Labor shortage causing remodeling frustrations
The construction/remodeling industry is facing a severe labor shortage. Whenever there’s a labor shortage in any industry, employers must compete for the limited number of workers. And the main way that employers try to attract that limited labor pool, is by raising wages. And yes, you’ve guessed it: The contractors recoup their extra costs by raising prices to you, the consumer. Another result of labor shortages in the industry is that it can take longer to have a home built or complete a renovation of an existing home.
What Do the Stats tell Us?
In a recent survey, the U.S. Chamber of Commerce reported that 70 percent of construction firms nationally said they were struggling to make deadlines because they can’t find enough workers.
The U.S Bureau of Labor Statistics stated that there are currently about 300,000 unfilled jobs in the construction industry, and by 2026, another 747,000 construction workers will be needed.
And the Associated Press reported that in a study of 375 members of the National Kitchen and Bath Association (NKBA), about two-thirds said they had “difficulties hiring skilled workers during the previous year.” Also, 70% think the problem is getting worse.
And Globe Street reports that “a severe labor shortage will continue to plague the construction industry through 2019, driving up construction costs …” The article notes that a recent study from the Associated Contractors of America demonstrates that 79% of construction companies want to hire more workers this year, but the industry is only expected to grow its employment rate by a meager .5% annually for the next ten years.
Bill Darcey, chief executive officer of the NKBA says that, “Labor shortages have impacted start dates and completion dates on construction and renovation projects, with NKBA members citing delays on 30% of jobs.”
As referenced earlier, the inevitable result is higher wages being offered – leading to increased costs to homeowners.
What is Causing the Problem?
The main driver of the labor shortage is the Great Recession of 2007/08. During this severe economic downturn, construction slowed severely, and vast numbers of workers found themselves unemployed – about 600,000 skilled tradesmen left the industry. Most have not returned. This shrunken labor pool is found throughout the industry: carpenters, masons, pipefitters, electricians, etc. The .5% growth rate forecasted for the next decade is not even close to making up for the six-figure loss in skilled tradesmen.
Today, with a strong jobs market most of these workers have other choices which may be more lucrative, offer greater career advancement, and have a higher status in society. Millennials, for example are much more attracted to white collar jobs in finance or information technology.
In many high schools, shop classes have vanished, as fewer students are choosing the trades as an elective to their required course work. In this regard, more students are being encouraged to go to college, rather than choosing a traditional trade.
As a result, the industry is graying, with the average age of a tradesman at 42.5 years according to the U.S. Labor Bureau. For every five people leaving the industry, only one is entering it.
What is Being Done About It?
Some heavy industry players, such as Lowes and Home Depot (and some of their suppliers) are launching incentive programs to lure young people toward the construction trades.
The National Association of Homebuilders is sponsoring student chapters in high schools across the country – they currently have 4,500 members.
Legislation pending in congress would try to ease the work permit process for skilled foreign workers with industry experience.
But in the short term, homeowners and builders will face higher costs and delays in construction and renovation jobs.