While materials price escalation has grabbed most of the headlines, labor costs are also contributing to constructions growing inflationary pressure. "The one thing that is not getting a lot of attention, but soon will be, is wage and salary pressure on contractors prices," says Julian Anderson, Phoenix-based partner at project cost consultant Rider Hunt Levett & Bailey. "As the economy picks up, there is going to be upward pressure on salaries of supervisors, cost engineers, schedulers and other professionals that are going to be passed along to owners."
Total construction through the first four months of this year is running 9% ahead of last years strong market, according to McGraw-Hill Construction Dodges construction starts data. This has already caused a bounce in employment.