The current labor shortage across the U.S. is nothing new to the construction industry. During the homebuilding boom in the early 2000s, there was a lack of construction workers. The Great Recession and the resulting housing market collapse, which in turn created the foreclosure crisis, caused that shortage to end.
The construction industry has still not fully recovered from the housing market downturn of the early 2000s. Construction workers in search of employment found alternative positions in retail and the energy sector and never returned to pick up their toolbelts. At the same time, the pool of available construction workers continued to age out. Current data indicates that the average construction worker today is 41-years old. As a result, the construction industry needs more younger workers than ever before.
In a statement, Home Builders Institute (HBI) President and CEO Ed Brady said, “The construction worker shortage has reached crisis level.” The HBI estimates that 2.2 million new workers are needed within the next three years to meet housing demand.
In an email to Yahoo Financial, Brady added that the “Pandemic-driven labor shortages are being felt across the board in nearly every industry. Home builders now must compete with far more businesses for the same workers… That’s requiring them to rethink not only wages and benefits, but also how they can improve work environments and career opportunities.”
According to the Association of Builders and Contractors (ABC), the construction industry will need to attract nearly 650,000 additional workers on top of the normal pace of hiring in 2022—just to meet the demand for labor.
ABC Chief Economist Anirban Basu said, “It’s the lack of skilled workers as much as it is the lack of bodies in the context of construction. With infrastructure spending set to rise and construction workers retiring at a rapid rate, skills shortages are likely to worsen going forward.” Basu prefers to call what the industry is facing “a skills shortage.”
Basu added that “When construction company CEOs raise wages, they become less competitive.” Construction companies can’t pass on higher expenses to consumers like retailers or restaurants, for instance, Basu noted. In addition, construction companies win projects by offering the lowest bid.
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The labor shortage is nothing new for this industry