Construction Industry Faces Continuing Labor Supply Struggles

Over the last decade, the labor shortage in the construction industry has consistently ranked as one of the sector’s top pain points. At the moment, that challenge may have been at least temporarily eclipsed by the impact of the coronavirus and its related government-imposed shutdowns, with many projects delayed or even cancelled, supply chains in disarray and lenders increasingly cautious with financing. Nonetheless, the industry’s labor environment still has its fair share of uncertainty.

As government-mandated shutdowns began to emerge in the spring, the United States Bureau of Labor Statistics (BLS) reported that construction industry national employment was mildly reduced in March by 29,000 before plummeting by 975,000 in April, which represented approximately 13% of total industry employment and the worst one-month decline ever. Conversely, when restrictions began to be lifted in May, construction employment increased by 453,000, followed by a gain of 158,000 in June, which helped reverse over half of April’s decline. The BLS’ July employment report showed a meager construction employment increase of 20,000. Employment in the industry remains approximately 444,000 below its February level.

Associated General Contractors’ Chief Economist Ken Simonson notes that approximately 2.3 million construction jobs were lost from the effects of the housing crash and the Great Recession, and early years of its recovery. Many of those displaced were skilled workers who either retired or pursued other careers. Ever since, the industry has been dealing with a skilled labor shortage, magnified by the attitude of Millennials, who as a whole either don’t have the skills or as much interest in construction work as prior generations.

Will the 2020 economic recession add to the industry’s labor shortage? There’s reason to believe that construction will not keep pace with restarts in other sectors of the economy, despite the fact that interrupted projects and a backlog allowed some companies to return a portion of workers in May, June and July.

There are still many unknowns and it’s hard to predict the short- and long-term effects to the industry’s employment market. As each company handles skilled labor shortages and bears the economic consequences of the shutdowns, it’ll be pivotal to implement a strategic plan. Simply relying on a humming economy for a steady backlog of contracts is no longer an option.

If your company would like assistance in maneuvering the construction climate, we invite you to contact us or visit the Schneider Downs Construction Industry Group webpage. For additional construction industry articles, visit the Our Thoughts On blogsite.