Workforce Woes in Focus
AGC survey reveals the severity of the labor shortage, its impact on the construction industry and the need for swift action
With 91% of U.S. construction firms experiencing a labor shortage, public officials have a vested interest in helping the industry to develop its workforce. The dearth of workers is contributing to rising costs and project delays, even as construction companies step up their investments in training and recruitment, leading industry executives to call for government action.
Those are among the key findings from the AGC of America’s 2022 Workforce Survey, conducted in partnership with Autodesk this past summer. The 10th annual survey drew responses from almost 1,300 firms representing a broad cross section of the construction industry, including union and open-shop companies of all sizes.
While calling for shifts in public policy, the construction industry has redoubled its efforts to attract and retain workers. In addition to offering higher wages, 45% of firms are providing incentives and bonuses, and 24% have improved their benefits packages, according to the Workforce Survey.
The results show that construction firms are struggling to hire enough workers to meet demand. Combined with supply-chain disruptions, the labor shortage threatens to blunt the effects of the federal government’s recent investments in infrastructure, including the bipartisan infrastructure bill of 2021 and legislation this year to invest in semiconductor factories and renewable-energy projects.
"There is plenty of work for the industry to perform; there just aren’t enough people to do the work or materials to complete the projects," said Ken Simonson, the AGC’s chief economist. "Addressing labor shortages and supply-chain problems will ensure that the construction industry can upgrade America’s infrastructure, modernize its manufacturing sector and help deliver a more reliable and cleaner energy grid."
The Workforce Survey found that 93% of construction firms have open positions, and among those companies, 91% are having difficulty filling at least some of those roles. This despite 86% of firms having increased their base pay rates in the past year, according to the poll.
The labor shortage is particularly acute among the craft workforce that performs the bulk of onsite construction work. The survey found that 87% of firms have unfilled craft positions, and 65% have unfilled salaried positions.
Similarly, 77% of firms report having difficulty filling open positions because job candidates either lack the requisite skills or can’t pass a drug test, according to the poll. As a result, 66% of firms have had projects delayed because of labor shortages.
As more states legalize recreational or medicinal marijuana, the construction industry is missing out on a larger share of job seekers, but there’s no easy fix. Firms lacking a drug-testing program have great difficulty obtaining workers’ compensation, general liability and other forms of insurance. Moreover, the available drug tests can show whether someone has used marijuana recently but not whether that person is currently impaired.
"A consistent result in our survey over the years is that [marijuana usage] has been one of the impediments to finding qualified workers," Simonson said.
For those who can pass a drug test and have worked in construction previously, opportunities abound. The unemployment rate for job seekers with construction experience plunged to 3.5% in July from 6.1% a year earlier, Simonson said. There were 330,000 job openings in construction at the end of June, the highest total for that month in the past 22 years of government employment data, he added.
A CALL TO ACTIONTo address the worker shortage, the AGC is calling on federal, state and local leaders to invest in career and technical education programs that expose job seekers and students to the many highpaying career opportunities in construction. In addition, the association is urging federal officials to allow more immigrant workers into the country, helping to meet demand until more domestic workers can be upskilled.
The AGC and its chapters are doing their part through a broad range of workforce-development initiatives, including the "Construction is Essential" targeted digital recruiting campaign and the "Culture of Care" worker-retention program.
"Construction workforce shortages are severe and having a significant impact on construction firms of all types, all sizes and all labor arrangements," Simonson said. "These workforce shortages are compounding the challenges firms are having with supply-chain disruptions that are inflating the cost of construction materials and making delivery schedules and product availability uncertain."
Along with rising wages, construction companies are dealing with high costs for materials due to global supply-chain issues, making projects more expensive. The Workforce Survey found that in the past year, 82% of firms have had projects delayed because of supply-chain challenges, and 70% have had to pass along rising materials costs to project owners.
Additionally, 58% of firms have had projects canceled, postponed or scaled back due to increasing costs, while one-third of firms report having projects impacted due to lengthening or uncertain completion times.
The industry’s workforce woes have been building for some time but were exacerbated by the pandemic, according to Matthew Reid, regional director of project management in the Southwest for the Cumming Group, a leading construction consulting firm.
Over the years, young people have been steered more toward colleges and universities instead of vocational and trade schools, which will "have a profound effect on the construction industry in the future," Reid said. It’s no secret that the construction workforce is aging, and the pandemic led many older workers to opt for early retirement, he added.
At the same time, the shift to remote work has "been hard on the construction industry" since so much of the labor must be performed onsite, Reid said. Construction firms can’t offer as many workfrom-home opportunities as other employers, which puts them at a competitive disadvantage when it comes to recruiting.
"Across the board, finding the quantity and quality of labor is a difficult challenge," Reid said. "Vaccination status has also become a potential issue for the industry. Vaccination rates are lower in construction than in many other industries. Finding the balance between the health of the workforce and the industry’s need to keep workers on the job will be an ongoing challenge."
INCENTIVIZING WORKERSWhile calling for shifts in public policy, the construction industry has redoubled its efforts to attract and retain workers. In addition to offering higher wages, 45% of firms are providing incentives and bonuses, and 24% have improved their benefits packages, according to the Workforce Survey.
Nick Grandy, construction senior analyst with RSM US LLP, which offers audit, tax and consulting services, said many firms are prioritizing employee engagement. By providing workers with a clear path for advancement and consistently acknowledging them for a job well done, firms can make employees feel more appreciated and increase retention rates, he said.
Another trend gaining traction is employee stock option plans, which give workers an ownership stake in the company and can boost their total pay, Grandy said. "This can increase total compensation without providing an immediate cash payout or hourly wage increase," he added.
Stephen Sines, vice president of operations at The Morganti Group, said his construction firm is currently hiring for all positions, as are his subcontractors. To boost recruitment and retention, his West Palm Beach, Fla.-based company is striving to create a "high-quality work environment" that includes a focus on employees’ mental health, he said.
"It leads to more internal referrals of good candidates," Sines said. "That’s not only economical, but it’s also proven to be the more effective way to recruit construction workers. Morganti also is recruiting out-of-state candidates. There are a lot of people who want to move to Florida, so we’re trying to capitalize on that situation."
In the past, the construction industry has struggled to recruit a diverse workforce that includes racial minorities and women, which "exacerbates the workforce shortage in construction," according to Tina Nazier, director of national construction for Wipfli LLP, an assurance, accounting, tax and consulting firm. Many construction companies are now stepping up their outreach efforts to minority communities, but simply getting job candidates in the door isn’t enough, she said.
"Spend as much time re-recruiting and engaging your current employees as you do recruiting new," Nazier said. "If you don’t focus on current employees, you can assume someone else will."
Educating the EducatorsGuidance counselors and teachers play a pivotal role in shaping students’ career aspirations, but if they don’t know much about construction, their students likely will miss out on the many high-paying career opportunities in the industry.
To address this issue, the AGC’s Massachusetts chapter recently put 15 educators through a week of construction-focused summer school. The chapter’s second annual summer externship in August introduced these teachers and guidance counselors to trends within the construction industry, core competencies for different construction careers and career paths in the commercial construction industry.
The externship program is part of the Massachusetts chapter’s plan to correct misconceptions about construction jobs, which some see as unsafe and low-paying, according to Bill Aalerud, the chapter’s board chairman. Aalerud is an executive vice president at Columbia, a North Reading, Mass.-based construction management firm that hosted the externs for an educational session.
The visit included lessons about the new technologies being used in the construction industry and how Columbia is building an attractive workplace culture. Industry executives talked about their career paths and answered questions from educators for more than four hours, Aalerud said.
"From what we could tell, the externs were very interested in what we had to say," he said. "They had a very apparent thirst for knowledge about Columbia and our industry. We talked about the experience internally after the externs left, and we agreed that we accomplished the mission of creating an awareness of the viable and lifelong careers in the construction industry."
TECH-SAVVY JOB SEEKERSConstruction firms are augmenting their efforts to prepare current and future workers for careers in the industry. The Worker Survey found that 51% of firms have engaged with career-building programs such as high school, collegiate or technical-school construction programs, up from 37% a year ago.
"We’ve increased our focus on recruiting at colleges and universities," Sines said. "Historically, we have focused on degrees in building construction and engineering, and now we have expanded that to accounting as well as business administration."
Furthermore, 47% of firms are increasing spending on training and professional-development programs, 25% are enhancing their online and video training capabilities, and 16% are using augmented and virtual-reality technology to better train workers.
The survey found that 87% of respondents believe their employees need digital technology skills to succeed in their roles as companies adopt new technologies. And while few job candidates have mastered construction skills, the majority of new hires in the industry do possess some technology skills, according to the poll.
"This is a really strong indicator to us of the larger digitization trend taking hold in construction," said Allison Scott, director of construction thought leadership and customer marketing at Autodesk. "It shows that firms should continue to utilize and upskill digital nomads, those workers who have come up in the industry without using those tools, while also seeking to attract digital natives, those who have been using connected construction technology since its inception."
Reid, of the Cumming Group, said he expects the industry’s labor shortage to persist, which requires firms to take action. "While the current labor issues can provide challenges, today’s environment also provides the industry a good opportunity to reevaluate what they offer to workers and build a great culture to attract long-term talent," he said.
Source: AGC of America