Construction Industry Labor Shortage: How Trade Contractors Can Fill Skills Gaps

Things are never simple in the construction industry.

So far, 2023 has been a record-breaking year for the nonresidential construction industry which grew by nearly 20 percent, according to the American Institute of Architects’ (AIA) Consensus Construction Forecast Panel. While that’s encouraging for the sector overall, the rapid expansion has created some challenges for trade contractors, one of which is a critical labor shortage. 

“The industry is currently battling the highest level of unfilled job openings ever recorded,” write CNBC News’ Lori Ann LaRocco and Natalie Rose Goldberg.

Why Is There a Shortage of Construction Industry Workers?

The latest Associated Builders and Contractors (ABC) data analysis of the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey shows there were 374,000 construction industry job openings in June 2023. That’s high. “The number of unfilled jobs remains so elevated by historical standards,” notes ABC Chief Economist Anirban Basu.

There are a number of different factors contributing to this shortage of workers in an industry that has such a high demand for skilled laborers.

An Aging Workforce

One of the leading causes of the labor shortage is that a large number of workers are retiring and not being replaced by the younger generations. According to 2022 Bureau of Labor Statistics (BLS) data, the median age of construction workers was 41, and about 45 percent of construction workers were 45 and older. Data from Associated Builders and Contractors also shows that 25 percent of the construction workforce is over 55 years old. 

It’s not inherently bad that there are so many older workers; the problem is that there isn’t anyone to replace them.

“As many members of the senior workforce retire from construction, there aren’t enough qualified, experienced folks to take their place,” says Marianne Monte, chief people and administration officer for Shawmut Design and Construction.

A Pipeline Problem

An empty pipeline is the next big factor contributing to the industry’s labor shortage. And it’s a problem that has gotten worse for a few different reasons.

One, there simply aren’t enough young people interested in joining the construction industry. Younger generations have different ideas about what defines a “good job” and jobs in the trades don’t often meet those expectations. It’s a career with a reputation for being labor intensive, inflexible, and unstable — none of which appeals to today’s workers.  

That perception comes from a lack of understanding of jobs in the industry, which points to the next reason the pipeline is empty. There’s a lack of awareness about careers and training opportunities in construction. Even if they wanted to go into construction, most young people don’t know how to start down that path. In many high schools, shop classes have been replaced by technology classes. 

Another reason for the pipeline problem is the lack of qualified instructors to train people. “Who’s gonna go teach a high school class for $50,000 a year when they can make $85,000 to $100,000 a year in the trades?” asks Sean Ray, vice president of craft workforce development at Sundt Construction, a general contractor in Phoenix.

A Lack of Meaningful Benefits

The competition for labor is tight across all industries. People have options about what kinds of careers they want which means companies who want to fill positions have to woo workers. Unfortunately, the construction industry isn’t known for offering great benefits packages when compared to some other industries.

“You’ve got to make it attractive enough that they want to come and work and they want to show up every day, and they feel like they are valued and that there’s something more than just a paycheck,” says Lisa Sanders, vice president of human resources operations at McCarthy Building Companies.

What Can Trade Contractors Do to Fill Those Skills Gaps?

The labor shortage is having a major impact on the construction industry. According to a survey of construction industry managers by the Associated General Contractors of America (AGC) and Autodesk, 61 percent of companies are experiencing project delays due to the labor shortage. 

As every trade contractor knows, project delays cost money. So how do you overcome these barriers to hire skilled workers to fill open positions? 

Invest in the Workers You Already Have to Keep Them

Perhaps the most important thing is to hold on to your current employees. That means making sure they feel valued for the work they do.

That starts with offering them competitive, comprehensive benefits packages. It’s not enough to just compensate them fairly. Employees today want a broader set of benefits that includes perks such as family leave, retirement, mental health support, and wellness benefits.

You should also offer them training opportunities to sharpen their skills or develop new ones to further their careers. “Employee training can focus on specialized skills, new technology or safety-related topics,” notes insurance brokerage firm The Horton Group. They recommend identifying skills gaps and then planning training opportunities around them. 

Diversify Your Workforce

The majority of workers in the construction industry are older white men. In addition to the previous statistics about the aging workforce, 2022 BLS data shows women make up only about 11 percent of the construction workforce and that 87 percent of the workforce is white. 

There is a huge opportunity for trade contractors to diversify their workforces to fill their skills gaps.

“To get ahead in this industry, we have to go to the people that we haven’t been going to, which are people of color and women, in order to fill the labor shortage,” says Jennifer Todd, founder and president of LMS General Contractors.

Doing that requires you to reach out to underrepresented groups including women, ethnic minorities, and young people. To find those people, look for talent within a range of nontraditional sources, suggest McKinsey & Company’s Garo Hovnanian, Ryan Luby, and Shannon Peloquin. Consider veteran-transition programs, formerly incarcerated individuals, and others to find more diverse talent, they write.

Use Technology to Increase Productivity and Cover Skills Gaps

You may not need to hire as many people as you think. It’s possible that you can do more with the team you already have by using construction project management software to create efficiencies in your business that would allow your employees to be more productive. The technology enables you to: 

• Automate administrative tasks. Daily work such as paperwork submissions and photo uploads can take up a significant amount of field team members’ time that could be better spent on project-specific tasks. The digital reporting capabilities of the technology frees them up to take on additional responsibilities to cover skills gaps. 
• Allocate labor more effectively. Construction project management software enables you to see where you may have some labor waste and where you need more labor hours. You can also forecast hours needed based on labor efficiency. With that data you can better allocate your teams’ time. 
• Streamline communication on projects. Inefficient communication can drain productivity which puts extra pressure on businesses already suffering from a shortage of employees. With construction project management software, everyone on a project can share data and communicate critical information in real time. This helps ensure all resources are being maximized to get projects completed on time and on budget.  

An increase in worker productivity is one of the key benefits Eckstine Electrical has experienced since adopting the eSUB platform. Lead Project Coordinator Renee McEntee says the employee productivity has increased by ten to 25 percent each week since they started using eSUB. The technology has enabled them to do more with the same team which mitigates the impact of the labor shortage and skills gaps.

To see how eSUB Cloud can help you overcome a labor shortage, schedule a demo today.

Images used under license from Shutterstock.com.