. If you’re a young, entrepreneurial worker and want to start your own business, your chances are greater in this industry than almost any other. The industry hasn’t done a good job of promoting the advantages of a career in construction. There are lots of workers who like to problem-solve, who may prefer working outside—not being behind a computer screen—and doing something different every day. The industry needs to play that up more.”