Like many developed countries, the US is currently facing a severe labor crisis. According to the Bureau of Labor Statistics (BLS), there were 10.1 million job openings by the end of April 2023. And the labor force participation rate currently stands at 62.2%.
Employers in nearly all commercial sectors are struggling to fill in-person job positions. The construction industry is particularly heavily hit by the ongoing labor shortage. Construction projects require a steady supply of skilled and semi-skilled workers. Unfortunately, it’s getting harder and harder to find these workers.
This article sheds light on the labor crisis in the construction industry. We’ll look at how bad the construction labor shortage really is, the reasons behind it, and what it means for construction companies. More importantly, we’ll discuss ways of dealing with the labor shortage.
Let’s get started.
By the Numbers: How Bad Is the Construction Labor Shortage
The labor shortage has made shocking headlines since the onset of the COVID-19 pandemic. But popular press is known for blowing news stories out of proportion. But in this case, the labor situation truly is as bad as advertised, and it’s only worsening.
Here are some labor statistics and figures to put the crisis into perspective:
- The construction industry will need about 546,000 additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor. This is an all-time-high job opening rate for the construction industry. (Associated Builders and Contractors)
- As of March 2023, the unemployment rate in the construction industry averaged at 5.6%. The figure represents a mere 0.4% drop from a year ago. (Associated Builders and Contractors)
- 80% of contractors have a hard time filling job positions. Meanwhile, 70% cite “insufficient supply of workers or subcontractors” as one of their biggest concerns for 2023. (2023 Construction Outlook)
- There are over 25% more construction work opportunities available than qualified construction workers to fill them. Mechanics, carpenters, plumbers, project managers, and electricians are the most sought-after construction workers. (Construction Dive)
How did this happen? What’s causing the construction labor shortage?
We can’t blame the labor crisis on just one reason. Several factors are at play here, all blending into a perfect storm. Here are the main culprits of the construction labor shortage:
The COVID-19 Pandemic
Millions of businesses shut down in March and April 2020 following the COVID-19 pandemic. These closures and other pandemic measures saw 9.4 million Americans lose their jobs.
The pandemic stirred up the labor market for several months. Some of the unemployed individuals switched careers, while others turned into entrepreneurs. And three years down the line, the national labor pool is yet to make a full recovery.
An Aging Construction Workforce
The average construction worker is 42 years old and retires at 61. However, many construction workers retire 10 years earlier, mainly for safety reasons.
That’s not necessarily bad, except that the workforce is aging faster than it can be replaced. Industry stats show construction workers aged 55+ rose from 19.3% in 2015 to 22.3% in 2021. Meanwhile, younger workers (25–54 years old) dropped from 71.9% to 67.7%.
Better Pay and Benefits Elsewhere
Construction workers earn a mean hourly wage of up to $28.51. Not bad for a semi-skilled position. But with the ongoing inflation, many construction laborers are trading their hard hats for better-paying jobs.
And it’s not just a matter of earning more. Other perks, such as working from home and the freedom of self-employment, seem more attractive than commuting to construction sites.
The Great Resignation
The Great Resignation, or the Big Quit, is an ongoing phenomenon where millions of employees leave their jobs every month. It’s affecting all commercial industries, the construction sector included.
Many of those who quit their job cite the following reasons:
- Low pay
- No opportunities for advancement
- Childcare issues
- Disrespect in the workplace
- Lack of flexible working hours
By 2019, immigrants accounted for nearly a quarter of the US construction workforce. But the number of people immigrating to the US has dipped sharply over the last few years. That’s bad news for the construction industry.
Most notably, the US is not as welcoming to immigrants as before the pandemic. But for now, we won’t get into the intricate diplomatic and social-political reasons for this.
The Inevitable Impact of the Construction Labor Shortage
Both big and small contractors are feeling the pinch from the ongoing construction worker shortage. But how does it affect employers and the construction industry as a whole?
Here’s what labor scarcity means for contractors and construction projects:
Working with a short-staffed crew inevitably leads to delays. In a recent survey, 66% of construction firms reported that the labor shortage had delayed their projects.
Project delays are a big pain point for everyone involved. Moreover, delays cost money and immeasurable damage to your company’s reputation.
Rising Construction Labor Costs
Labor scarcity drives up construction costs in many different ways. Firstly, workforce shortages disrupt vital construction supply chains. Without enough workers, suppliers and distributors can’t fulfill your orders on time, leading to expensive delays and high construction material prices.
Secondly, skill shortages escalate the demand for construction workers. And with high labor demands comes high labor costs as employers try to attract more laborers.
The labor shortage is arguably to blame for the soaring cost of construction labor and materials in North America.
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Quality Control Issues
Quality and safety standards can become a problem when facing a labor crisis. It’s easy to prioritize speed at the expense of quality and safety amid labor shortages. Also, with overworked or inadequate supervisors and project managers, some construction oversights may escape scrutiny.
Shift to Automated Workflows
Construction is one of the most conservative industries. Over the decades, very little has changed in how contractors do business.
However, the labor shortage is leading many contractors toward automation. Many construction companies are already filling vacant positions with computer software and machines.
Some examples of automation in the construction industry include:
- Autonomous vehicles and machinery
- Digitized crew management software
- Virtual construction planning and project modeling systems
- Worksite surveying using drones and sensors
- Accurate budgeting and scheduling software
As the labor crisis intensifies, we’ll undoubtedly see more companies adopt autonomous tech in construction sites.
Unstable Housing Market
The US real estate space is already a highly volatile market as is. Couple that volatility with the construction cost fluctuations, and you get an extremely chaotic market.
Construction labor is a critical player in the housing industry. While residential houses are still going up, the labor shortage leads to poor timing and high costs. This inevitably results in a supply-demand mismatch.
How to Deal with the Construction Labor Shortage
The construction labor force shortage is a serious problem for any contracting business. It could even be a threat to your everyday business operations. And since there’s no end in sight for the labor crisis, you can’t afford to sit idly by and hope for the best.
Here are six strategies you can take today to deal with current and future construction worker shortages:
Hold On to the Construction Workers You Already Have
Before you even think about hiring new workers, try keeping the ones you already have. Many contractors get too comfortable with their existing crews. They forget workers can easily quit on them.
With other employers hunting for workers and the tantalizing possibilities of better work opportunities elsewhere, your crew could be at risk. Mitigate the risk of turnover with these employee retention tips:
- Offer training. Skill training is a gateway to career advancement. It’s also a powerful motivator for workers to stick around.
- Recognize your crew’s hard work. Show appreciation for each crew member’s hard work, commitment, and sacrifices for your company. Basic rewards such as time off and novelty gifts can go a long way in showing that you value the crew.
- Be flexible. Provide flexible work schedules and less bureaucratic rules for your crew. In a recent FlexJobs survey, 56% of workers said they would change jobs/careers for a better work-life balance.
- Boost comradery. Create a sense of community and belonging among your workers. Get to know each crew member on a personal level, encourage collaboration, and arrange team-building exercises. Ensure each worker sees the employment as more than just a job.
Look Outside the Box for Construction Workers
Tough times call for tough measures. The labor shortage makes it unlikely to find skilled workers from the usual sources. So, expand your search radius beyond your comfort zone.
Look into new or less competitive construction labor pools. You might also want to change your hiring and recruitment approaches to find scarce talent. Here are some of the ways you can do just that:
- Look for construction-ready workers in other closely related sectors, such as manufacturing, logging, and mining.
- Tap into the female workforce. Include more women in your construction crew — they are just as good as men, if not better.
- Diversify your crew with workers from across the border. Over 30% of the construction workforce is Hispanic or Latino.
- Hire a talent recruitment agency to expand your search for skilled construction workers.
- Open your doors to unskilled workers and train them on the job.
Attract the Younger Demographic
As we saw earlier, the construction workforce is aging out of work. So, target younger job seekers for your next hire.
But it’s not easy finding young construction workers.
Construction jobs have a reputation for being grinding, dangerous, and low-paying. It’s hardly surprising that a career in construction is not as appealing to millennials and Gen Zs. To attract the younger generation, your company must shake off the stereotypical image of working in construction.
To do so, reach out to local colleges and high schools and persuade learners to view construction as a rewarding career path. You can also offer summer, internship, or mentorship programs to try and get youths interested in construction work.
Prioritize Safety in Construction Sites
In 2021, construction workers sustained 260,000 medically consulted injuries; 946 of these were fatal. Working in construction is inherently dangerous. And every worksite injury robs you of much-needed labor.
It’s a rather cheeky and selfish way to look at workplace injuries, but it’s true. Every worker that leaves the site on account of injury creates a vacant spot.
It turns out that most workplace injuries are easily preventable. You just have to enforce strict safety policies, conduct regular safety briefings and training sessions, and ensure all crew members have the necessary safety gear for their job.
Build Your Work Culture Around Efficiency
Another clever way of dealing with the labor crisis is to make the best of what’s already available. In other words, get the most out of your construction crew.
Don’t get it wrong. This doesn’t mean overworking your employees but rather making more efficient use of their time and skills.
For instance, schedule work to align with material supplies or other favorable construction windows. Assign roles and tasks based solely on the worker’s fitness for the job. And develop an accountability system to ensure everyone works at their best.
You can do more with an efficient crew of 10 than with a disorganized crew of 20.
Leverage New Technologies
Consider adopting smart technologies to fill labor gaps.
As we mentioned earlier, modern autonomous technologies are more than capable of taking over some human roles in construction sites. You can’t replace an entire construction crew with machines, at least not yet. But automation can make up for labor shortages.
Plus, autonomous construction technologies make for safer and more efficient worksites. Machines can handle the more dangerous tasks without exposing the crew to risks. And the repetitive and mundane tasks no one likes can be delegated to bots and computers.
If your construction company is facing a worker shortage, you’re not alone. Millions of employers across the country are having a hard time finding skilled and semi-skilled workers.
Admittedly, that’s no consolation.
But it tells you that the labor crisis is a widespread problem, and your business must take action to get through it.
There are no signs that the construction labor shortage will be resolved anytime soon. So, take long-term measures to combat the crisis. Start by exploring alternative sources of labor, retaining and making the most of the crew you already have, putting safety first, and investing in modern automation technologies.