Two-thirds of the nation’s construction firms report having a hard time filling hourly craft positions that represent the bulk of the construction workforce, according to results of an industry-wide survey recently released by the Associated General Contractors of America.
Association officials said that many firms are changing the way they pay and operate to cope but warned that labor shortages could undermine broader economic growth. They called for new workforce measures to improve the pipeline for recruiting and training new craft workers.
“With the construction industry in most of the country now several years into a recovery, many firms have gone from worrying about not having enough work to not having enough workers,” said Stephen Sandherr, chief executive officer for AGC. “These shortages have the potential to undermine broader economic growth by forcing contractors to slow scheduled work or choose not to bid on projects, thereby inflating the cost of construction.”
Of the 1,459 survey respondents, 69% said they are having difficulty filling hourly craft positions, Sandherr said.
Craft worker shortages are the most severe in the Midwest, where 77% of contractors are having a hard time filling those positions. The region is followed by the South, where 74% of contractors are having a hard time finding craft workers, 71% in the West and 57% in the Northeast.
In Utah, 68% of firms said they would need to add more workers in order to expand their portfolios, with 80% of respondents reporting a hard time finding hourly craft workers, 55% experiencing a shortage of salaried field employees and 45% looking to hire more salaried office personnel.
In Colorado, more than 89% of respondents said they are having trouble filling positions for hourly craft workers, 57% cited shortages of salaried field workers and 51% noted shortages of salaried office personnel. More than 84% of firms said they needed to hire more people to expand their businesses and keep up with current demand.
The labor shortages come as demand for construction continues to grow. Sandherr noted that construction employment expanded in 239 out of 358 metro areas that the association tracks between July 2015 and July 2016, according to a new analysis of federal construction employment data released by AGC.
Growing demand for construction workers helps explain why 75% of firms report it will continue to be hard, or will get harder, to find hourly craft workers this year.
Tight labor market conditions are prompting nearly half of construction firms to increase base pay rates for craft workers because of the difficulty in filling positions.
Twenty-two percent have improved employee benefits for craft workers and 20% report they are providing incentives and bonuses to attract workers.
Forty-eight percent of firms also report they are doing more in-house training to cope with workforce shortages while 47% report they are increasing overtime hours, and 39% are increasing their use of subcontractors.
In addition, 37% report getting involved with career-building programs in local schools. Twenty-one percent report they are increasing their use of labor-saving equipment, 13% are using offsite prefabrication and 7% are using virtual construction methods like building information modeling.
The new AGC survey was conducted in July and August.