The 2008 recession did a lot more than just shut down that year’s construction jobs, leaving projects frozen in the pipeline: It permanently derailed the pipeline of construction talent.
As the economic recovery picks up steam, construction projects are rebounding, especially for commercial space. Analysts predict six percent growth in the industry this year and construction starts valued at better than $700 billion.
But contractors can’t fill all the jobs they are creating, particularly in the skilled trades. “The overwhelming, number one issue is access to skilled labor,” said Dominic Thasarathar, senior industry program manager for construction software producer Autodesk, in an interview with the online trade magazine Construction Dive.
The Associated General Contractors of America says that, in its most recent survey of its members, with almost 1,400 respondents, 86 percent report having difficulties filling available positions. That’s up from 83 percent in 2014 and 81 percent in 2013. Another survey found that one in six firms (16.3 percent) actually had to delay or turn down projects because of their inability to find qualified workers. Some experts worry that conditions like these could lead to failed contracts and ultimately to credit problems for a large segment of the industry.
There’s a talent shortage in the construction industry and it’s driving up costs for general contractors. Tweet This
The talent shortage is driving up costs for general contractors. Some builders are guaranteeing 10 or 12 hours of overtime a week for journeyman electricians, dry wall installers, carpenters, sheet metal workers and others for the duration of a project. Some are even putting skilled workers on the permanent payroll as high-paid staff members in order to keep busy construction crews fully manned. On one Illinois project, skilled workers have been guaranteed 58-hour work weeks during the 18-month run of the job.
And those in-demand workers are earning more. “The workers who are available may expect wages higher than you’d planned to pay, potentially causing budgeting issues,” notes the industry site Construction Monitor.
The industry is desperately seeking solutions. Construction unions are reviving their apprenticeship programs, which offer on-the-job training for entry-level workers. Though the two or three-year training programs are administered by the unions, costs are shared with contractors. In the past, apprenticeships have been the traditional route to skilled construction jobs, but up to 90 percent of apprentice programs were sacrificed during the recession, in various regions around the country.
Some states are responding to the rising demand for vocational education by starting or expanding building trades training programs. Connecticut, Kansas, Michigan, Oregon and New Jersey are among those trying to bring new journeyman workers into the industry via state programs.
Meanwhile, state officials and industry leaders are calling on the federal government to fund building trades programs, in the same way that it supported training for advanced manufacturing workers and other high skilled mechanics as part of President Obama’s post-recession economic stimulus effort.
The current talent drought presents a dilemma for both contractors and for companies with expansion plans, says Tom Fioretti, project and development director for Cushman & Wakefield, a national commercial real estate firm.
“The scarcity of skilled laborers and the increasing construction demand is driving up build-out costs and prolonging project schedules,” he says. “With this imbalance in mind, companies looking to build out their office space should engage an integrated transaction and project management team early on, to help ensure on-time and on-budget project delivery.”
Construction Monitor suggests some ways that contractors can attract talented workers. “Providing training and coaching, hiring workers from other industries, ensuring a safe and healthy work environment, and boosting pay and benefits can help you bring in skilled laborers despite the shortage,” the magazine recommends.
Hanging Up the Tool Belt
What happened to the nation’s army of high-skilled construction workers?
The talent shortage was brewing even before the recession thanks to aging workforce. Dire economic conditions drove many to seek employment elsewhere, shifted careers or retired, according to the AGC study.
“Assuming the economy continues to grow, worker shortages will only get more severe and the consequences of those shortages more significant,” AGC says.
The silver lining might be a rare chance to remodel the industry’s image, says a report by the Construction Industry Institute.
Young people entering the work force aren’t seeing the appeal of construction work, the Institute says. “Over the past 30 years, real wages of construction workers have declined relative to those of other workers,” the report says. “Poor industry image, tough working conditions, and the industry’s perceived poor safety record… also have contributed to the decline in the number of people willing to enter and remain in the industry.”
And the talent shortage has layered expectations for sourcing talent into the job description of the successful project manager, says Cushman & Wakefield’s Fioretti. “An experienced project management team can help guide the process, develop value-add real estate options and recommend a selection of qualified service providers with incentive-based agreements,” he says.
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