Workforce
ABC Says Infrastructure Act Will Worsen Industry's Labor Crunch
ABC's model shows that labor markets will tighten due to a variety of factors.
Chart Courtesy of Associated Builders and Contractors
Covid-19 has caused major disruptions in the construction workforce, and the expected infusion of funds from the Infrastructure Investment and Jobs Act (IIJA) will further pinch contractors’ ability to find enough workers to complete projects, according to the Associated Builders and Contractors.
According to a newly released model developed by ABC the industry will need to attract nearly 650,000 additional workers above its normal hiring pace in 2022 to meet the demand for labor.
“The workforce shortage is the most acute challenge facing the construction industry despite sluggish spending growth,” says Anirban Basu, ABC’s chief economist.
But spending is about to increase dramatically through the rollout of the infrastructure law, “exacerbating the chasm between supply and demand for labor,” Basu adds.
Potential impacts could include: project delays; increased costs for projects that will be passed on to clients, and, ultimately, consumers; and less “bang for the buck” on IIJA projects because projects will cost more, Basu says.
Project delays already are occurring. For example, on Feb. 15, a Taiwanese manufacturer announced that it would extend the completion date by six months for a new $12-billion chip fabrication plant in Phoenix, citing labor shortages as the primary cause.
An additional concern is the decline in the number of construction workers aged 25-54, which fell 8% over the past decade, Basu says.
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At the same time, the number of people retiring and exiting the workforce has soared, with more than one in five construction workers nearing retirement age. Low-skilled construction laborers account for most of the growth in the construction workforce, ABC says.
Labor unions and contractors that work with union labor are also feeling the pain, says Kevin Tighe, vice president of labor relations and field service at the National Electrical Contractors Association (NECA), whose members are electrical contractors that hire International Brotherhood of Electrical Workers (IBEW) labor to staff their jobs.
Tighe says, “Manpower shortages are our biggest concern right now. There’s large projects coming where we’re struggling to figure out ways to [fully staff].”
Whether union-affiliated or not, contractors are all “competing for the same people," Tighe says. As a result, he adds, “Everyone’s increasing their wages, everyone’s increasing the extras paid on jobs sites. There is a war for talent.”
In the short term, in “hot spots” such as cities in Arizona and Texas experiencing severe shortages, NECA and IBEW are using social media, job fairs, hiring websites and other outreach methods to attract the talent needed to fill a growing list of large projects.
NECA and IBEW have created a workforce recruitment task force to take a longer view of the challenge.
NECA also has long worked with groups like Ready for Work to hire formerly incarcerated youth into pre-apprenticeship programs and has federal grants to team with such programs in about 20 cities across the U.S. “We are 100% committed to help knock the doors [to gainful employment] down,” Tighe says.
ABC has similar outreach programs and its own workforce development centers across the nation. ABC’s Baltimore Chapter recently established a workforce training academy in East Baltimore, an economically disadvantaged community, and has reached “a lot of people who otherwise might not be aware of the opportunities” presented by construction work, Basu says.
