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Reasons for the Construction Labor Shortage

In 2015, homebuilders saw a staggering increase in sales, which made it one of the busiest years since the recession began in 2006. According to a report in the Wall Street Journal, U.S. residential construction spending in August 2015 topped $36 billion, the highest monthly total since October 2007. Yet, this boom came with a downside. There were 676,500 fewer skilled laborers available nationwide to handle the work compared to the number of workers in 2007 – a shortage of epic proportions. This caused longer lead times and higher prices on construction jobs, which can scare off potential clients.

Knowing why there is a construction labor shortage will help you shape your team. And to be able to do the job in a time frame that works for you and your clients. Allowing an agency to take on the task of finding skilled laborers can free you up to focus on the work.

Where Have All the Good Craftsmen Gone?

Industry tracker John Burns Real Estate Consulting Inc. reported slowdowns as long as two months in an October 2015 report in The Wall Street Journal. The problem is there are not enough qualified craftsmen to go around. Having to wait for available carpenters, drywall workers and other specialists stalls projects.

There are a few reasons why craftsmen are leaving the industry, and why there is not an influx of new skilled labor to fill the vacancies.

Leaving for Another Industry

The recession hit many industries hard, but the construction industry took a heavier blow than others, losing 2.3 million jobs between 2006 and 2011. Two U.S. Census Bureau agency economists, Hubert Janicki and Erika McEntarfer, recently dove into the construction industry’s job-to-job flow, which tracked workers as they moved in and out of industries. Their findings illuminated some of the reasons behind the labor shortage.

Construction workers moved in and out of industry.

Of the construction workers unemployed for more than 3 months between 2006 and 2009, 40 percent stayed in construction.

About 1/3 switched to another industry, but only after 1 year or more of unemployment. Typical destinations included work as general laborers, landscapers and truck drivers.

About 1/4 of displaced construction workers were still out of work 5-7 years after they lost their jobs.

Lack of Vocational Education

Many school districts lapsed in their efforts to promote vocational training. This means that potential young workers were not introduced to the construction trade.

But the blame doesn’t lie only on the shoulders of the school system. During the recession, construction companies did not hire enough young workers out of an unwillingness to train them.

Age Groups in Construction

Janicki and McEntarfer studied this trend in their recent job-to-job flow report of the construction industry. They discovered “the percent of hires accounted for by the 19-25 age group declined from approximately 18 percent at its peak before 2006 to 13 percent in 2012-2013. In comparison, the composition of hires of workers in the 25-34 and 34-44 age groups shows much more modest declines over this time period.”

Immigration Issues

Foreign-born craftsmen make up around 22 percent of the construction industry’s labor force, according to the National Association of Home Builders.

Yet, many international workers aren’t coming into the country. This is due to stringent immigration policies, increased border enforcement and an improved Mexican economy. The National Association of Home Builders asked Congress to institute a temporary-guest worker program to address the issue. Unless that comes to fruition, those in the industry must look elsewhere to address the worker shortage.

The second blog of this series will highlight different ways you can combat the construction labor shortage. Check it out here.

To find skilled craftsmen for your current or next construction project, contact us today.

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