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ABC Analysis Looks at Hiring for Worker Shortage

Tuesday, March 30, 2021

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A recently released analysis from the Associated Builders and Contractors of U.S. Bureau of Labor Statistics data has revealed that, in 2021, construction companies will need to hire 430,000 more workers than what they employed in 2020.

According to economic estimates, construction spending is likely to reach $1.45 trillion in 2021, up 1.3% from 2020. Assuming this occurs, employment demand will increase by 430,000 this year from actual employment of 7.829 million in 2020.

“According to forecasts analyzed during the COVID-19 pandemic, an impressive 430,000 more construction workers still need to be hired in 2021 to meet the demand, evidence that the construction industry is powering America’s recovery and economic engine,” said ABC President and CEO Michael Bellaman.

“ABC’s annual forecast incorporates several variables that may affect the U.S. construction spend and employment demand over the next few years. These variables, which range from inflationary pressure, rising commodity costs and other global supply chain concerns to the regulatory and legislative trajectory of a new administration and the vaccine rollout domestically and even globally, are considered in the ABC cone of probability.”

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A recently released analysis from the Associated Builders and Contractors of U.S. Bureau of Labor Statistics data has revealed that, in 2021, construction companies will need to hire 430,000 more workers than what they employed in 2020.

In 2020, COVID-19 had a substantial impact on construction activity and employment. However, last year, nominal (not adjusted for inflation) construction spending rose by 4.8% even as employment fell by 6.3%. Several factors contributed to this, including:

  • A spike in building materials and labor costs, which is attributed to shortages and supply chain disruption;
  • A change in the mix of construction work, with an increase in residential construction, a segment that saw some of the largest price increases due to an uptick lumber prices;
  • A reduction in labor supply encouraged builders to adopt more labor-saving technology faster than usual;
  • Improvement in the scheduling and logistics of building materials delivery;
  • Increased use of prefabrication and modularization; and
  • A decrease in the number of smaller, less efficient construction companies because they went out of business.

“ABC and its contractor members are working tirelessly to recruit, educate and upskill our nation’s future construction workforce, putting our money where our mouth is by investing $1.5 billion annually in workforce development initiatives to equip our craft professionals with durable and transferable skill sets. Now is the time to consider a career in construction, a vocation that offers competitive wages and ample opportunities to both begin and advance in an industry that builds the places where we work, play, worship, learn and heal,” said Bellaman.

Following the Shortage

Worry about the worker shortage has picked up steam over the last few years. A 2018 survey conducted by Autodesk and the Associated General Contractors of America indicated that 80% of contractors reported at the time difficulty filling hourly craft positions, which compose the bulk of the construction workforce. The shortage may also have a negative impact on future economic growth if it is not addressed.

Three of four U.S. regions surveyed reported that they added construction jobs within the past year. Craft worker shortages were reported in all four regions.

According to AGC economist Ken Simonson, between July 2017 and July 2018, construction employment expanded in 281 out of 358 metro areas. On a national level, 33% of respondents indicated that it would continue to be hard to hire the staff needed, 48% anticipated that difficulty would continue to increase and 17% reported no change. Only 1% reported that it would continue to be easy to hire, with the same amount saying future hiring will be easier.

Simonson noted at the time that labor market conditions are prompting firms to change how they recruit and compensate workers: 62% of construction firms increased base pay rate for hourly craft workers, 24% improved employee benefits and 25% are using incentives and bonuses to attract workers.

The AGC published results on the same survey about a year later, which still showed the 80% number.

However, that survey found that a major area of concern is that contractors are skeptical of the quality of the pipeline for recruiting and preparing new craft personnel. 45% said the local pipeline for preparing well-trained and skilled workers is poor and 26% said the pipeline for finding workers who can pass a drug test is poor.

Also in 2019, 29% of firms said that they were investing in technology to supplement worker duties: 25% of firms reported they are using cutting-edge solutions, including drones, robots and 3D printers while 23% of firms said they are taking steps to improve jobsite performance by relying on tools such as Building Information Modeling and doing more off-site prefabrication.

Some have tried to mitigate the pipeline worry. In spring 2020, the National Roofing Contractors Association launched a workforce recruitment webpage in anticipation of the COVID-19 rebound.

The webpage contains tools and resources designed to help NRCA members recruit, engage, onboard and train entry-level and transitioning employees to the roofing industry.

The page reportedly showcases opportunities to work, earn, learn and advance in the roofing industry; skilled training and certification opportunities; safety and technological advances; earnings potential and th career opportunities available across all sectors of the industry.

Finally, near the end of last year, the AGC released the report despite the COVID-19 pandemic, which saw the shortage continue despite an increase in canceled or postponed projects. This survey broken down the shortage by project type, noting:

  • Highway and transportation contractors report the greatest difficulty in filling hourly craft positions, with nearly 73% reporting an unfilled craft position on June 30; and
  • About 69% of utility infrastructure and federal and heavy construction firms had unfilled craft positions the, as well as 58% of building construction firms.

In addition:

  • 52% of all respondents report having a hard time filling some or all hourly craft positions;
  • 60% of firms had at least one unfilled hourly craft position as of June 30; and
  • 28% of respondents report difficulty filling salaried positions.

   

Tagged categories: Associated Builders and Contractors; Associated Builders and Contractors Inc. (ABC); Associated General Contractors (AGC); Economy; Good Technical Practice; Jobs; NA; National Roofing Contractors Association (NRCA); North America

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