In the five years following the peak of the housing bubble – so from 2006 to 2011 – the United States’ construction industry lost 2.3 million laborers. By 2013, 60 percent had already found new careers in other industries – which meant that when homebuilders finally started building again, there weren’t enough skilled workers to fill their crews. And so now we have a labor shortage.
Last year, more than 50 percent of builders reported shortages in key trades – more than double the share reporting shortages in 2012. Three out of four builders agree it’s the No. 1 problem facing the industry, according to the National Association of Home Builders.
But the shortage hasn’t completely stifled growth. Chicago’s residential construction spending last year grew by 46 percent from 2015 to over $7.2 billion – one of the nation’s most pronounced increases.
So how are builders doing it?
Paying more for valuable skills
If builders want to attract the talent they need from a labor pool that, while growing, is dangerously shallow, they need to dangle the right bait – which, in many cases, is money. An NAHB survey showed that 75 percent of home builders are already paying higher wages and subcontractor bids on account of the shortage. In an interview with Construction Dive, Tim O’Brien, president of Wisconsin-based Tim O’Brien Homes, estimated that his labor expenses have increased by as much as 20 percent for all trades.
Training workers in different skills
Carpenters, framing crews, bricklayers, plumbers, roofers, painters, electricians – all are experiencing some level of a “serious” shortage, according to the NAHB. Those shortages may vary from place to place, but even a deficit in one trade can keep a home from being finished. Some builders have seen this as an opportunity to expand the skill sets of existing crew members by offering on-the-job training in other trades. Reuters reported last year on the story of Eduardo Salcido, who was hired by Toll Brothers as a concrete finisher but then trained as a painter, and is now a certified semi-skilled finisher.
Supporting older workers
There is a retirement surge nearing. We’ve reported on how it will change the housing industry. And in fact, it will change every industry. AARP says that nearly two thirds of all companies are concerned about the impending loss of “critical knowledge and experience,” and that includes builders. Forty-four percent of all construction workers are over the age of 45. But there are ways to ease the exodus, according to AARP. One way is to keep older workers on as part-time employees after retirement, or just simply entice them to remain full time for longer. But because of the physical demands of the job, perhaps the most applicable of AARP’s suggestions is “knowledge transfer programs,” which would see veteran laborers passing their trades and skill sets onto newer employees.
Reaching out to the new generation
The long-term solution to the construction industry’s labor problems is Millennial and Generation Z outreach. Builders need to convince younger generations that skilled labor is a viable career choice. The good news is that vocational programs are becoming more popular. A report from the Massachusetts Budget and Policy Center found that in 2016 the state’s waitlists for vocational high school programs was up to 3,200 students. But builders need to make an effort themselves, which is exactly what the NAHB is doing, according to Michael Neal, a senior economist for the group. “We are encouraging younger people to go to trade schools and acquire those kinds of skill sets,” he said. Patrick Coveny, president of the Home Builders Association of Greater Chicago, says his group is taking it a step further, setting up association chapters in local colleges to introduce and educate students on the opportunities available in the construction industry. “It’s not going to be an immediate fix,” Coveny says. But it could end up being the fix.