With revenue continuing to be a significant struggle for many contractors, salaries for construction staff are languishing at levels not seen in decades. Salary increases fell from 4.1% in 2008 to 3% in 2009 among companies that offered raises, and contractors estimate they could dip to 2.9% in 2010, according to a recent survey by PAS Inc., a construction-compensation consulting firm in Saline, Mich.
Roughly one-third of PAS survey respondents said they would not offer salary increases this year, slightly more than last year. “We’ve never seen numbers this low for this long in the history of this survey,” says Jeff Robinson, president of PAS, which has surveyed industry salaries since 1984. “This recession is different than any we’ve seen before.”
The survey suggests the trend is consistent nationwide, with nearly all regions forecasting increases between 2.8% and 2.9% for 2010. The southeastern U.S. could see 3% increases, while the Northwest is estimated at 2.7%.
Although construction staff is not seeing much of a boost in their paychecks, their household expenses aren’t rising dramatically, either. Projected raises remain above the Consumer Price Index, which was at 2% in May.
Less than 5% of survey respondents said they reduced salaries in 2009. However, some companies reported freezing salaries and instituting furloughs. Robinson says he is concerned about the long-term impact of current salary trends. “Contractors are going too long without taking care of their people,” he adds. “At the very least, people will leave their company, but many will leave the industry.”
There already are signs of attrition. “Some people [who] were displaced are no longer there to be rehired,” says Jim Vockley, founder of Adams Group, a Fletcher, N.C.-based recruiting firm. “One company I work with had let people go last year but was looking to add people again. When they went through the list of the people they had laid off, those people had moved on and changed industries.” When the market comes back, that could be a real problem, he says.
However, for now, employers looking to hire staff are taking advantage of the down market. Vockley says many job seekers are taking positions at 10% to 15% below the salary levels they earned prior to the recession.
Many companies are taking the opportunity to improve their staff with better employees at lower salaries. “[Contractors] have let go the more expensive people who they may have overpaid because they had specific needs at the time and are replacing them with people at lower salaries,” says Dollie Lee of Professional Search Inc. in Douglasville, Ga. “They consider that smart business.”
Today, it is easy for employers to drive down salaries, given the continued high level of unemployment in the industry, says Chuck Carter of Carter Associates, a Grafton, Wisc.-based search firm. “Companies are low-balling positions like superintendents because there’s a multitude of them looking for work,” he says. “I ran a job listing for a superintendent and got 1,156 responses in three days.”
Although salaries are soft nationwide, some sectors are faring better than others. Recruiters report that commercial building remains the toughest market, as the credit crunch continues to hamper new development. However, heavy civil work is commanding talented staff. Carter says he sees salary increases ranging from 3% to 8% for heavy civil jobs.
Recruiters also see a glimmer of hope on the horizon. Many report an increase in requests for estimators, indicating more companies are eyeing potential jobs. Still, landing those jobs and being able to staff up is a significant challenge.
“I’ve had several companies come to me and say they are looking for superintendents and project managers,” Lee says. “But after a few weeks, they call back and say the project isn’t moving forward because the funding didn’t go through. Until the situation with the banks is worked out, it’s going to be tough to hire that next level of staff.”
|ASST. SUPERINTENDENT|| |
|PROJ. SUPERINTENDENT|| |
|PROJ. MGR./ESTIMATOR|| |
|CONSTRUCTION MGR.|| |
|PROJECT MGR.|| |
|PROJECT ENGINEER|| |
|COST ENGINEERING MGR.|| |
|SCHEDULING MGR.|| |
|assistant SAFETY DIR.|| |
|SAFETY DIRector|| |
|SALES REPRESENTATIVE|| |
|ACCOUNTING MGR.|| |
|HUMAN RES. MGR.|| |
|SOURCE: PAS Inc.|