A year ago, ENR pondered the impact of two big events: the U.K.’s Brexit vote to leave the European Union and the U.S. government’s ruling to increase the tariffs on Chinese cold-rolled flat steel by 522%. As the magazine predicted, neither move had much effect on construction costs. However, another inflationary sleeper, wage costs, is starting to arise. Most labor markets are still dealing with the impact of the last recession, which drove out many skilled workers from the industry. How contractors are meeting that challenge is the major driver of today’s costs.
“After more than a decade of flat wage increases in the Davis-Bacon wages we track, we are all of a sudden seeing increases of more than 4%,” says Bill Mahoney, president of BNI, which publishes cost-consulting books.