When the global economy collapsed in 2008, the construction industry was hit hard. The construction industry found itself in a situation where it had to lay workers off for extended periods of time and cancel billions of dollars in scheduled projects. The end result was that those workers went off to work in other fields, and many of the skilled workers have opted not to come back to construction.
Shortage Of Skilled Labor By The Numbers
In 2016, the numbers when it comes to construction employment are extremely deceiving, especially when it comes to skilled labor. Between January and March of 2016, the construction industry added 68,000 jobs in total, which is a gain over the same period last year. But between April and August, it is said that the construction industry lost 25,000 net jobs. These statistics on their own can be intimidating, but they do not tell the whole story.
Nearly 70 percent of construction managers surveyed in 2016 said that they are having a difficult time finding skilled labor of any kind to work on new projects. The labor shortage for skilled workers means that construction companies are being forced to pull back on the number of projects they bid on and take. That forces construction companies to not hire new laborers of any kind, and even lay off laborers until new projects can be found. It is the lack of skilled labor that is causing the drop in construction employment figures, and the construction industry needs to find solutions quickly.
The Effects Of A Lack Of Preparation In Construction
While the construction industry was obviously hoping for an economic recovery, it has started to become obvious that the industry was not prepared for a recovery to actually happen. The massive labor shortage that existed as a result of the 2008 collapse was never addressed by the industry. Furthermore, companies were forced to fight over the workers who were available when the recovery started to happen.
Instead of training workers throughout the initial stages of the recovery to take on skilled tasks, the construction industry hoped that training would happen some other way. As a result, while New York City added 179,000 new jobs from 2013 to 2015 that paid between $30,000 and $60,000 annually, the construction industry’s wage growth was flat. As the middle class in New York City started to make a comeback, the construction industry was unable to keep pace and now there are major losses happening in every part of the construction world.
What Could Be Next For The Construction Industry?
It is interesting to note that there is still a large gap between what skilled workers learn through formal education, and the types of skills actually needed. When asked about the training they provide to skilled labor in a variety of fields, 96 percent of educators said that they feel that the training they offer prepares workers for real work situations. Meanwhile, only 33 percent of business owners agree with those comments.
If construction companies are waiting for other factions to train skilled workers, then that is another bottleneck in the system. Since these newly trained workers are not learning the real skills they need to step into a skilled labor job, then the construction industry falls further and further behind in its ability to meet labor needs for future projects.
The results could be another construction labor shortage in the near future that could threaten to cause losses to the construction industry at a time when other business sectors are seeing significant growth.
Is The Shortage Being Resolved?
There are two areas where the construction industry is notoriously slow; the adoption of new technology, and training workers. While most construction companies offer basic training for all new laborers, most laborers learn the details of their craft on the job.
As for skilled laborers, most unions offer skilled laborer training courses that can help get a worker ready to take on the jobs that need to be done. But the decline of the unions means that there are not nearly enough new workers being trained to meet the growing demands of companies. There is also the problem of time, as it can take a new construction worker years to be properly certified and licensed to take on a skilled position.
Short And Long Term Solutions To Solve The Problem
The construction industry has taken on two short-term fixes for this problem, and one long-term solution. Short-term solution number one has approximately 48 percent of all construction companies offering higher wages for experienced skilled workers. While this may help some companies, it will hurt others that cannot compete with the wages larger companies are offering.
Short-term solution number two has companies offering more over time to their current roster of skilled workers. Once again, this will get the job done for now, but more over time increases the potential for injuries. Workers asked to put in more hours on a regular basis may love the bigger paychecks, but they may also start to get burned out after a while and could start looking for another line of work.
The long-term solution that approximately 48 percent of all construction companies are using is to enhance their in-house training programs. This sounds like the perfect solution but, as mentioned earlier, it takes a long time to properly train a skilled worker. Construction companies are being forced to take on the additional costs of training new workers. This is happening at a time when they are also having to turn down work because of the general labor shortage in the industry.
If the construction industry had properly planned for the recovery, then there would already be a pool of skilled workers to pull from. But when workers were moving on to other fields without the construction industry making any attempt to replace them, the foundation was laid for the labor shortage the industry experiences right now.
So Is There Really A Decline In Skilled Labor?
The simple fact is that there was a very limited pool of skilled labor for construction companies to pull from when the recovery from 2008 began, and the industry did nothing to replace the skilled labor that was lost. In 2015, the borough of Queens had more building permits issued than Manhattan. The construction activity in 2015 was also well beyond anything the city of New York had seen since 2010. To get that work done, the construction industry depleted its pool of skilled workers, and that has resulted in a skilled labor shortage.
As construction companies continue to try and keep pace with the growing demand for new projects, they are finding that the lack of skilled workers is causing a crisis. More workers are now getting laid off at a time when other industries are seeing significant growth. The reason for the decline in construction employment is the considerable lack of skilled workers needed to get projects done.
The wage war that has broken out throughout the construction industry is inevitably going to hurt the smaller contractors. The construction world could see itself plunged back into the same kind of chaos it experienced in the 2008 economic collapse. The difference with this particular crisis is that it is one created by the lack of foresight on the part of construction companies when it comes to their labor needs.
Can the construction industry rebound and fill its need for skilled workers? The hope is that the increase in in-house training will help to create a new pool of skilled workers that companies can draw from. This shortage of skilled workers may also increase the need for union labor on private jobs, which will affect costs. Whatever the construction industry decides to do about the decline in skilled labor, it needs to be done soon.