Figure 1: Residential permit count by month (1990 – present) (Photo: Courtesy of BuildFax)

Figure 2: Commercial permit count by month (1990 – present) (Photo: Courtesy of BuildFax)

Finally, what excess capacity remained in the construction industry disappeared when the U.S. suffered the costliest year of natural disasters on record in 2017. Several hurricanes, unprecedented wildfires and large-scale flooding accounted for about $306 billion in damage last year across the U.S. A BuildFax analysis of post-disaster recovery construction patterns found the rebuilding period for last year's hurricanes is likely to take more than two years. The impending return of hurricane season, increasingly acute drought conditions and the expansion of flood-prone regions practically guarantees little to no time between the conclusion of one year's natural disaster recovery period and the beginning of the next.

Related: 4 things carriers should know about hurricane recovery

Supply costs, politics and labor

The demand placed on the construction industry through the remodeling boom and burgeoning natural disaster costs invariably increase the price of construction materials. According to the Old Castle Business Intelligence "2018 North America Construction Forecast Report," total construction costs will increase by 3% in 2018. Additionally, the report indicates that overall material costs will likewise increase by 3% this year.

A shortage of skilled construction labor further impairs the industry's capacity to handle additional projects. According to the USG Corporation and the U.S. Chamber of Commerce's "Q42017 Commercial Construction Index," 56% of contractors reported difficulty finding skilled workers. Similarly, a survey released by the Fed in January 2018 cited "ongoing labor market tightness and challenges finding qualified workers across skills and sectors, which, in some instances, was described as constraining growth. Several Districts noted elevated demand for manufacturing and construction labor."

To fill the labor gap, many U.S. construction companies apply for H-2B visas to hire foreign labor for seasonal non-agricultural work such as construction after they've proven they attempted to hire domestic workers. The Department of Labor received an abnormally high number of applications from U.S. companies in 2018 that vastly outpaced the maximum number of visas that could be issued.

In an effort to alleviate stress on labor markets, the federal government has since responded and signed the $1.3 trillion omnibus spending bill that grants the secretaries of the departments of Labor and Homeland Security the authority to increase the number of H-2B visas from 66,000 annually to about 130,000 annually.

Related: N.Y. construction company schemed $1.8M from workers, investigation finds

Everybody loves infrastructure

Most Americans agree that the U.S. desperately needs infrastructure improvements. There are tens of thousands of structurally deficient bridges alone, not to mention the potholes, rusting pipes, aging dams and defunct railways. It feels great to see the government dollars at work in such a practical way, especially when it tangibly benefits our hometowns.

But the fact remains that the infrastructure plan under current conditions only places more demands on the already strained construction industry. This will push construction timelines and increase material and labor costs even further. Worse yet, the addition to construction timelines and costs are likely to dilute the impact of the dollars spent in the effort. This could prevent the plan from succeeding at the level the administration hopes for and the American people need.

Related: Examining the most common — and costly — cause of construction injury claims

Holly Tachovsky is the CEO and co-founder of BuildFax, the leading provider of property condition and history insights. She can be reached at [email protected].