Help wanted: Inside the construction industry’s skilled labor shortage

There are approximately 195,000 open positions in the construction industry as the skilled labor shortage persists during the Covid-19 pandemic

Skilled labor is the lifeblood of the construction industry – and it’s in short supply.

The U.S. Bureau of Labor Statistics (BLS) reported approximately 195,000 job openings in the construction industry in December 2020, the latest month tracked, which is equivalent to 2.6% of the available positions.

Dr. Anirban Basu, Marcum Construction Group’s chief economist, said that there were 13,000 more workers who quit their construction jobs than were laid off or discharged by their employers in 2020’s final month, just the 17th time quits have exceeded layoffs in the past 20 years.

Basu called it “a clear indication of labor market tightness.”

This comes after the Associated General Contractors of America (AGC) and Sage released a 2019 report that concluded 81% of contractors were having a hard time filling positions – even before the Covid-19 pandemic delivered serious blows to the construction industry and the economy in general.

The skilled labor shortage isn’t new to construction, an industry that, even before Covid-19, was still dealing with the effects of the Great Recession and the real estate bubble that burst in the late-2000s.

“The last economic downturn from 2006-11 was largely a construction-based downturn,” said Brian Turmail, vice president of public affairs and strategic initiatives for the AGC. “It was a housing market bubble that dried up funds for commercial development, so this is an industry that took the brunt of the pain – we were the first industry to start laying people off in the last downturn and the last industry adding people.”

CONEXPO-CON/AGG 365 investigated several questions behind the industry’s dearth of skilled labor.

How dire is the need for workers on jobsites? What skilled labor jobs are in demand? Why is construction work becoming less desirable of an occupation? How has the cyclical nature of the industry and the pandemic affected the shortage? And what are some solutions to developing the industry’s workforce?

Skilled labor positions the industry needs the most

In the 2019 Talent Shortage Survey, ManpowerGroup reported that for the seventh year in a row, skilled labor topped its list of the most in-demand jobs in the U.S.

But which jobs fall under skilled labor? Here’s an explanation from Stephen Toups, president of Turner Industries, a leading Louisiana-based industrial construction contractor.

“Skilled work is anything that happens on a construction site: putting forms together, laying concrete, building,” Toups said. “Whatever the endgame is, that’s what we define as skilled.”

Although virtually all construction jobs are in demand, Tony Rader, vice president for the Texas-based National Roofing Partners, specifically said there’s a standing order on welders, plumbers, electricians, pipefitters, carpenters and many other roles suited for craftspeople.

“You got a kid who wants electrical work? Send him my way,” he said.

According to Rader, his firm currently has open positions – including positions in sales, customer service, project management and human resources, as well as an estimator role – and he’s struggling to find people to fill them.

The skilled labor shortage extends to construction manufacturers, too.

Caterpillar’s Global Dealer Leading Division (GDL), which works with the company’s dealer network to develop technical, sales and leadership professionals, has seen its potential labor pool decrease over the past two decades as students and applicants pursue different industries, said Kelley Maxwell, global learning consultant.

Let’s explore why the construction industry might not appeal to young people entering the workforce.

The attractiveness of skilled labor

With more high school students choosing to pursue college and office-based careers after graduation, the construction industry is one of the hardest-hit in terms of missing out on the next generation of workers.

Turmail put it succinctly: “To paraphrase Willie Nelson, ‘a lot of mommas don’t want their babies to grow up to be construction workers.’”

But infusing construction jobs with younger labor is essential, Rader said, especially as the BLS pegs the median age for a construction worker at 42.9 years old.

“We, as a construction industry, have an aging workforce, and none of us is getting any younger,” Rader said.

Rader, who clarified that he appreciates the spotlight TV host Mike Rowe has shined on the industry, said that programming such as Rowe’s Discovery Channel show Dirty Jobs can paint a negative image of construction work.

“When individuals look at those jobs, we want to say there are other jobs in the construction industry that digging a ditch,” Rader said.

“It’s not just turning wrenches anymore … skilled labor is so much more than working with your hands in a shop or in the field,” Maxwell said, adding that many potential Caterpillar GDL students and applicants see the heavy equipment and power systems industries as being “behind the times.”

Maxwell pointed to the plethora of opportunities, most aided by advancing technology, that could be used as selling points to change the minds of younger people entering the workforce.

The skilled labor shortage in the construction industry has been a constant issue, but contractors are committing to workforce development and technology as solutions

“We do not see the replacement of skilled labor by technology,” Maxwell said. “Rather, we see technology enabling our technical workforce to change the way they work and improve their overall efficiency.”

Turmail said that although a college education is a noble pursuit, career opportunities in construction and similar industries, which don’t require thousands of dollars in student loans, have been a forgotten path.

“There’s a large segment of the population that likes to do something tangible with their hands and likes to spend time working outside,” Turmail said. “The industry is doing a lot of young people a disservice by not exposing them when they’re in high school or even younger to the fact that construction should be on the career menu that they should explore.”

It’s a path that pays well, too. According to the BLS, the mean annual wages for construction laborers in 2019 was $42,320 – and that’s the low end of the spectrum. The 2019 annual mean wages for carpenters, electricians and equipment operators ranged from $53,150-$59,740, and construction managers made $103,960.

Per the BLS’ 2020 employee benefits statistics, 59% of construction workers had access to retirement benefit plans.

Toups said that informing potential workers of a construction job’s benefits is part of creating an environment people will choose.

“I have learned that when you have a jobsite and the pay is a fair package and it’s a great workplace, you don’t usually have trouble staffing that job,” Toups said. “Is it hard finding the perfect people for perfect job? Yes. Is there a labor shortage? If you find a way to give people a fair wage, [maybe not].”

Before we address other solutions to invigorating and recruiting skilled labor, let’s inspect the effects of the pandemic on the skilled labor shortage.

Construction’s cyclical nature, Covid-19 and skilled labor

Toups, who has been with Turner for 24 years, said that the construction industry has always been cyclical, a quality that’s been heightened by Covid-19’s effects for almost a year.

“I don’t know if we’re having a hardcore labor shortage getting people on jobs; there’s a shortage of jobs because of the pandemic,” Toups said.

Right now, he said, industrial construction has been depressed as large projects were paused because of Covid-19 restrictions, yet the residential sector (particularly contractors who build pools and cabanas in warmer parts of the country) are experiencing a boom.

Toups used the February winter storm that struck the middle third of the country – Texas, especially –as an example of an unexpected rise for certain construction sectors, namely plumbers and generator repair workers who helped thousands with their flooding and power needs.

“Every discipline in the construction world zigs and zags, so I can’t tell you construction is depressed [in general],” Toups said. “It’s dozens of pistons, some up and some down. In one particular [sector], there might not be turnaround. It’s very difficult to say construction is down overall.”

That cyclical nature applies to construction businesses’ reactions to the pandemic. Turmail said that in times of economic downturn, the first thing many firms cut is typically training and workforce development as they figure, “We’re not going to be hiring anyway, so let’s cut the training budget.”

“And what we learned in the 2006-11 downturn is that cutting the training budget when things are tough is really a mistake because what happens is you’ve got no one in the pipeline and no one with the skills you need when the market rebounds,” Turmail said.

Given that 2021 has shown some signs of recovery and growth after 2020’s pandemic-hit financial results, Turmail said keeping training efforts strong is the right advice for construction companies.

Still, Covid-19 has presented its challenges to combating the skilled labor shortage, Turmail said, with many workers having to navigate social distancing and safety precautions on jobsites; needing to stay home and quarantine for 14 days after contracting the virus; caring for family members; or deciding to stop working to live off unemployment checks until the pandemic blows over.

“The virus, in many respects, contributes to an environment where [AGC] members are worried about how much work they have and how many workers they can find, which is a new level of worry for them,” Turmail said. “Usually, they get the luxury of only worrying about one of those two things.”

Labor shortage solutions

The AGC has a three-pronged plan for addressing the skilled labor shortage:

• Federal advocacy: Lobbying for more career and technical education funding, which gets exactly to the question of exposing students to construction as a career opportunity.
• Providing resources to AGC’s local chapters: Helping members improve existing training programs, conducting virtual workshops to create registered apprenticeship programs and working to secure grants and public funding on local levels for programs.
• “Construction Is Essential”: A workforce recruitment campaign with the message that construction career opportunities – that were deemed “essential” during the pandemic – are more secure than other industries (hospitality, restaurants and leisure, for example) that suffered financially when the economy shut down in 2020.

Turmail said the AGC is supplying its 89 chapters with the tools, ideas and resources to work as a grassroots campaign to craft solutions to the labor shortage because, ultimately, the industry can’t rely on federal, state or local governments to come to the rescue.

“Our takeaway is that no one is going to solve this industry’s challenges of workforce except for this industry,” Turmail said.

Maxwell, of Caterpillar’s GDL division, said there’s no single solution to the skilled labor shortage, but the manufacturer and its dealers will continue developing their technical workforce from the ground up.

“While we don’t see the challenges going away in the immediate future, we do feel there are many indicators to be positive about,” Maxwell said. “There appears to be more openness and interest in career training pathways like apprenticeships and two-year degree programs. We are excited to continue our efforts to provide them resources and tools to learn more about our technical workforce opportunities.”

Both Rader and Toups are elected chairs with the National Center for Construction Education & Research (NCCER), an organization that has grown into one of the industry’s sources for training, assessments and certification since its inception in the 1990s.

One of the more notable solutions Rader has experienced is the Indiana-based Gaylor Electric, which founded its own technical school that offers a two-year program for high school students that involves classroom learning and on-the-job training.

“That’s the kind of forethought we need in this industry ... We’ve got to do something different besides waking up every day and saying we have Groundhog Day: Part 2,” Rader said of the seemingly never-ending skilled labor shortage. “If we don’t get out in front of this, it’s only going to get worse and worse and worse.”

Toups describes himself as “overly optimistic and evangelical” when it comes to workforce development.

Before his election as an NCCER chair, he’s an immediate past chairman of the Louisiana college system, and he’s married both organizations to set up opportunities for potential young workers.

Toups has coordinated education and training so high school students can earn college credit through dual enrollment, get skills experience as teenagers and achieve NCCER craft training certification, which is universally accepted on professional jobsites.

He said once the kids graduate from high school, they can get “great-paying” jobs and continue their education at any two-year and most four-year colleges with credit in hand.

“We’ve created a system so people can enter at any point at any age,” Toups said. “If you’re good with your tools, there’s a path. If you’re a book kid, there’s a path.”

His inspiration? More than a decade ago, Toups attended a graduation ceremony at River Parishes Community College in Gonzales, La. When a woman received her construction management diploma onstage, she turned around and raised it to the audience – and two men screamed, “Go, Mom!” as loud as they could.

“It brought tears to my eyes,” Toups said. “It was a moment like, ‘Oh, wow, this really works.’”

Since then, Toups has committed to investing and doubling down on people. And the skilled construction workers he helps recruit and train are the source of his optimism and evangelism.

“To me, It’s the most exciting time to be involved in the construction business,” Toups said.