Dive Brief:
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Contractors are confident in the health of the commercial construction industry, according to the Q3 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index, with 95% of contractors surveyed expecting the same or higher revenues in the next year and 93% anticipating stable or increased margins.
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Still, 91% of respondents were at least somewhat concerned about the current labor supply being able to meet future demand, and 60% said they are currently having difficulty finding enough skilled labor.
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Contractors are enjoying a 9.5-month backlog of work, and 54% of respondents expect new business in the next 12 months. On a scale of 0 to 100, the Index's Q3 composite score was 73, close to previous quarters and indicating stability in the industry.
Dive Insight:
The labor shortage has become a familiar concern to those in the construction industry. Thousands of workers left the sector during the Great Recession. Meanwhile, fewer younger workers than in previous generations are interested in pursuing a career in the trades. And baby boomers who are in the industry now are staring down retirement.
According to a survey this summer by the Associated General Contractors of America and Autodesk, seven in 10 construction companies are having a hard time finding enough skilled hourly workers. Shortages are the worst in the Western U.S., but that could change as the study was conducted before the devastating hurricanes struck the South.
Add to that the promise of a $1 trillion infrastructure program from the Trump administration, and it is no wonder the industry is unsure as to where it will find enough workers to meet demand.
Longer delivery times and higher wages are the most common outcomes of tight labor, but the shortage is hitting contractors in the pocket in other ways, too. Contractors on the Detroit Red Wings' Little Caesars Arena were fined $2.9 million through March for not meeting the project's 51% local hiring requirement. However, even city officials have said that the arena's contractors have tried to recruit Detroit workers but that there are not enough qualified individuals to meet the demand.
In an effort to bring new workers into the industry, President Donald Trump earlier this summer ordered that $200 million in Department of Labor job-training funds be used for apprenticeships. His goal is to create 5 million apprenticeships in the next five years.
However, the administration's 2018 budget proposal calls for cutting DOL training and employment services by 21% and doing away with $1 million in women's training programs, raising questions as to the impact of the new apprenticeships program and the effect of reallocating such a significant portion of funds.