FIVE SOLUTIONS FOR THE SKILLED LABOR SHORTAGE IN THE BUILDING INDUSTRY
If you’re like 85% of top homebuilders surveyed by the NAHB, your top priority in 2024 is recruiting skilled labor. Approximately 723,000 jobs need to be filled this year — which will require recruiting, training and retaining dedicated employees. Left unaddressed, this critical shortage can trigger a domino effect. Labor costs, workloads and legal risks could increase while quality, efficiency and client satisfaction can decrease.
Effectively implementing solutions to address the skilled labor shortage requires understanding the complex causes that led to it and continue to exacerbate it.
CHALLENGE #1: STAGNANT WAGES
Residential building workers’ year-over-year hourly wages grew 8% nationally at the end of 2021. Since then, the pace of wage growth has dropped below 3% according to the Bureau of Labor Statistics’ most recent report.
Last year, average hourly earnings did increase to $29.87 (from $29.16), but they did not keep up with inflation. Growth is expected to continue through 2024 to keep up with workers’ standard of living.
CHALLENGE #2: ECONOMIC CONDITIONS
Despite a 3.7% annual inflation rate and high mortgage rates, Americans are still buying homes. A record-breaking 30% of homes on the market are new construction, and research reveals the following trends year over year:
- New home sales have increased 40%
- Starts are accelerating by about 15%
- Prices are up 2%
- Spending is up 1% (with single-digit growth for 10 of the 18 building product categories)
Find efficient ways to deliver what budget-conscious homebuyers want. “As material costs have gone up … people are saying, ‘I might do 10% less … maybe not the four-car, just a three-car garage. And maybe I won’t get the massive walk-in closet,’” explains CEO of Risinger Build and Founder of The Build Show Network, Matt Risinger.
But that doesn’t have to mean sacrificing basic desired functions, according to President and CEO of Front Light Building, Matt Green: “You can get the same things in 2,500 square feet as you can into 3,200 … by building smarter with better design flow.”
Forbes predicts high demand for smaller single-family housing like purpose-built townhomes, duplexes, quads and cottages on a single plat of land. According to Deloitte, this shift in demand will require connecting construction sites with prefabrication and warehouse facilities through command centers to drive efficiency.
CHALLENGE #3: OPERATIONAL INEFFICIENCIES
Homebuilders across the country are still grappling with these long-term issues:
- Supply Chain Disruptions: It’s difficult enough to work around persistent material shortages and delivery delays. If your design facilities are not yet digitally integrated with your construction sites, document storage, material estimates ordering, delivery status and job scheduling are not being managed optimally. That means more labor hours wasted (possibly even your own).
- Poor Communication: When your staff, trades, suppliers and homebuyers aren’t on the same page, you’re likely to waste materials, time and energy. And decentralized documents can lead to budget overruns and non-compliance penalties.
- Inefficient Materials: Are theft, waste, misuse or takeoff errors costing you hours, or even days, of extra labor expenses? Traditional stick frame materials commonly lead to waste while increasing your need for workers, their jobsite risks and your EPO volumes.
To increase your productivity so you can afford those higher wages, try reassessing how your company is doing in these areas:
Supply Chain Management:
Is your crew still waiting around for deliveries? Are damaged leftovers increasing worker risk and jeopardizing your budget? Are your trades using leftover lumber inappropriately just because it’s there? Don’t settle for the nearest supplier — find one that offers on-time, in-full delivery guarantees.
Communication:
How do you take homebuilding from chaotic chore to creative collaboration? “Digital tools lead to savings, big time — less waste and less error in the field,” says Risinger. More importantly, it saves time and money for your customers: “We take their plan from 2D and bring it to a digital twin, a 3D immersive environment where they can see, touch and feel what they’ve designed … then make any changes. We have better success rates when we do that prior to construction,” Green explains.
Choice of Materials:
Make sure your choice of materials isn’t forcing you to hire extra crew. While manufactured components may cost a bit more up front, building with them can save you much more in the long run, according to BFS Sales Manager Jon Coulombe: “When you use components like roof trusses, wall panels and open web floors, you only need to hire one carpenter and four unskilled laborers.”
Strategically chosen digital tools can also help you:
- Streamline your workforce management
- Reduce your need for manual labor
- Integrate your construction sites with your offices and design teams
- Secure your documents and payments to maintain accurate financials
CHALLENGE #4: RETIREMENT OF THE MOST SKILLED TALENT POOL
Have you been seeing more gray hair on your jobsites in recent years? You’re not alone. Nearly half of America’s skilled trade workers are preparing to retire. Only about 10% of industry workers are under age 25, while burnout is driving an average 58.4% turnover rate. As the highly skilled retire, fewer 18-to-25-year-olds are joining the industry to replace them.
Promote the Hard Facts
Student debt is rising, and only two-thirds of degreed graduates say it was worth it. Meanwhile, the highest-paying construction jobs in 2023 paid average salaries above $70,000. The industry boasts the happiest workforce where workers are most likely to recommend their employer, and industry surveys find that 83% of tradespeople are somewhat or extremely satisfied with their jobs.
Provide Apprenticeships
Young people want skills. That’s why Associated Builders and Contractors is recruiting, educating and upskilling workers via apprenticeship, craft and management programs across 20 construction occupations. You can do the same.
Connect with Colleges and Trade Schools
Find the top building and construction colleges in your area, reach out to career counselors, attend job fairs and discover motivated prospects.
Reach Out to Community Youth
Activate the next generation of builders by hosting workshops for middle and high school students, Scout troops, sports clubs, park districts and trade unions.
CHALLENGE #5: INDUSTRY PERCEPTION
The construction worker stereotype is a hard one to break. You could never have built the homes your customers love without highly specialized skills and trade-specific knowledge.
Yet American schools have eliminated courses for the mechanically minded. Unfortunately, 48% of the 18-to-25-year-olds believe the industry doesn’t provide the flexibility or career growth they’re seeking. Also, as Risinger puts it, “They want to do work that matters, to make a difference in the world,” which, they don’t realize, is exactly what homebuilders do every day.
SOLUTION: CHANGE THE PERCEPTION OF THE INDUSTRY
To dispel the construction industry myths in the minds of Gen Z, Gen X and Millennials, meet them where they are and be open to recruiting new demographics.
In recruiting, avoid terminology that may be impacted by stereotypes. Consider listing an opening for a “craft professional” as opposed to a “construction worker” and highlight the most enticing job details in the listing. Explain that these jobs offer more than a lucrative career path.
What may be easier than convincing 18-to-25-year-old white males to join the industry? Focusing on other demographics with an affinity for construction:
- Women. Women make up 10.9% of the industry workforce, and their job positions are expanding beyond sales and management thanks to training and mentorship.
- Veterans. Every year approximately 200,000 vets transition out of the military, yet they make up only 7% of the construction workforce. “Our men and women formerly of the armed services are disciplined. They’re used to taking orders. They’re used to being on time and having a customer. An incredible, untapped market,” explains Risinger.
- Latino immigrants. They already make up 30% of the national and 50% of the Texas, California and Florida workforce, and can help train younger bilingual Latinos, who can be recruited on job boards like HispanicConstructionJobs.com. Diverse teams have lower turnover and are 33% more likely to outperform competitors, as they tend to be more engaged and innovative while elevating brand reputation.
- Second-chancers. These highly motivated recruits tend to exhibit overwhelming loyalty, and employers who hire, train and retain them may be eligible for federal and state tax credits.
BFS’s custom homebuilder specialists have helped countless builders implement meaningful solutions to address today’s toughest challenges – including labor shortages, increased cycle times and housing affordability. They can do the same for you.