Severe labor shortage continues to plague construction industry

A severe labor shortage will continue to plague the construction industry through 2019, driving up construction costs further.

A recent report from the Associated General Contractors of America shows that 79% of construction companies want to hire more employees this year, but the industry is only estimated to grow its workforce by .5% annually for the next 10 years. That is hardly enough to make up for the 600,000 jobs lost since the last recession.

Not an attractive industry to millennials

“A few factors are driving the construction labor shortage and lack of labor growth,” John Wagner, national construction director at global insurance brokerage firm Gallagher, tells GlobeSt.com. “For one, construction is not an attractive industry to millennials. In addition, 600,000 workers left the industry during the great recession and have not returned. One reason for this is that the healthcare and social working industries are attracting more workers than the construction industry. Finally, the United States is experiencing a slower population growth and an aging workforce.”

The labor shortage has had a direct impact on construction costs, and along with rising materials costs and land prices, new development has become burdensome. According to Wagner, construction costs increased 6.2% last year. “The majority of the increase coming from increased labor costs,” he says. “With labor shortages, projects take longer and bid contracts also become more expensive.”

While the labor shortage remains a product of the recession, when skilled labor left the then-dried up industry for other prospects, construction companies can help grow the workforce through better recruiting and outreach.

“Shifting the younger generations perception of the industry is critical,” says Wagner. “College internship programs and trade & apprenticeship programs can appeal to younger generations as they provide hands-on experience and exposure to careers in construction. In addition, construction companies should provide mentorship programs and career coaching.”

In addition to grooming a new generation of workers, Wagner says veterans are also a source of quality workers. “Construction organizations should also make an effort to recruit veterans. Offering training to veterans is a great way to fill the talent pipelines as vets often come with a sense of mission and have proven their value to the industry.”

Need to create a culture that attracts workers

More than recruiting, construction companies should create a culture that attracts workers. In general, talent recruitment and retention have become essential to successful businesses, and other industries have adapted to the needs of young professionals. The construction industry should be no different. “Construction organizations should strive to be an employer of choice,” says Wagner.

“A healthy work culture and flexible work arrangements incentivizes good employees. Construction companies can also increase retention by developing creative compensation programs that also include retirement benefits. Construction companies should continually train and promote their own workforce. One way to do this is establish a specific budget for training and recognize high potential employees. Executive training should also be part of the equation.”

Employee safety

Creating an attractive workplace also includes employee safety. “Construction companies need to understand that their reputation as a safe place to work is also critical,” adds Wagner. “Companies should not stray from their company values and safety protocols simply to hire more employees.”

The good news is that many companies are adopting these policies to grow the workforce. Successful companies in particular understand the need to adopt serious talent recruitment strategies. “What separates construction companies is that the best know that addressing the labor issues is their number one priority,” says Wagner. “These companies recognize that they will always be able to get work but not workers.”

Related: Construction insurance continues to see double-digit growth

Kelsi Borland is a freelance writer and editor living whose work has appeared in such publications as Travel + Leisure, Angeleno and Riviera Orange County.