A Healthy Economy
The United States is currently enjoying one of the longest job growth streaks in its history. As of February, 2017 unemployment stood 4.7%, which continues a trend of sub 5% unemployment throughout 2016. At an unemployment rate of 5% or less, it’s generally understood that anyone who’s able and willing to work has found a job. So if this is true, most industries must have plenty of workers, right? Not so fast.
A Construction Skilled Labor Shortage
The construction industry – long a bellwether of overall economic health – has seen year-over-year growth in construction starts in each of the last four years. This growth has spawned a corresponding jump in construction hiring according to a recent Job Openings and Labor Turnover (JOLT) report. But unlike the economy at large where growth and job opening signal health, this new data underscores the uncertain future for America’s construction industry.
In 2015 the Associated General Contractors of America commissioned a report surveying 1,358 U.S. Contractors. The results neatly capture the problem the industry faces:
“… 86 percent said they are having difficulty filling hourly craft or salaried professional positions. Seventy-nine percent of responding firms nationwide are having a hard time filling one or more of the 21 hourly craft professional positions, particularly carpenters (73 percent of firms that employ carpenters report difficulty), sheet metal installers (65 percent) and concrete workers (63 percent).”
So during one of the longest job growths streaks in the country’s history, in an economy enjoying full employment, the majority of contractors report difficulty finding qualified workers. So what gives? A closer look at the jobs data shows us why.
Jobs Data Shows Aging Workforce?
By now we all know the role housing played in the Great Recession and in many ways, the construction industry bore the brunt of the subsequent losses. Between 2007 and 2011 – during the worst years of the housing crash – approximately 2 million skilled tradespeople left the industry. Those workers didn’t just drop out of the workforce. They went back to school, acquired new skills, and moved on to other lines of work. As a result, the industry has struggled to replace those lost jobs, even as the sector heated up over the last few year.
To make matters worse, the construction workers still on the job are a rapidly aging group. Data from the Bureau of Labor Statistics (BLS) shows the median age of a U.S. construction worker is between 41 & 43 depending on their exact job. The same data reveals that more than half of the total construction workforce is over 35, with more than a third – close to 3 million workers overall – nearing retirement age. The construction workforce under the age of 35 might be enough to replace all those retiring workers alone, but BLS data also predicts the construction sector will grow by nearly 15% – adding 800k new jobs – through 2024.
So we have a sector struggling to return to prerecession employment levels, currently experiencing heavy demand, with more growth predicted for much of the next ten years. Alongside it, there’s a rapidly aging workforce that lacks the young workers necessary to fill all the new jobs. Therein lies the skilled labor shortage.
How Does This Shortage Affect the Construction & Remodeling Industries
Like many other aspects of our economic system, the job market is subject to the laws of supply and demand. A growing number of jobs with fewer workers available to fill them means wages rise as competition increases for qualified candidates. This results in higher labor costs that are ultimately passed down to consumers. In addition, a smaller hiring pool makes it more difficult for construction contractors to scale up to meet increased demand. As a result, new projects often face long delays. This all spells trouble for the long-term health of the construction sector, and there’s no easy solution in sight.
How Does this Problem Get Fixed?
Many people point to the decline in trade school attendance and trade school education in high schools as a source of this current predicament. As a counter, many industry associations are sponsoring efforts to encourage younger people to consider a future in the trades. They hope more younger workers will be enticed by the promise of long-term stability and comparatively higher wages. The available data certainly underscores this argument.
Douglah Designs Sees the Impact
As a company dedicated to luxury home remodeling, Douglah Designs understands how important skilled tradespeople are to the health of our industry. That’s why we employ our own in-house team of construction managers and skilled installers. It’s the only way we can guarantee your remodeling job will be completed on budget and under the timeline we’ve promised. If you’re interested in learning more about our process, please feel free to contact us.
We all benefit from a construction industry that’s able to provide fast service for a competitive price but unfortunately, current trends are discouraging. If you know a younger person considering their own future career path, encourage them to consider the trades. There’s plenty of opportunity and the future health of the industry – and the nation – might depend on people just like them.