Average salary increases continue on an upward path for construction employers, particularly for entry- and junior-level staff positions, as firms seek to fill developing workforce gaps.
Salaries rose an average of 3.46% in 2014, following increases of 3.16% in 2012 and 3.24% in 2013, says the 2015 Construction-Construction Management Staff Salary Survey published by Personnel Administration Services, Saline, Mich.
"The market has clearly changed," says company President Jeff Robinson. "[Firms] need people, and, to get them, they need to pay a bit higher. They also recognize that to keep [staff], they need to pay higher, as well."
Respondents reported that they expect to raise salaries by an average of 3.29% for 2015, but Robinson believes the conservative increase estimates likely will end up between 3.7% and 3.8% in reality.
Even so, salary increases still remain below pre-recession levels, when averages were typically above 4%. Companies offered average increases of 4.12% in 2008, according to the firm's data. The survey covers salary data from 21,465 participants in 58 job categories.
Jim Vockley, founder of Adams Consulting Group, a Fletcher, N.C., workforce consultant, says he sees a significant increase in demand for staff as project starts tick up, but he agrees that percentages remain well below recent historic highs. "There's some upward pressure on salaries but not like in past post-recession cycles, where people were throwing money at candidates because of demand," he says.
Vockley says that could be due, in part, to many companies having a limited ability to make big offers. "We hear companies complaining that they are working on razor-thin margins," he says. "Margins are way down, and that is reflected in what they can afford to pay people."
Still, many employers are finding the means to offer significant salary increases, especially at the entry and junior levels.
Rob Herndon, president of HCC Construction Consulting & Recruiting Services, Roswell, Ga., says he sees high demand for candidates with less than five years of experience, such as assistant project managers, assistant superintendents and field engineers. "There's a gap that was created in the past few years," he says. "Even when you can find someone, you might not find someone with the right experience. Finding [candidates] in commercial and multi-family is very tough right now."
According to survey data, assistant superintendents reported a 7.9% increase in base pay last year. By comparison, superintendents saw a 5.1% increase, and project superintendents had a 3.2% hike.
Robinson notes that few people came into the industry during the recession, meaning there is a dearth of candidates with three years of experience. "When companies cut staff [during the recession], they kept experienced people," he says. "There was no room for new people to come into these companies."
Given the difference in salary increases offered to junior staff compared to senior staff, companies now face salary compression issues, according to Robinson. "Senior staff becomes aware of this," he says. "Once you push up compensation at the entry level, the rest needs to bump up, as well. If you're not staying on top of this, you'll lose your key money-makers."
Although salaries are on the rise, bonuses remain depressed. According to survey data, there was a slight rebound in bonuses as the market pulled out of the recession, but Robinson says the number of companies that gave bonuses in 2014 remains 20% below 2008 levels.
"If there are limited dollars in compensation, you put that into recruiting the people that you need," he says. "In order to get people, it's all about base pay, but to keep them it's about [the] bonus."
Between salary compression and historically low bonuses, Robinson says he expects staff retention to be a big issue this year and next.