The Great Recession of 2008 hit the construction industry hard and one of the consequences was that many skilled workers were forced to look for a job elsewhere. Fast forward a few years and the economy is in recovery. So is the construction industry, but where are the skilled hands?
The recovery is unequivocally good news, but it carries along certain challenges, such as the increasingly worrisome construction skills gap. The trend became apparent around mid-2013, but its proportions have grown in 2014. Let’s look at some of the implications for the construction industry.
What Is Causing the Shortage?
The issue becomes most apparent when you look at Optimism Returns: The 2014 Construction Hiring and Business Outlook, a report published earlier this year by the Associated General Contractors of America (AGC).
Is there actually bad news in a report whose first word is “optimism”? Well, for the most part, it really is optimistic. The survey, including more than 800 construction firms across the US, found that contractors’ expectations are that 2014 will be a good year for the industry. Predictions are hopeful for every construction segment with the exception of marine construction. More specifically, the respondents expect growth in private sectors and stabilization in public ones.
But in that optimism lies the problem, as well. The fast-paced growth will create even more new job openings, and the industry is already struggling to catch up with the demand as it is.
How Bad Is the Problem?
Let’s start with the fact that 41% of contractors are positive they will need to hire new workers in 2014, compared to just 2% who are planning lay-offs. 27% were undecided at the time the survey was taken, which can add up to more than half of companies looking for new hires.
AGC’s report contains some very specific numbers about the areas in which contractors are struggling the most, too. 12% of them said they are “having a hard time filling all key professional and craft worker positions,” while 24% of respondents pointed to difficulties in filling not all, but some of them. Additionally, some contractors (9%) struggle with filling “key professional positions” only and another 17% are struggling with only finding people for “craft worker positions”.
Add up the numbers and the shortage of skilled workers is affecting nearly two-thirds of respondents.
Which Positions Are Hardest to Fill?
The shortage of skilled workers is not equally spread out among the different job roles.
When it comes to filling key professional positions, a whopping 48% of respondents pointed to difficulties in finding project managers and supervisors. 41% are struggling with recruiting estimating professionals, followed by engineers (21%) and safety professionals (15%).
Finding skilled craft workers seems to be even harder. Nearly half of respondents (48%) cannot find equipment operators. Carpenters and laborers are next in line with 44% and 37%, respectively. The shortage is also unfavorable to filling other positions such as: pipefitters/welders (30%), cement masons (26%), electricians (21%) and iron workers (17%). Only roofers and painters are relatively easy to find with only 7% and 5% of respondents reporting difficulties in filling these positions, respectively.
As for their expectations, more than half of contractors say that it will continue to be just as hard or even harder to fill these positions in 2014.
How Does This Affect Construction Companies?
Naturally, the shortage of skilled workers will be costly for the construction industry. A lot of companies are already losing employees who are looking for higher-paying jobs, either to a competing company or to companies in other industries.
More than half of the respondents in the survey had to increase benefits in an effort to retain their workers or find new ones. And not only that, but 89% of contractors believe the cost of providing healthcare benefits in 2014 will grow.
But perhaps the most troublesome part for construction companies is that if the issue is not addressed, they may need to start turning project offers down, because they don’t have the workforce.
What Could Improve?
Judging by the responses of contractors, we can identify some areas which, if improved, could ease the strained situation.
For starters, training programs for construction workers will need to be addressed. The majority of contractors report that training quality is not up to par. More specifically, 43% of them think local training programs for craft workers are average, and 55% of them say the same thing about key professional programs. Additionally, 36% of respondents rate the quality of craft workers’ training programs below average and 18% do the same when it comes to programs for key professionals.
Contractors are also increasingly worried about certain legislative reforms and feel they are affecting their business negatively. For example, 51% believe federal regulations that require them “to keep detailed records of all job applicants” will have a negative impact.
When asked which legislative issues are important to their business, the vast majority of contractors (77%) points to “preparing the next generation of skilled construction workers”. Some of the other issues that they think need to be addressed are multiemployer pension plans (25%) and passing a comprehensive immigration reform (41%).
This is simply an overview of the skills shortage issue in the construction workforce. Is your company affected by the shortage too? What strategy are you using to deal with it? Let us know with a comment below.