Construction Jobs on the Rise, Despite Chronic Labor Shortage

The industry should re-examine training and benefits to attract Millennial workers

Roy Maurer By Roy Maurer March 7, 2017
Construction Jobs on the Rise, Despite Chronic Labor Shortage

Construction employment in January 2017 hit its highest level since the Great Recession, though the industry continues to suffer from a severe labor shortage, lack of projects and a growing skills gap. The growth of the Millennial workforce in particular has caused employers to re-examine the benefits and culture they offer.

Employment in construction rose by approximately 36,000 jobs in the first month of the year, totaling 6.8 million jobs in January and representing a 2.6 percent increase from a year ago, according to the Bureau of Labor Statistics. That growth included 20,300 jobs in residential construction, up 5 percent from one year ago, and 14,900 nonresidential construction positions, an uptick of 1 percent from January 2016. The construction sector added a total of 170,000 jobs in 2016.

"The recent increase in construction jobs is, in part, a rebound after the slowdown of the housing bust, when home building fell to extraordinarily low levels," said Jed Kolko, chief economist for job site Indeed. "Single-family home construction is still low by historical standards, so the growth in construction jobs is likely to continue but is unlikely to be sustained as home construction gets closer to historically normal levels."

Hiring in the near term is expected to keep on rising, according to new research from Associated General Contractors of America (AGC), an Arlington, Va.-based trade group for the construction industry, which reported that 73 percent of the 1,281 participating contractors surveyed said they planned to add to their head count this year.

"This report aligns with what contractors have been telling the association—that the construction industry is still eager to add workers," said Ken Simonson, AGC chief economist. The employment gains would be even larger if there were enough qualified workers available to hire, he said. The AGC report showed that employers are having trouble filling hourly and salaried positions. End-of-month openings in construction have been at 17-year highs, according to the study.

Many construction workers were scared off by the drastic declines in construction jobs during the Great Recession years, said Josh Wright, chief economist for iCIMS, a talent acquisition software company based in Matawan, N.J. And they haven't yet come back.

"We could see a jump in demand for construction labor if President [Donald] Trump follows through on some of his infrastructure proposals," Kolko said. "However, the construction unemployment rate is back down to pre-recession levels, so wage increases might be necessary to bring workers back to construction jobs."

Contractors have raised average hourly earnings by 3.2 percent over the past year to $28.52 per hour, higher than the rate of 2.5 percent for all private-sector workers in 2016 and nearly 10 percent more per hour than the private-sector average of $26.

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Lack of Qualified Workers, Investment in Construction

Despite the overall growth in construction employment in 2016, industry jobs actually declined in 110 out of 358 metro areas during that period and flatlined in another 65, according to an analysis of federal employment data conducted by AGC. The number of construction jobs increased in 183 metro areas.

"There are two main reasons so few areas added construction jobs last year—they couldn't find enough new workers to hire or they couldn't find enough work to require new hiring," Simonson said. "In some markets, the solution is more workforce development measures, while other markets need new demand for construction before firms will begin adding jobs."

The Houston area experienced the largest construction job losses from December 2015 to December 2016 (-11,200 jobs), followed by the Westchester, N.Y., area (-5,500 jobs) and the Los Angeles area (-5,200 jobs).

The Denver metropolitan area added the most jobs over that period (10,400), followed by the Orlando, Fla., area (9,700), the Las Vegas area (8,700) and the Tampa-St. Petersburg, Fla., area (8,700). The number of metro areas with year-over-year job increases was the lowest since September 2012.

Qualified applicants are also hard to come by. The AGC survey found that more employers anticipate difficulty in finding qualified help in 2017 than they did last year.

"There are a lot of applicants for construction programs that simply lack any of the skills firms would want in a new worker," said Brian Turmail, AGC's senior executive director of public affairs. "These include not knowing how to operate safely on a construction site, how to use their personal protective equipment, how to operate most tools safely and how to operate heavy equipment. Many also lack the technology skills needed to interact with software like building information modeling commonly found on many jobsites."

Re-examine Benefits, Training to Attract Millennial Workers

AGC has been aggressively lobbying Congress to support career and skilled trades training.

"Chief among our needs is boosting funding for, and adding flexibility to, the federal Carl D. Perkins Career and Technical Education program," Turmail said. "This would make it easier for more high schools to set up programs that provide valuable pre-construction skills. Having more of these programs will both better prepare our future workforce and serve as a powerful recruiting tool for getting more high school students to see construction as a high-paying career opportunity."

Angelica Rosales, director of business development and public affairs for J.A.R. Construction in El Paso, Texas, explained that students should know salaries have improved and higher education is available in the construction industry. "The annual salary of an experienced concrete foreman has increased throughout the years, up to $80,000 in 2017," she said. "And several universities are now offering degrees in construction management, bringing together a traditional trade with higher education and STEM [science, technology, engineering and mathematics]."

In addition, public-sector agencies have refocused their attention on implementing apprenticeship programs for skilled trades. "We currently have projects with the City of El Paso and the Texas Department of Transportation," Rosales said. "Both agencies require participation in apprenticeship programs on various projects for various trades."

The growth of the Millennial workforce in particular has caused employers to re-examine the benefits and culture they offer.

"It is a common misunderstanding that Millennials all want to work in Silicon Valley enjoying over-the-top perks like nap pods and free gourmet meals," said Susan Vitale, chief marketing officer at iCIMS. "Millennials value flexible work schedules, advancement opportunities and a competitive salary above all. They want to hear about employees like them being groomed for the next step in their career."

J.A.R. Construction began offering student debt assistance in 2016 as a way to attract Millennial workers. "As more students are coming out of college with student debt, we found this benefit to be more attractive to Millennials than other benefits typically offered, such as a 401(k)," Rosales said.

The flexible work program at Shawmut Design and Construction, a national construction management firm headquartered in Boston, has been credited with increasing employee satisfaction and retention at the company since it was initiated in 2016.

The flexible work program comprises compressed workweeks, job sharing, part-time hours, shift sharing and telecommuting, said Marianne Monte, chief people officer at Shawmut.

Vitale recommended employers use their careers sites to showcase employee success stories and use social media to post photos highlighting the unique perks of the company.

"Eighty-four percent of college seniors say an [employer's] active social media presence would make them more likely to apply to a job," she said. "This gives potential candidates a peek inside what it's like to work for your company so they can envision themselves there. Photos of employees working outside feeling the sunshine and breathing fresh air could be enticing to many Millennial job seekers, particularly when compared to being stuck in an office cubicle."

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