Labor Challenges Facing the Construction Industry

The shortage of qualified employees in the United States has been widely reported as a major business challenge.  This is especially true in the construction industry, and is primarily driven by three factors: a) an aging population, b) declining interest in the industry, and c) a particular lack of skilled labor.

The high number of retirements as Baby Boomers age has not been offset by an equal number of new employees to replace them. Per the Associated Builders and Contractors, construction workers between ages 25 and 54 decreased 8% over the last 10 years. This trend is especially challenging with the growth in construction projects and spending expected over the coming years.

This shortage of employees is compounded by an even greater shortage of skilled labor the industry requires. The average age of retirement is 61, and approximately 20% of the workforce is older than 55. The skill gap lost from the baby boomer retirements has been very difficult to replace. It is vital to replace not just the number of workers but lessen the skill gap as well.

The loss of older employees with significant experience and skills is further complicated by a decline in interest in the industry by potential employees. The pandemic has worsened the labor shortage. As of July 2022, there were 375,000 available, unfilled construction job openings in the United States. Historically, construction workers have earned moderately higher pay than many other industries. However, the significant compensation increases in other industries has reduced this competitive advantage. As of August 2022, average hourly earnings are $32.36 for all private industries. The construction industry is only slightly higher at $34.82 per hour.

There are solutions construction contractors can implement to mitigate these challenges, and it is imperative for the industry to rethink its workforce strategies such as:

• There needs to be an increased focus on working with trade schools and educational institutions to develop talent through apprenticeship programs.
• Mentoring programs should be implemented to maximize retention of employees and assist them in developing the skills needed going forward.
• A focus on diversity that can yield additional talent. For example, non-native construction workers are a potential resource for new employees who can also reduce the skills gap.
• Joint ventures may lessen the concern of labor shortages for certain projects.
• Investing in new technologies and performing prefabrication work offsite can increase efficiencies and decrease field labor hours on projects. 

Each contractor will need to assess their particular challenges and potential solutions. In any case, it will require ingenuity and flexible thinking to drive success in these unprecedented times. Learn more about the construction industry trends that we are following for 2023.