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HomeEducationConstruction labor shortage to top 500,000 in 2023

Construction labor shortage to top 500,000 in 2023

Demand remains high for construction skills

Carol Johnson, Southern Indiana  Business Report

The catchy tag line “If you build it, they will come” has been popular for years, but these days it’s more like, “If they come, who will build it?”

A construction industry labor shortage that has persisted since 1999 has only gotten worse as more workers approach retirement age. America’s construction industry will need to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor, according to a proprietary model developed by Associated Builders and Contractors.

Whether it’s large commercial and residential projects or home remodeling jobs, demand far outweighs the supply of skilled workers.  

As a professor of construction technology at Vincennes University, Rich Welage fields quite a few inquiries from construction firms looking to recruit students to come work for them. 

Unfortunately, Welage can’t always oblige.

“I tell these employers that our Construction Technology program at Vincennes University is experiencing the same problem as they are – inability to attract a fair number of good young people,” Welage said. “Even many of the trade unions are experiencing difficulty in attracting young applicants today, in spite of the good pay and benefits that they offer.”

Students enrolled in Vincennes University’s Construction Technology program are in demand by companies looking for skilled workers.

“The construction industry must recruit hundreds of thousands of qualified, skilled construction professionals each year to build the places where we live, work, play, worship, learn and heal,” said Michael Bellaman, ABC president and CEO. “As the demand for construction services remains high, filling these roles with skilled craft professionals is vital to America’s economy and infrastructure rebuilding initiatives.”

In Indiana, the Indiana Construction Roundtable Foundation predicts the state will need more than 275,000 additional workers by 2026 to meet the demands of the construction industry.  The shortage is due to an aging workforce and fewer young people growing up with exposure to manual labor and how to use tools. 

Welage knows the issue all too well.

“I’ve read from more than one source in recent years that for every five workers in the construction industry who are retiring today, there is only one new young worker taking their place,” Welage said. “Do the math – how long can this go on?”

Rich Welage, Vincennes University professor

Welage said several factors have contributed to the shortage of workers. He said a national emphasis on increasing college attainment for students diverted students from vocational training, companies that offer good pay but not benefits such as health insurance and retirement and a growing number of young people who have little to no experience using tools or construction skills has shrunk the talent pool.

The construction industry also has to fight the notion of being a “last resort” career pathway. 

“For decades we have fought the stigma of being a career path for dummies, but many still see us that way,” Welage said. 

The dirty, sweaty, physical, and at times, dangerous work also makes it a challenge to attract workers.

The construction industry averaged more than 390,000 job openings per month in 2022, the highest level on record, and the industry unemployment rate of 4.6% in 2022 was the second lowest on record, higher than only the 4.5% unemployment rate observed in 2019. National payroll construction employment was 231,000 higher in December 2022 than in December 2021.

“Despite sharp increases in interest rates over the past year, the shortage of construction workers will not disappear in the near future,” said ABC Chief Economist Anirban Basu. “First, while single-family home building activity has moderated, many contractors continue to experience substantial demand from a growing number of mega-projects associated with chip manufacturing plants, clean energy facilities and infrastructure. Second, too few younger workers are entering the skilled trades, meaning this is not only a construction labor shortage but also a skills shortage.”

No shortage of work

The labor shortage covers all aspects of construction, from residential, commercial and industrial.

The shortage is beneficial for those who want to work in construction; Welage said the majority of his students all have jobs secured before they graduate. Students who work part-time with a company and then become full-time when they graduate never have to look for work upon graduating.  

“Our students all find employment, it’s just a matter of whether or not they find a job that they are content with,” Welage said. 

Henry Shetler, owner of Five Star PRO Construction LLC in Mitchell, currently has a good crew working for him, but in general, finding and retaining quality workers is an ongoing challenge.

He looks for applicants with a clean background check, some building experience and soft skills. 

“Those requirements are more difficult than you might think, when it comes to construction,” Shetler said. “It’s difficult as a small business owner because you’re either training your future competition, or you’re competing with companies that can offer good benefits. It’s hard to be upset when an employee leaves for health insurance and 401(k), though, because you want them to do the best they can for their families. I value any individual who wants to better themselves and make life better for their family. The part I dread, however, is finding their replacement.”

Five Star works mainly in the residential sector, specializing in new builds, room additions, remodels and also does some commercial work. With workers in short supply, Five Star uses sub-contractors more than in previous years. 

Finding work is not a problem. Shetler, who honed his skills while growing up in the Amish community, said he is booked up for the rest of the year.

“When I first started working construction outside of the Amish community, it was much easier to find employees than it is now. But, again, I consider myself fortunate to have the guys I have working for me. They’ve gained the experience to do what I need them to do, and they show up for the work we have. We stay very busy, with a lengthy waiting list, and that has been a blessing for me.”

Solutions

A growing immigrant population and advances in technology are potential solutions to the labor shortage. Welage said the Hispanic and migrant population has helped fill the labor gap.

“Without this group, our construction industry (and agricultural industry) would be in deep trouble,” he said. 

Advances in construction technology – drones, high resolution 3D modeling software and self-driving bulldozers and dump trucks – have the potential to attract young workers who are tech-savvy but that still leaves a void in the hands-on trade jobs that are most in demand.

Welage said the popularity of pre-fabrication and panelization in the residential sector is growing, largely due to labor issues.

“We still need workers to build these pre-fab buildings and wall panels, but the work is normally in a more controlled environment, safer, and with normal work hours,” he said.

Early exposure to working with tools and home repair is another factor contributing to the shortage. 

Welage said as year-round sports and video games fill their time, kids have less time to watch a parent clean the gutters, replace a leaky faucet or install a ceiling fan. 

The students in VU’s construction program are quite diverse, Welage said.

“I do get some students who have grown up in a family construction business or attended a building trades program while in high school, and maybe worked summers for a contractor. Other students are coming in with little to no experience,” Welage said.

The state has several high school career/vocational programs that have building trades programs, but Welage said it’s not enough to meet the demand.

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