State of the construction labor shortage in 2021: what to do about it?

State of the construction labor shortage in 2021: what to do about it?

As North America’s economy continues to reopen, hiring managers across many sectors are having a hard time finding skilled workers. Construction – which has been battling a labor shortage for more than a decade now – is no exception.

Keep reading to learn more about the construction labor shortage and what workforce managers can do to fill skill gaps despite it.

Construction labor shortage statistics

A staggering 81% of construction companies responding to the 2020 Construction Outlook Survey reported having difficulty finding professionals to fill hourly and salaried positions. Of all responding firms, 72% also reported that they expect the construction worker shortage to be 2021’s biggest challenge.

The Associated Builders and Contractors of America reports the construction industry needs to hire 430,000 more craft professionals in 2021 than it did in 2020 to keep up with demand.

The COVID-19 pandemic certainly hasn’t helped professionals address this shortage. In fact, according to the 2020 Marcum Jobs Opening and Labor Turnover Survey (JOLTS), construction companies throughout America generally tightened their grip on existing workers, sending labor costs upward.

Construction labor shortage causes

Next, let’s discuss why the labor shortage in the construction industry has persisted over the past decade in both good economic times and bad ones.

Older construction workers are retiring in large numbers

The construction industry employs large numbers of Baby Boomers (see this article from the National Association of Home Builders). As people in this abnormally large age group retire, there simply aren’t enough younger professionals to replace them.

“By 2029, we will be short about 100,000 tradespeople if we don’t do anything,” said Kieran Haw, COO of EllisDon Corporation, speaking with the Globe and Mail about the state of construction’s labor shortage.

The industry isn’t attracting enough young professionals

While it’s true the population of Baby Boomers dwarfs that of younger generations, the construction industry has also arguably struggled to attract fresh talent.

As this analysis from SGC Horizon points out, the construction industry’s workforce has been increasingly skewing older. Workers aged 55 and older represented just 17% of the industry’s workforce in 2011 compared to 22% in 2018.  Meanwhile, the percentage of construction workers aged 25 and below is just 9%. For comparison, that age bracket makes up 12.3% of America’s overall workforce.

The industry is struggling to recapture laid off professionals

According to U.S. Bureau of Labor statistics cited by the aforementioned JOLTS study, 60% of construction professionals laid off during the Great Recession subsequently left the industry entirely. Many of these workers were not replaced.

The study also suggests this may prove to be the case following the COVID-19 pandemic.

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Why the construction labor shortage needs to be addressed

The labor shortage in the construction industry has brought on many negative effects. Let’s discuss a few.

Many construction projects are understaffed

Due to the ongoing labor shortage, many construction projects are understaffed. This has additional consequences, including:

  • projects taking much longer to complete than they otherwise would, increasing the level of disruption to the public
  • projects costing much more than they otherwise would
  • workers becoming burned out; as much as they may enjoy the opportunity to work overtime, there are limits on how long most people can work

Many essential construction projects are cancelled

The shortage of skilled workers in construction means many projects simply can’t proceed. Further consequences of this include communities being left without vital infrastructure.

Some companies are forced to hire less-skilled workers

In an effort to keep up with demand, some construction companies are hiring less-skilled workers wherever possible. These are workers that wouldn’t qualify for their jobs if enough skilled laborers were present.

The impact of this is far-reaching. Workers who lack the ideal skill set often produce subpar work and are more likely to be injured on job sites.

Professionals in non-manual labor positions are affected, too

Construction shortage issues don’t just affect those on the front lines. It can also push other professionals out of the industry.

For example, construction HR professionals may feel maintaining a workforce in that industry is much harder than it would be elsewhere. Consequently, they may eventually take their talents elsewhere.

What companies can do about the construction worker shortage

Now that we’ve extensively discussed the construction worker shortage’s causes and effects, let’s look at how professionals in the industry can combat it.

Use workforce scheduling software

Many workforce scheduling challenges brought on by the labor shortage can be mitigated with purpose-built software applications like Bridgit Bench. With Bridgit Bench, construction management professionals can identify and implement optimal allocations that account for the limited nature of workers.

Bridgit Bench also helps construction companies forecast their workforce demands so they can strike the right balance between keeping workers busy and taking on too much work.

Focus on attracting workers in under-utilized demographics

According to Data USA, America’s construction workforce not only skews older but is also concentrated among three racial demographics:

  • White (non-Hispanic), comprising 41.2% of the workforce
  • White (Hispanic), comprising 28.5% of the workforce
  • Other (Hispanic), comprising 17.1% of the workforce

These racial demographics account for 86% of the construction workforce, which leaves just 14% split among members of other races despite their share of the population amounting to much more (African-Americans, for example, comprise an estimated 13.4% of the U.S. population, according to the U.S. Census).

Women are also a historically untapped demographic in the construction industry. According to Data USA, 95.9% of construction workers are male. To paint a more vivid picture, there are 1.52 million men working in construction compared to only 65.3k women.

Addressing the construction labor shortage will inevitably involve tapping into demographics that have historically been excluded (for a variety of reasons) from the industry.

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Retain existing workers

Given how difficult it is to find workers in the first place, construction professionals would be wise to take employee retention seriously. In fact, this is a crucial part of construction workforce planning.

Workers need to feel they’re being fairly compensated, that their safety is taken into account, and that there are opportunities for professional advancement. Otherwise, they’ll find those things elsewhere, which will leave you scrambling to fill yet another position.

Encourage innovation

When workers work smarter rather than harder, they can get more done in less time. Forward-thinking construction companies understand this and foster an environment in which innovation is rewarded with more pay and additional opportunities.

Invest in equipment to get more done

A good equipment management strategy helps construction companies identify tools worth investing in. These tools can, in turn, reduce the number of workers needed to complete projects.

While the cost of new equipment may make this strategy seem impractical, companies need to account for the cost of not having resources (whether they be equipment or personnel) to fill those needs. Running these numbers may make the case for new equipment stronger.

Hire foreign workers

As mentioned earlier, there aren’t enough younger workers in America interested in construction to replace older workers as they retire. Skilled foreign workers are often willing to fill these positions if employers are willing to sponsor them and provide fair wages.

We hope this article has helped you understand the construction labor shortage along with its causes, impacts, and potential solutions. For more workforce management guides, visit our blog.

Brandon-Richard Austin

Brandon-Richard Austin is a writer and content strategist focused on the construction sector. He’s passionate about educating readers on construction management techniques and best practices.