Men (not) at work: Will construction's lingering labor shortage ever rebound?
Homebuilders, real estate agents and mortgage lenders over the past few months have expressed optimism that the housing industry is headed for a growth spurt. Just last week, Dodge Data & Analytics reported a 3% surge in construction starts for commercial and residential builders combined.
With new building, of course, comes a heightened need for construction workers. In May, construction firms added 17,000 jobs, and the industry’s unemployment rate hit 6.7%, the Associated General Contractors reported.
Each upbeat report, however, is tempered by a chronic reality that has shut down job sites, forced firms to turn away top-dollar contracts and even slowed building to a crawl in some cases: a construction industry labor shortage that has persisted for nearly 10 years, since the house boom busted and building came to a near standstill.
Between April 2006 and January 2011, the construction industry slashed more than 40% of its work force, eliminating nearly 2.3 million jobs.
Uncertain of when — or even if — their construction employers would call them back to work, carpenters, plumbers, electricians and laborers sought jobs elsewhere. When they couldn't find them in the industry, many of them migrated to the oil and gas fields or got licensed to drive trucks.
Some took the opportunity to hang up their hard hats and retire early, while others learned alternative trades, changed careers and left construction behind.
Now, as their old employers recover from the recession, those eliminated jobs are up for grabs. But are the employees gone for good?
Employment in the industry may never balloon to its housing-bubble peak; in fact, as of May, the sector was 1.3 million jobs short of it. Even so, contractors complain that they don’t have enough workers to fill the openings.
The AGC has reported that 84% of construction firms are struggling to fill jobs for carpenters, laborers and equipment operators.
"The combination of having had this massive long exodus, a late pickup in hiring and now this greatly diminished pool of workers, that’s what has contractors scrambling," AGC Chief Economist Ken Simonson told The Wall Street Journal.
In the scramble, some firms have changed the way they do business and treat their employees, who became more precious as they became so few. Here are some of their strategies:
- Move them indoors. Eckardt Electric in Atlanta has moved 10% of its employees to indoor jobs, where they use computers to lay out electrical systems and assemble as much as possible in a prefabrication facility, President Rilo Stephens told The Journal. The indoor work requires manufacturing skills that are more available among job seekers than construction-related craft skills, Stephens says.
- Offer more money. Commercial construction workers got a 3.3% pay bump since last April, compared with 2.2% for private-sector employees across all industries. The Journal reports that many construction companies are offering cash incentives to employees who recruit their pals to come on board.
- Plan carefully. In an uncertain labor market, planning for the unknown is key to keeping jobs running when something unexpected happens, Lorne Burns of KPMG International, told The Daily Commercial News. A KPMG survey earlier this year blamed labor shortages, in part, for cost overruns and missed deadline on construction projects. "The way to manage that contingency element is through some forms of scenario planning to deal with (them) when they arise, not waiting until they arise," Burns said.
- Outsmart the trend. Look here for 10 more ideas for easing jobsite labor pains.
Reforming the system?
Some construction firms in dire need of employees are taking a chance on hiring illegal immigrants to fill the gap left by the dwindling number of available laborers.
Construction organizations don’t condone the practice, which, of course, is illegal. But they are pushing for legislative reforms that would allow more immigrants to legally work in the U.S. construction field.
The National Association of Home Builders calls immigration reform "a sound solution" to a problem that forced 60% of the builders in a survey last year to delay the completion of jobs; 18% to turn down projects; and 9% to cancel sales or lose jobs they had already won. In some states, the lack of laborers is more acute: In Texas, for example, 90% of construction companies have reported problems finding qualified craft workers, and half said they are losing employees to the gas and oil industry.
Immigrants already account for 22% of the construction labor force, according to the Census Bureau.
NAHB’s proposal: Create a visa system just for immigrant construction workers so they can legally enter the country during peak construction seasons and fill empty jobs.
Pat Kiley, former director of Associated General Contractors' Houston chapter, goes further, calling for comprehensive immigration reform. "We have so many needs for workers in every aspect of construction," he says.
Still, Florida labor attorney Samuel Horovitz advises contractors not to jump the gun, warning that repeated violations can lead to prosecution, fines and jail time for employers.
He added in the Rogers Towers law firm blog "Deconstructed" that legal employees in the past have sued employers who brought in illegal workers, claiming the practice led to lower wages.