US, Canada Witness Continued Labor Shortages
According to several reports, the construction industry in North America is continuing to undergo challenges related to supply chain disruptions, labor shortages and recruitment, among others.
While projects are still being scheduled out, some builders have been forced to defer or cancel work as they continue to address these issues.
Ongoing US Labor Trends
At the end of March, there were 415,000 construction-industry job openings reported in the United States, a jump of 69,000 (20%) from March 2021. The month hike marked the largest total for any month since the government data series was inaugurated in 2000.
In an analysis of the data released between March and April, the Associated General Contractors of America found that construction employment gained 2,000 jobs.
According to Ken Simonson, AGC’s Chief Economist, the pause in employment gains signified a shortage of qualified workers, rather than any slowdown in demand for projects. “In fact, job openings in construction hit an all-time high at the end of March, while the industry’s unemployment rate was the lowest ever recorded for April,” he said.
At the time, the report revealed that the unemployment rate among jobseekers with construction experience dropped just over 3% from 7.7% in April 2021 to 4.6% in May, the lowest April rate since the series launched. The number of unemployed construction workers fell by 304,000 or 40% to 464,000, a 22-year low for April.
The report went on to note that total construction employment inched up by 2,000 employees to 7,628,000 in April. Employment in residential construction rose by 3,800 workers, including 2,500 employed by homebuilders and multifamily general contractors and 1,300 at residential specialty trade contractors.
For the first time in eight months, nonresidential construction firms’ employment dipped by 2,000. According to the report, losses were limited to nonresidential specialty trade contractors, which shed 6,400 employees. General building contractors added 3,900 workers, while heavy and civil engineering construction firms added 500 employees.
While the labor market continued to send contractors scrambling for work, the AGC urged Washington officials to address the short- and long-term shortage with expanded work permits and asks that investments in career education, training and apprenticeship programs be increased.
More recently, AGC found in a new report that construction employment in the U.S. climbed by 13,000 in June. However, the continued plunge in jobseekers continues to leave the construction industry with a record number of unfilled positions at the end of May.
“Although nonresidential contractors were able to add employees in June, the industry needs more as demand for projects is outpacing the supply of workers,” said Simonson. “With industry unemployment at a record low for June and openings at an all-time high for May, it is clear contractors can’t fill all the positions they would like to.”
Labor Trends in Canada
In confirming what Simonson said, Chris Gower, Chief Operating Officer for PCL Constructors Inc.’s buildings group, told The Financial Post that the current labor market is one of the toughest the industry has seen, forcing his team to turn down many opportunities “simply because we don’t have the resources to manage it.”
Two years ago, Gower claims that PCL, one of the largest construction companies in Canada, would have never imagined turning down projects. “This scarcity of labor is driving up costs and it’s also making us have to have to make tough decisions," he said.
Like AGC, BuildForce Canada has been representing all sectors of the construction industry and reporting on its gains in employment, job vacancy increases and unemployment rates, among other topics.
“We certainly don’t think it’s going to get better anytime soon,” BuildForce’s Executive Director Bill Ferreira said. “The demands right now for construction services are very high, particularly in Nova Scotia, Ontario, Quebec and British Columbia, but not exclusively.”
Ferreira went on to say that the labor issue in particular is widespread among all the trades at this point. While it would have appeared that the industry in North America rebounded in 2021—now almost exceeding pre-pandemic levels—the labor force has not had the same opportunity to return and grow as quickly as what’s needed.
“Those workers that were available are all being swallowed up by the expansion in demand and so you’re seeing declining unemployment rates in the construction industry,” Ferreira said.
In a recent report by Statistics Canada, officials found that construction employers were actively looking to fill 81,500 vacant positions within the first quarter of 2022. This number is noted to be 7.1% (5,400) higher from the first quarter of 2021 and more than double that was reported in 2020.
Although many associations, agencies, unions and others in the construction industry are searching for relief, Employment and Social Development Canada predicts that demand for construction trades will likely remain high.
Citing BuildForce, ESDC pointed out that the industry in Canada would need to recruit 309,000 new construction workers over the next decade. This number is driven predominantly by the expected retirement of 259,100 workers, which make up 22% of the current labor force.
Some months ago, in the U.S., cloud-based human resources and talent acquisition solution LaborIQ, by ThinkWhy, wrote in a job forecast for construction and extraction occupations that the industry would need to expand by 3.9% (nearly 240,000 jobs) in 2022; however, growth could be thwarted by limited labor supply.
For both countries, it is reported that replacing workers typically requires several years of planning. While for many this was the plan, it’s been further noted that the pandemic has complicated many training and certification processes for new workers.
“There has to be training and it has to be subsidized because employers can’t afford excessive costs. They’re already dealing with price volatility like we’ve never seen before,” said John Mollenhauer, President and CEO of the Toronto Construction Association. “We’ve got ridiculously high inflation. We’ve got supply chain issues. It’s so superheated that it isn’t easily solvable.”