America currently needs more skilled construction workers, and unfulfilled labor demand has a detrimental and lasting impact on the construction industry. The issues aren’t limited to large corporations employing hundreds or thousands of workers. Local construction companies, homeowner associations, property management firms, and similar small to midsized groups are also hiring construction labor in a shortage.
Understanding America’s Skilled Labor Shortage
While workforce demand in the U.S. is dulling overall, this isn’t the case in the construction industry. In fact, the U.S. Bureau of Labor Statistics reports that the industry averaged more than 390,000 job openings per month during 2022. Anirban Basu, who is the chief economist of Associated Builders and Contractors, added that the industry would need to attract an estimated 546,000 skilled workers in 2023 on top of the normal hiring pace to meet the demand for labor.
The current construction workforce is aging and retiring, and it’s not being replenished. The trades don’t appeal to younger workers as they once did for various reasons. The prevailing perceptions are that the trades are physically demanding and unsafe, while tradespeople are underpaid and lack the career path opportunities that one gets by obtaining a college degree or joining the military.
What Your Company Can Do About It
The industry helped to create this problem when it let go of a large portion of its workforce during the most recent economic crisis. That quandary was then compounded by the COVID-19 pandemic and The Great Resignation that would follow. It’s important to appreciate this context when hiring construction labor in a shortage because it can inform how you navigate these obstacles in the short and long term.
Efficient Project Planning and Execution
A common mistake companies make when dealing with a workforce shortage is waiting too long. If summer is your busy season, you should hire in spring at the latest. Your company may also need to reassess its approach to seasonal positions. Keeping a valuable worker on even during your down period may be worthwhile. Companies should also examine their planning strategies with hiring and project execution overall to be as lean as possible to have the resources needed to attract and retain good workers.
Operate in a Transparent Manner
Companies can avoid complicating matters through open communication. To set realistic expectations, be truthful with clients about the challenges you face due to the construction labor shortage. Provide information to potential hires, employees, and subcontractors honestly and upfront. Employees will value this approach and be much more likely to be loyal to your company.
Work With a Staffing Partner
All of the biggest general contractors in America work with a staffing agency to fill their positions, but this isn’t just an option for large businesses. Through a staffing agency, you’ll have access to a much larger pool of talent, and while your initial costs will increase, your long-term costs will be lower because you’ll acquire qualified, retainable talent at a higher rate.
Pay for Employee Referrals
Your employees are an excellent way to expand your network. People who work in this field often have friends and associates from trade school and other construction jobs, and people are typically reticent to refer anyone who may reflect poorly on them or make their job more difficult. Even in an ideal labor market, paying a referral fee to an employee at the same level you’d pay a staffing agency is worthwhile.
Hire From Nontraditional Sectors
With construction job openings reaching the highest level on record, companies should be willing to tap into nontraditional talent pools. Women are a prime example of a group often discriminated against in the trades but have been integral to meeting current labor demands. You may also want to employ previously incarcerated individuals, and you can work with an organization like Helmets to Hardhats, which helps to transition veterans into civilian roles.
Offer Competitive Pay and Benefits But Also a Career Path
The bottom line is that this is a workers’ market, and construction job wages are increasing significantly. Companies must be willing to pay for talent, but compensation packages must extend beyond a weekly paycheck. The workforce isn’t being replenished because potential workers don’t see construction as a career. Show potential hires' career paths and ensure that compensation includes medical insurance, paid vacation, and flexible work schedules.
Manage Overtime Carefully
Overtime is a strategy many construction companies use to deal with labor shortages, and it’s an excellent opportunity for workers to earn extra. But it’s also a leading cause of burnout and can affect retention. Workers should never feel as if overtime is required and take care not to work a person so hard that it leads to safety issues, fatigue, reduced productivity, and so forth.
Partner With an Insurance Carrier
Not partnering with an insurance carrier specializing in construction is among the most common mistakes small businesses make. A construction insurance specialist can perform an inspection on your construction site to avoid safety issues and help your employees feel more secure. They can also work with you to minimize your insurance fees, which is essential to optimizing your liability costs and giving employees the kind of insurance they need and want.
Invest in Training
Investing in training is an effective way to reduce your long-term labor costs. It’s also an opportunity to expand the workforce available to you. Consider construction companies that pay veterans and formerly incarcerated people to learn a trade. Those people not only build a career while being gainfully employed but are also invested in the company that allowed them to be successful.
Reach Out to Area Students
If you’re willing to invest in training, local students can also be a great resource. Surveys show that modern students generally don’t view construction as an opportunity for them after high school. There are young people in your area who don’t want to go to college or the military and would be willing to take a job with you if they knew that they would learn skills that would be valuable throughout their lives.
There Is a Teacher Shortage Too
Many people who teach trades throughout the U.S. are retiring, and those jobs aren’t being replenished either. If you have people who can fill those roles part-time, you should check with area schools about doing so. It not only serves the community but expands your network. You should also encourage your local government to invest in educational opportunities for youths and adults in your area that extend beyond the usual college tract, such as the trades.
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