AGC Report Highlights Severity of the Labor Shortage

September 4th, 2018 by Jordan Scott

AGC Report Highlights Severity of the Labor Shortage

The labor shortage is impacting the fenestration industry nationally, but the problem isn’t unique to these industries. Eighty percent of firms in the U.S. are having trouble finding craft workers, according to new data from the Associated General Contractors (AGC) of America and Autodesk, showing the severity of the labor shortage nationwide.

According to the 2018 Workforce Survey Results, which questioned more than 2,500 respondents, 65 percent of firms reported finding it more difficult to fill installer positions compared to one year ago. Sixty-two percent of firms found it more difficult to fill ironworker positions compared to one year ago. The five toughest craft positions to fill are pipelayers, sheet metal workers, carpenter, concrete workers and pipefitters/welders.

Association officials said shortages pose a significant risk to future economic growth and they released a new workforce development plan to solve the growing problem.

“Labor shortages in the construction industry remain significant and widespread,” says Ken Simonson, AGC’s chief economist. “The best way to encourage continued economic growth, make it easier to rebuild aging infrastructure and place more young adults into high-paying careers is to address construction workforce shortages.”

Forty-seven percent of respondents rated the adequacy of the local pipeline for supplying craft personnel who are well trained/skilled as poor. Only 15 percent found it to be good or excellent. Of the total respondents, 23 percent found the local pipeline poor for supplying craft personnel who are able to pass drug tests and 15 percent found it poor for personnel able to pass background checks. Around half of respondents reported that the pipeline was fair for both attributes.

Craft worker shortages are severe in all four regions of the country. In the West and South, 81 percent of contractors reported having a hard time filling hourly craft positions, almost identical to the 80 percent rate in the Midwest and 77 percent rate in the Northeast.

The labor shortages come as demand for construction continues to grow.

“Construction employment expanded between July 2017 and July 2018 in 281 out of 358 metro areas that the association tracks—more than three out of four—according to a new analysis of federal construction employment data,” says Simonson. “Growing demand for construction workers helps explain why 81 percent of firms report it will continue to be hard, or get harder, to find hourly craft workers this year.”

Many contractors reported losing hourly craft personnel to other employers. Fifty-one percent said they lost employees to other construction firms and a quarter of contractors reported losing workers to other industries. Thirty-six percent of contractors reported that they were not losing hourly craft workers to other employers.

In an effort to increase hiring of hourly craft positions, 62 percent of contractors increased their base pay rates, while 25 percent provided incentives and bonuses. Around a quarter of contractors reported increasing their portion of benefit contributions and/or improved employee benefits.

Methods to reduce onsite worktime such as lean construction and building information modeling (BIM); labor-saving equipment such as drones, robots or 3-D printers; and added specialists such as architects or BIM personnel are some ways contractors are replacing workers or skills due to the continued labor shortage.

Forty-seven percent of firms report they have put higher prices on their bids and 44 percent report that already-underway projects cost more because of labor shortages. Forty-six percent report it takes longer than originally scheduled to complete projects and 27 percent report they are putting longer completion times into their bids because of workforce shortages.

“With a rise in the share of firms having trouble finding skilled craft workers, it’s evident that we need to reskill the future workforce,” says Sarah Hodges, senior director, construction business line at Autodesk. “Technology can help bridge this gap, and more firms are bringing training in-house to implement digital strategies such as building information modeling, or BIM, to ease staffing challenges and train the next generation of industry professionals.”

Hodges says the survey is a call to action for the industry at large.

“It’s on us to think about ways we can provide better access to our tools so that tools and training bridge the gap to meet demand. We need to really look at not just automating, but enhancing the ways we problem solve,” she says. “We want to be a technology and business partner to the industry at large by being a change agent.”

The association also released a new Workforce Development Plan that identifies steps federal officials should take to support construction workforce development, including doubling the funding for career and technical education over five years and allowing more people with construction skills to legally enter the country. The plan also outlines new recruiting steps the association is taking, including launching a targeted digital advertising recruiting campaign and investing in innovative workforce solutions.

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