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Construction’s Labor Pain

Posted by Jeff Hopper on Oct 4, 2016 9:37:20 AM

It’s an age old problem for the construction industry: as the economy (and construction activity) continues to improve, the skilled labor force fails to keep pace. This is particularly true for today’s home builders. Using information compiled by the National Association of Home Builders (NAHB) and the Bureau of Labor Statistics: in Colorado, where workers in the construction trades can make up to $50K per year, there’s an estimated shortfall of about 5,000 laborers needed to do the work in 2016.  In Texas, despite an estimated 170K skilled and semi-skilled subcontractors, is shortage is estimated at 140K laborers.

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Builderonline.com has recently published a couple of articles addressing this situation. One article entitled Housing’s Labor Pain warns that this current labor shorage is unsustainable:

Home builders today face wishing a lesser of two evils. One, is a continuation of lower volume, fewer starts than normal, so that the current level of capacity can keep up with the pace of construction without getting overheated, exponentially expensive, and out of control. The other, amidst higher demand and more normalized new housing construction, would be a labor capacity stress test.

Smart people are doing smart things about the challenge. Smart people are also beginning to admit that as they model out the current trends, diminishing returns are unavoidable:

  • Fewer young people entering into construction trades careers
  • More restrictions and impediments to immigrant labor
  • More drop-outs continuing to pursue careers else-wise due to the unpredictability and unreliability of employment through volatile business and housing economic cycles
  • Fewer people continuing their education and training
  • Workflows, scheduling, and processes remaining stagnant vs. improving
  • Contractor payment systems remaining outdated vs. improving

With some bright-spot exceptions, current trends run to end game: two few people to do the work builders need done at a cost that can be applied to a profitable business.

Another article, Labor Pain and Labor Gain, by Builderonline.com author George Casey recalls discussions held at the Housing Innovation Alliance Summit in Chicago:

Despite all of the neat stuff we saw and discussed over two-plus days we were there, the discussions with builders around the tables continued to gravitate back to a more fundamental issue: the growing lack of trade labor that it takes to build homes and communities at a level that is needed to house people in the USA. Whether it is affordable housing, workforce housing, rental housing, multifamily housing, modular housing, or manufactured housing, the supply of tradespeople, both skilled and unskilled, needed to produce at the level required is just not there.

No app for the iPhone or Android is on the horizon to physically build the structures we need. We still need people with the skills and passion to be carpenters, concrete masons, electricians, plumbers, mechanical system installers, drywallers, painters, siders, roofers, glazers, insulators, and all of the other skills needed to build.

It seems to me that the real innovation needed right now is how to recreate a narrative and a system that enables and supplies sufficient trained labor to build the housing that the country needs.

He blames negative attitudes towards both immigration and skilled labor:

Yet, over the past several decades, we have seen a growing animosity toward immigrants into the US. The historic source of the bottom-rung labor for construction that eventually evolves into the skilled labor and the owners of trade contractors for that labor has dried up despite the fact that we are essentially at a point where anyone who truly wants to work has the opportunity to do so. Even more worrying is the demonization of manual and skilled labor on an institutional basis.

The narrative that “in order to get ahead and attain a middle-class lifestyle, you HAVE to go to college” has become accepted gospel. High schools are ranked on the SAT scores they attain and the percentage of students going on to four-year colleges and the principal’s careers is determined by how well they deliver on those metrics.

The fact that only a modest percentage of those going on to four year colleges ever graduate seems to be lost in the shuffle.

Mr. Casey concludes:

So the innovation needed in the industry at this time is less about the cool software, energy improvement, and “internet of things” opportunities that are out there on the horizon. Instead, innovation is more about how a truer story of the needs and opportunities for those in the construction trades and how those can be translated into lifestyles and incomes that are worthy, also.

If this piece of innovation is not accomplished, we, as a nation, will continue to suffer a diminished lifestyle and opportunity for advancement. This truly is an imperative.

Despite the labor shortage doom and gloom cited within these articles, there is a bright side to all of this, namely construction activity is growing. This is certainly preferable to the little or no construction activity experienced at the beginning of the Great Recession. Contractors now have numerous sources in which to find work. One of these sources is the LDI Line published by LDI Reproprinting. This FREE plan room service publishes daily construction leads bidding throughout the southeast. Check it out if you are a contraction looking for bid opportunities.

 Click Here to View LDI Line Projects Currently Bidding. 

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