Welcome to our Blog page. Here, you can read our firm’s latest blog posts about timely tax, accounting and audit issues.

Persistent Construction Labor Shortage Demands New Solutions

Posted by Barry Watson on Jun 10, 2019 8:30:00 AM

Texas Faring Better Than Most, Though Need for Workers Still High
The shortage of skilled construction workers continues to plague the U.S., leading to higher job costs and prolonged project completion rates. Unfortunately, the severe labor shortage is expected to continue throughout 2019 and beyond. North Texas had the largest gain in construction employment in the country in 2018, adding more than 22,000 jobs in the sector, according to the Department of Labor. Still, 78% of Texas’ construction firms report a problem in finding skilled workers. The construction industry must rethink its strategies to attract workers.

Diagnosing the Problem

As we first reported in 2016, many construction workers left the industry during the recession to find work in other industries. Of the 600,000 jobs leaving construction nationally, many never came back. According to the Dallas Builders Association, Dallas is still missing roughly 20,000 construction workers.

Related Blog: 6 Ways to Deal with the Skilled Labor Shortage in Construction for 2016

As baby boomers retire in record numbers, younger generations – namely millennials – simply lack the interest in construction jobs, or at best, have a misperception of what a career in construction offers. Increased enforcement of immigration laws is adding to the problem for states like Texas. The construction industry estimates that unauthorized immigrants comprise 14% of its workforce. Some believe the problem will not be alleviated without a guest worker program tailored to the construction industry.

A Look at the Numbers

A recent Associated General Contractors (AGC) report is telling: 79% of the nation’s construction companies want to hire more employees this year, and 78% cite problems filling jobs for both salaried and craft positions. One-quarter of those surveyed expect the labor market to become even more difficult. Along with price increases from timber, steel, and other materials, construction costs increased 6.2% last year, mostly due to increased labor costs.

According to the AGC report, more than half of Texas construction firms surveyed report that labor shortages are forcing them to raise prices. Almost 40% of construction contractors say the labor shortage has raised the cost of bids and contracts, and half of Texas companies surveyed have raised prices because of the shortage. According to the Dallas Builders Association, the labor shortage is adding two months to residential projects.

However, it’s not all bad news. Despite the labor challenge, construction firms are optimistic about projects in the coming year. The challenge lies in finding creative solutions to the problem. 

Finding Workable Solutions

Increasing workers’ salaries appears to be the prevailing solution to the skilled worker shortage. Almost 70% of Texas firms said they have increased pay in the last year to retain or attract workers, according to the AGC report. Additionally, almost 30% of firms are providing bonuses and other incentives. But pay alone doesn’t appear to be enough. Resolving the greatest challenge to the industry calls for shaking up the prevailing perception about construction as a career and forming partnerships with schools, from middle schools to trade schools and college.

Some Dallas builders have been partnering with schools to boost technical training programs in the construction sector. For example, the Dallas Builders Association conducts outreach in schools, conducts site tours, and serves as a consultant for workforce training programs.

College internships and apprenticeship programs can serve to create a new perception of the construction industry—one that includes a long-term career with management opportunities. There are also opportunities to better retain good workers through mentorship programs, career coaching, and other incentives. Safety training can debunk perceptions that construction work is dangerous.

Consider outreach to veterans. They often have difficulty finding employment, so offer training programs that make it easier for them to secure work and establish careers. You want employees who are dedicated and disciplined—veterans can work under pressure and are often committed to seeing projects through to success. There are also government incentives for hiring veterans.

As you consider these approaches, don’t forget to make any necessary changes in your workplace. Are your current employees happy? What is the culture at your company? Understand what millennials want, and provide updated technology and opportunities promote innovation.

The workforce challenge is monumental. By embracing partnerships and changing perceptions, construction firms can begin chipping away at the problem and create new opportunities for growth.

Questions about strategic planning or other real estate and construction issues? Contact Barry Watson at 972-818-5300 or fill in the form below. Please visit our Real Estate and Construction page to learn more about what GPP can do to help with your business needs.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article. 

Topics: Construction