Where Are All the Builders? By Andrew Soergel (usnews.com) / June 15 2018
Construction costs are climbing and production is lagging, in part because there aren’t enough workers to go around.
The United States has a building problem.
The country that paved one of the most expansive highway and transportation systems on the planet, that festooned a riverside between Maryland and Virginia with ornate marble and sandstone statues, columns and monuments in the creation of the nation’s capital, that introduced architectural marvels to the world ranging from the Golden Gate Bridge to the Empire State Building to the Space Needle, is now dogged by an ailing construction industry.
A common thread has waylaid the building of a much-anticipated senior community in Oro Valley, Arizona, forced Exxon Mobil to retool the construction of what would be the world’s largest ethylene plant in San Patricio County, Texas, and spurred Home Depot into investing $50 million into skills training programs over the next 10 years: there simply aren’t enough construction workers to keep up with demand.
“For better or worse, business is good for us. They’re beating down the door,” says Tyson Conrad, the president and founder of Tampa-based Goliath Construction Consulting, which serves as a national recruiting and consultation outfit geared specifically toward the construction sector. “We’re in a place now where you have a booming economy and booming construction industry and lack of manpower. So people have gotten creative and desperate, essentially.”
Conrad works with clients across the country, many of whom seem to be telling the same story. With the economy chugging along through what is now its second-longest recovery to date and with demand for more affordable housing options as high as it’s been in years, Americans’ desire for new homes, buildings and facilities is through the roof.
But there simply aren’t enough skilled builders around to complete the work. Through the first quarter of 2018, employers have been looking to fill an average of nearly 225,000 construction jobs each month, according to the Bureau of Labor Statistics. That average was eclipsed in only one year going back to 2000, when the BLS first began tracking the data – and that year was 2007, at the tail end of the U.S. housing boom.
The labor shortage is so acute that 91 percent of more than 2,700 contractors, construction managers, builders and trade contractors surveyed in the latest Commercial Construction Index reported having a difficult or moderately difficult time finding skilled workers.
“Among the contractors expressing concern about worker skill levels, more than one-third (37 percent) believe the problem has worsened in the last six months, and almost half (47 percent) believe it will continue to worsen in the next six months,” according to the report.
That shortage hasn’t been a terrible thing for those already in the industry, as their pay has skyrocketed in tandem with their demand. Wages of production and nonsupervisory construction employees – which excludes managers, sales personnel and accounting staff associated with the industry – climbed 3.6 percent between May 2017 and May 2018. That’s comfortably larger than the 2.8 percent wage gain production and nonsupervisory employees across the economy enjoyed over the same window.
A recent blog post from Aaron Terrazas, an economic research director at Zillow, identified even more drastic gains among residential construction workers, in particular. Such employees closed out April with a 5 percent annual wage gain, nearly double the 2.9 percent uptick for all of the economy’s private-sector workers.
“These days they’re making a killing,” Conrad says, telling the story of a client’s son who at 23 years old is making around $75,000 annually as a foreman. “For so long, it was seen that if you worked with a hard hat, you didn’t make a lot of money and you were a dummy. I can tell you that is contrary to everything that is reality.”
Construction wage growth isn’t necessarily expected to be exponential – the BLS last year estimated the top 10 percent of construction workers earned an annual wage of roughly $63,000, with top-tier construction managers bringing in nearly $160,000. But Conrad says demand for workers has created attractive options in the industry, particularly for young workers as the more established individuals phase out of the workforce.
Those in the construction industry are, on average, slightly older than workers in the rest of the economy, with a median age of 42.6. Only 1.8 percent of the industry’s workers are between 16 and 19 years old, while fewer than 9.4 percent are younger than 25. Both percentages are shy of national averages for all industries, suggesting a larger-than-normal share of construction workers are on the older side.
Conrad says he’s concerned by the fact that young people don’t seem to be embracing the industry in the same way that they used to. He partly blames budget cuts to shop and skills development opportunities in high schools while also pointing out the negative stigma he believes trade professions developed over time.
“There was a huge push in the ’90s and even in the early 2000s that if you were going to be successful, you needed to go to college. And that was the only way. And you add to that the Baby Boomers all migrating out of the workforce now – you’ve got a trifecta of major issues,” he says. “You have few people going in, a lot of people going out.”
He also points to a downtick in immigration as a driving factor in the skilled construction worker shortage. A recent industry analysis spearheaded by Natalia Siniavskaia, the assistant vice president of housing policy research at the National Association of Home Builders, found that immigrants constitute roughly 30 percent of the construction industry. In states such as California and Texas, that share sits north of 40 percent.
“Over the last two administrations, the last one and this one, we’ve seen significant drops in undocumented workers coming into the country,” Conrad says, noting that this trend has in some cases left construction employers in a bind.
In order to solve the construction shortage with domestic workers, officials and educators throughout the country have made efforts to get students more excited and more involved in working with their hands, hoping to foster a new generation of builders to help address today’s shortfall.
“I think there was a mentality here for awhile that we had to send our kids to college,” says David Curry, director of career and technical education at the Milton Hershey School in Hershey, Pennsylvania. “We want our students to find success. For certain students, that doesn’t mean sitting in a classroom for four more years.”
At the Milton Hershey School, Curry stresses a “learning by doing” approach that allows students to get hands-on experience in their field of choice. The institution – founded in 1909 as the Hershey Industrial School by chocolatier Milton Hershey and his wife, Catherine – functions as a boarding school catering specifically to low-income students. It offers traditional academic coursework as well as specialized training in one of 11 career pathways for more senior students.
For students in the school’s construction and carpentry pathway, that means personally building houses in the nearby community from the ground up.
“At the start of their junior year, the house was nonexistent. It was a patch of dirt. They have been involved in every phase of the building of this house,” Curry says, noting that this year’s crop of seniors just finished the 52nd home Milton Hershey students have constructed in the area. “In their junior class, they came out and built the rafters and walled it and roofed it. They’ve spent most of their senior year working on the interior of the house. They work alongside our instructional trade professionals we have here at the school.”
Curry says the school has experienced staff members on hand to help guide the students, though it will occasionally reach out to trade workers in the community to fill gaps in their expertise. He says the school doesn’t have a painter on hand, for example, so that work will be subcontracted.
“The entire goal of this is not for our staff to build this house. At the end of the day, it’s the kids who are building the house,” Curry says. “Obviously, kids make mistakes at times, and it becomes a learning experience. But we’re not going to hand a house to a family and not have it be what it’s supposed to be.”
Four graduating seniors plan to enroll in a local technical school to continue their skills development, though Curry says interest in the construction and carpentry program is rising. Two freshmen signed up for the concentration last year, he said, while 17 jumped into it this year.
The school is relatively unique in the fact that it is supported in part by a significant endowment that was left behind after Milton Hershey’s death – so it can afford the equipment and tools necessary for students to gain such hands-on experience. But Curry says he hopes other schools are able to increase awareness of and support for trade and construction programs going forward. The jobs, he says, are certainly available.
“There’s a huge growth in opportunities nationally in trade areas,” Curry says. “Oftentimes these are kids that know they want to do that and they want to go directly into that field, either to a two-year school or directly to work. … This is designed to make sure they’re prepared for what they’ll see in the real world.”
