Survey: Contractors Talk Labor Supply, Demand
According to an Outlook survey issued last month by the Associated General Contractors of America and Sage Construction and Real Estate, three out of four construction firms plan to hire more workers this year in order to meet high demands for projects. The survey also reveals that the same contractors still worry about labor supply and quality of work as well.
The survey is based off nearly 1,000 firms from 48 states where contractors answered more than 20 questions about their hiring, workforce, business and information technology plans.
Despite signs of a slowing economy, the AGC and Sage reports via press release that contractors still expect demands to expand in every market segment as they plan to increase compensation and adopt productivity-boosting technologies to cope with worker shortages.
“Contractors are very optimistic about demand for construction in 2020,” said Stephen E. Sandherr, the association's Chief Executive Officer. “At the same time, many construction executives are troubled by labor shortages and the impacts those shortages are having on operations, training and safety programs, and bottom lines.”
The percentage of respondents who expect a market segment to expand exceeds the percentage who expect it to contract for all 13 categories of projects included in the survey. For every segment, 27-36% of respondents expect an increase compared to 2019 in the dollar value of projects they compete for.
However, 11-21% of respondents foresee less work available in 2020. The difference between the positive and negative responses—the net reading—was between 8% and 25% for every category.
"Overall, the level of optimism was somewhat higher than in the 2019 hiring and outlook survey, in which net positive readings ranged from 5-17%," the survey noted.
Some of the net positive readings in which workers were optimistic about the outcome of that category include:
Due to these predictions, most contractors plan to add staff this year in order to keep pace with the industry. As reported in the release, 75% of firms plan to increase headcount this year, similar to the 77% with this expectation at the start of 2019 and 75% at the start of 2018. However, 52% of firms report their expansion plans will only increase the size of their firm by 10% or less, while 19% of respondents plan to increase headcount by 11-25% and only 5% of respondents plan to increase employment by more than 25%.
Unfortunately, with the intent to expand headcounts, 81% of respondents report that they are experiencing issues while attempting to fill salaried and hourly craft positions. As a result of these issues, 41% of firms are putting higher prices into new bids and contracts, while 40% report projects have taken longer than they anticipated and 23% report putting longer completion times into their bids or contracts.
In an attempt to bridge the gap, the association reports that construction firms have been investing more in training programs for current and new workers, stating that last year, 42% of firms revamped initiatives to recruit labor. Additionally, 32% have increased funding for technical education programs and 29% have restructured or changed programming for current skilled labor recruits.
“Firms are adopting a variety of approaches to replace workers or allow for use of workers with less experience or training than before,” said Ken Simonson, the association's Chief Economist. Simonson noted that 32% of respondents report their firms are investing in labor-saving equipment, including drones, robots and 3D printers.
Officials with Sage add that 46% of respondents will increase their information technology segments this year, with 30% planning to increase investments in project management software, 25% planning to invest in document management software and 23% wanting to invest in fleet tracking/management software.
“We’re seeing an increasing number of firms embrace technology, especially mobile technologies in the field, as a way to help increase efficiencies and achieve business objectives,” said Dustin Anderson, Vice President of Sage Construction and Real Estate. “Technology will continue to play an important role in bridging the gap between growing industry demand, more complex projects and a less experienced workforce.”
Outside of IT practices, 28% of respondents are using methods to reduce onsite worktime, including lean construction, building information modeling or offsite pre-fabrication.
As a conclusion of the survey, Sandherr has also urged Congress to pass a temporary visa program for construction workers, protect the legal status of workers in the country as part of the Temporary Protected Status program and advance comprehensive immigration reform.
“A thriving, successful and diverse construction industry is the essential foundation for America’s continued economic prosperity, security and well-being,” Sandherr said. “Investing in infrastructure, making needed investments in career and technical education and reforming the immigration system will ensure that contractors can keep pace with strong demand for their services.”
Results from the Outlook survey have since been detailed in the Strong Demand for Work Amid Stronger Demand for Workers: The 2020 Construction Hiring and Business Outlook Report.