Tackling the Construction Labor Shortage
Three Strategies to Address a Perennial Problem
Understanding the Labor Shortage Paradigm
Every year, industry professionals speculate on what trends will impact roofing contractors, and the same issue tops the chart of industry pain points: The labor shortage. With 89 percent of construction firms facing talent shortages and 90 percent of roofing contractors, specifically, designating finding qualified workers as an impactful issue, this is a problem the industry cannot afford to ignore. 1,2
A Dismantled Workforce
The problem of the construction labor shortage began more than a decade ago and was exacerbated by The Great Recession. The construction industry eliminated nearly 2.3 million jobs—more than 40 percent of its work force— between April 2006 and January 2011 and many of those workers simply never returned.3 As of 2015, there were three times as many construction job openings as there were laborers to fill them—1.5 million needed positions versus 525,000 actual workers.4 While that employment gap has narrowed, data from the Bureau of Labor Statistics shows that 210,000 construction jobs were unfilled in the United States alone as of November 2017.5
The market for construction projects has improved in recent years, but the problem of the labor shortage still looms large. Beyond the loss of contractors who never returned to the industry once the economy improved, there is also the problem of a large wave of retirements beginning to diminish the total workforce. There are around 4.6 million workers over the age of 45 in the construction workforce, accounting for more than 44 percent of the workforce—many of whom will consider retiring in the next 10 years.6
Millennials, meanwhile, are looking elsewhere for jobs. The Millennial generation is expected to comprise half the global workforce by 2020, but many do not have experience or interest in the construction industry.7 Construction firms are often struggling to adjust to the Millennial mindset that the future of work is changing, and traditional career/learning paradigms should shift. Members of other generations also often struggle to relate to and manage Millennials effectively. With high-tech jobs and other enticing careers offering flexible schedules, appealing cultures and so forth luring many in the Millennial workforce away, construction firms often face an uphill battle bringing young recruits in the door.
Steady Labor Demand
While labor availability remains tight, demand continues to grow. According to the latest seasonally adjusted statistics from the U.S. Census Bureau, the value of both non-residential and residential construction put in place in the U.S. has been on the rise over the last several months, and the U.S. Department of Commerce reported an all-time high of over $1.25 trillion in construction spending for December 2017.8 With the global population predicted to hit nine billion by 2050 and two out of every three people living in cities by 2050, the demand for construction will likely remain at record levels.9
As summarized in a 2017 Talent Development Survey by FMI, a leading management consulting and investment banking firm dedicated exclusively to engineering and construction, “Volatility in workforce demand and composition, skilled labor scarcity and tech-related demands for new and broader skill sets at all levels are pushing talent shortages.”10 It all adds up to higher costs and longer timelines in the short term, as well as a high degree of anxiety about the future.
Envisioning a Solution
Clearly, the construction industry’s labor shortage challenge is an entrenched, complicated issue, but it is not unsolvable. Overcoming this challenge will require a multilayered approach. As summarized by Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, “Sectors like commercial construction will have to find solutions through new innovations, technology and training to continue growing and moving the broader U.S. economy forward.”11 Changes will need to take place on a national/global scale, as well as within individual companies if we are to collectively conquer the entrenched problem of a labor shortage.
From factors difficult for contractors to control to simple changes in the way business is conducted, we see three main adjustments that must take place to bridge the skills and staffing gap in the construction industry. The number of workers in the labor force must increase, talent must be retained more effectively within the industry, and solutions must be adopted to reduce the amount of labor required to complete jobs moving forward.
Increase the Number of Workers in the Labor Force
Perhaps the most obvious place to start addressing the construction labor shortage is with efforts to better fill the funnel of job applicants. Without stirring interest regarding construction work in the next generation of job seekers, the issue of the labor shortage will never truly be solved.
Engaging prospective employees must begin relatively early in their lives, improving students’ understanding of the construction jobs available, as well as related benefits. Problems with the current model of engaging students include:
- A lack of emphasis on and funding for proper career and technical school training, meaning young people are not introduced to construction trades as a viable means of steady employment
- Federal, state and local funding for career and technical education has declined in recent years, despite high graduation rates and good post-graduation pay
- Students being pushed towards college preparation and attendance, which hurts career and technical school attendance that could be a better fit for some students12
Another challenge lies in finding effective and engaging training for new hires. With only 13.9 percent of construction workers currently being members of unions, participation in union-based apprenticeship programs has diminished, according to the latest U.S. Bureau of Labor Statistics data.13 In their “workforce development plan,” the Associated General Contractors of America summarized the problem thusly: “Unfortunately, federal and often state rules make it difficult for open-shop contractors to create similar apprenticeship programs. As a result, many firms are hesitant to pay the cost of training on their own, knowing other firms may hire away their newly trained staff and underbid them for new projects.”14
Suggestions to address the problem of too few interested workers in the construction employment funnel have included:
- Reinvigorating the Perkins Act, the main controller of federal funding for career and technical education, boosting funding for these programs
- Following the example of states like Kansas and Tennessee that allow high school students to enroll in career and technical training at community colleges and have that education count towards a high school diploma
- Encouraging partnerships between community colleges and registered apprenticeship programs while increasing public funding for these programs
- Encouraging more private funding for craft training programs
- Making it easier for veterans to be hired into the construction industry, as many are prime candidates for this work, but have often gone into the military out of high school and need training/employment opportunities when returning from duty 15
While some combination of these efforts to increase the flow of job applicants for the construction industry will be necessary, it is important to recognize that these are not easy factors for individual contractors/roofing firms to control. Change must occur on a macro level, with government intervention and educational norms being shifted. That does not, however, mean that contractor firms are powerless in controlling their fates.
Attract and Retain Talent More Effectively
Better training and talent/professional development are needed within many contractor firms, and those companies that can get it right could have a significant opportunity to fare well in an age of labor shortage. According to FMI, “Despite rising talent shortages and high levels of recruiting difficulty, many firms don’t see talent development as a strategic priority, yet organizations with the highest employee retention have committed to rich professional development cultures and have effective performance management processes.”16
So, what does a contracting firm actually need to do to retain talent? Here are a few ideas, based on FMI’s research:
- Provide competitive salaries and challenging job assignments as a starting point
- Focus on offering frequent, informal feedback, formal in-house classroom training and coaching to help employees feel that investment is being made in their development
- Put a formal process in place to identify and develop high-potential employees as future leaders (something which 55 percent of contracting firms do not do)
- Especially when dealing with Millennials, it is important to assess competencies and readiness to take on future roles, then communicate with employees and use performance management techniques/further training to elevate high performers
- Create a workplace culture that is attractive through compelling benefits, perks and strong, friendly internal communication 17
While these internal changes are simpler to orchestrate than the significant macro shifts required to better fill the construction worker funnel, even organizational change takes time. Building an attractive culture designed around employee development does not happen overnight, but it is worth striving for long-term. Contractors seeking immediate means of addressing the labor shortage have one more option: reducing the amount of labor needed in the first place.
Reduce the Labor Required to Complete Jobs
The quickest way to address problems caused by a shortage of available labor is to find ways to expedite processes without “cutting corners,” and there is certainly opportunity for growth in this regard. According to McKinsey & Company, construction industry productivity has increased little since the end of World War II: “Globally, labor-productivity growth in construction has averaged only 1 percent a year over the past two decades, compared with growth of 2.8 percent for the total world economy.”18
A good place to start improving productivity is by being more discerning about the products and processes used every day. Using more efficient, effective products and processes can mean needing less manpower and less time to complete jobs, helping contractors stay profitable despite talent shortages. According to Digitalist Magazine, the top four challenges facing the industry are “poor productivity/ profitability, project performance, skilled labor shortages, and sustainability concerns,” and the right products can actually help contractors address all of these concerns to some extent. 19
Consider a few examples of how choosing products designed for efficient application can yield significant labor-saving benefits for a roofing contractor:
- A three-in-one product like SOPRASMART® BOARD 180 ISO—a high-performance panel of SBS-modified bitumen base membrane, SOPRABOARD™ asphaltic coverboard and two inches of SOPRA-ISO® polyisocyanurate insulation laminated together for use in multi-ply membrane assemblies—drastically decreases the amount of time and labor needed to complete a roofing project
- A self-adhered roofing membrane product line like ULTRA-STICK® provides time, labor and material savings over other products because it does not require a primer and can be applied quickly. These products are also easy to use, which can be important when laborers may be spread thinly across projects and someone without extensive experience is helping on the job
- Even choosing a different adhesive can add up to labor savings, as a product like DUOTACK® SPF low-pressure, two-component spray polyurethane foam adhesive features a faster flow rate and 50 percent more coverage than competing products, adding up to quicker installations
When we take these various time-saving factors into account, we find that there are a variety of ways in which job timelines can be cut down, counteracting some of the negative impact of having less laborers available than contractors might like. The products listed here are just a few of many that could be better choices than what has traditionally been employed, showcasing how simple shifts can mitigate the effects of the labor shortage on contractors’ job timelines and overall profitability. For a more holistic picture of how product choice can contribute to labor savings, contractors should reach out to material providers to find out what smarter product choices and application methods might be available.
Addressing the Labor Shortage Both Short and Long Term
It may be a while before the industry can fully conquer the labor shortages we are experiencing, as it is a complex issue requiring involvement of many players making changes that sometimes take years to yield desirable results. In the meantime, contractors will need to buckle down and prepare for a few more bumpy years, most likely. In doing so, however, they should commit to controlling what they can control in the process.
Contractors in all segments of the construction industry should start considering how smarter product choices and more efficient processes could yield some immediate relief of the pressure they are facing to remain profitable in the face of the labor shortage. At the same time, they should focus on revamping their hiring/training/culture programs to better attract and retain employees that are interested in the construction field, while also affecting what macro trends they can through lobbying and associations. Sometimes, change has to start small before blossoming into a major movement that truly overcomes deep-seated challenges.
1 “Talent Development in the Construction Industry.” FMI. 2017.
2 “2017 Roofing Contractor Commercial Roofing Trends Study.” BNP Media. 2017.
3 “Where Did All the Construction Workers Go?.” The Wall Street Journal. 2015.
4 “2015 Workforce Survey Results.” Associated General Contractors of America. 2015.
5 “Economic News Release: Table A.” U.S. Department of Labor: Bureau of Labor Statistics. 2018.
6 “Labor Force Statistics from the Current Population Survey.” U.S. Dept. of Labor: Bureau of Labor Statistics. 2018.
7 “Millennials at Work: Reshaping the Workplace.” PwC. 2011.
8 “Monthly Construction Spending, December 2017.” U.S. Census Bureau. 2018.
9 “World Population Projected to Reach 9.7 Billion by 2050.” United Nations. 2015.
10 “Talent Development in the Construction Industry.” FMI. 2017.
11 “Construction Revenues and Hiring Are Up. So What’s the Problem?” U.S. Chamber of Commerce. 2017.
12 “Preparing the Next Generation of Skilled Construction Workers.” The Associated General Contractors of America. 2015.
13 “Economic News Release: Table 3.” U.S. Department of Labor: Bureau of Labor Statistics. 2018.
14 “Preparing the Next Generation of Skilled Construction Workers.” The Associated General Contractors of America. 2015.
15 “Preparing the Next Generation of Skilled Construction Workers.” The Associated General Contractors of America. 2015.
16 “Talent Development in the Construction Industry.” FMI. 2017.
17 “Talent Development in the Construction Industry.” FMI. 2017.
18 “Reinventing Construction Through a Productivity Revolution.” McKinsey Global Institute. 2017.
19 “Top 4 Challenges Facing the Construction Industry.” Digitalist Magazine. 2016.