A closer look: BuildZoom Report on construction labor trends

Drive-thru:

  • A report by BuildZoom shows the continued construction labor shortage is primarily caused by the lack of younger workers entering the industry.
  • The downward trend of younger workers entering construction continues even as the employment rate has recovered and continued to rise.
  • Immigration and technology are not providing solutions to the problem due to the political environment and lack of technological advances.

BuildZoom, a referral service for contractors, released the results of a study this July which provided an in-depth look at the continuing construction labor shortage. Analyzing data from a labor market intelligence firm, Dr. Issi Romem, the company’s chief economist, offers a detailed summary of the reasons for such a slow labor recovery and explains which trades have suffered the biggest impact.

The root cause of the slow recovery

Most home builders and economists focus on three elements when examining the cause of the slower-than-expected construction recovery:

  • The rising costs of building materials.
  • Difficulty accessing desirable land.
  • A shortage of construction labor.

The study sheds some light on that final point. The construction labor shortage doesn’t appear to have the same severity in all areas. Nevertheless, the analysis shows a common thread present—regardless of how well a region seems to have recovered from the building bust.

A young problem

While the severity of the labor shortage is worse in some states with costly real estate and materials, less expensive states have still been hit relatively hard. Also, the impact isn’t the same from state to state, regardless of land and material costs. In fact, housing price accounts for less than half of the variation in labor shortage severity.

A more insidious reason for the continued difficulty in finding workers is seen when the age of the available workers is taken into account.

Why?

Because although employment rates in construction have recovered, the workforce has not. Labor participation has fallen from a high of 11.5 million in 2005 to 10.2 million in 2016, despite the economic recovery.

Many of the workers who left the industry never came back. However, a more insidious reason for the continued difficulty in hiring talent is seen when the age of the available workers is taken under consideration. According to the data, states hit hardest during the building bust are also the ones that lost a larger proportion of young workers.

  • Younger workers were more likely to lose construction jobs during the bust since they lacked the years of experience and were perceived as less valuable.
  • Even though the housing market and construction employment (as in job availability) show full recovery, young workers haven’t returned.

The pipeline of incoming tradespeople and construction workers has now slowed to a dribble.

This loss cannot be offset with the older generation, many of whom are retiring. Unfortunately, the pipeline of incoming tradespeople and construction workers has now slowed to a dribble.

Why aren’t young people (re)entering the industry?

It turns out there are a couple of issues the industry faces with respect to building a more youthful generation of employees. First of all, the availability of training has decreased. For instance, high schools have abandoned vocational training in favor of courses heavy in STEM education. Also, there are fewer technical colleges and training organizations (some of which were offered by unions) than before.

The other is that the construction industry as a whole has failed to convince teenagers and young adults that such work is a viable and desirable way to earn a living.

The pool of young people who might have been mentored by construction-working family members—and could have brought their own younger relatives and friends into the business—has dried up.

Unions, training institutions, and construction associations seemed to have been unable to market the trades and blue-collar work effectively. Moreover, the number of young people that might have followed in the footsteps of their construction-working parents and family members—and could have brought their own younger relatives and friends into the business—fell off when the work dried up.

The prognosis for recovery appears poor

So far there doesn’t seem to be a pat answer to the downward trend in construction labor participation. As Dr. Ramem states, immigration could be one pool of ready labor, but the current political environment makes this solution difficult to apply.

Technology hasn’t provided any answers either. Nevertheless, the perception that many jobs will be eliminated by some future labor-saving device may be acting as a deterrent to entry as well.

The realization that the construction labor shortage appears to be one of a lack of younger workers is disturbing. However, defining a problem is the first step toward solving it. Now we have a better idea of where to concentrate our efforts to change the trend.

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