Labor shortages are a universal hurdle facing the construction industry. High demand for construction creates a high demand for workers to carry out these projects. In the current environment most construction companies are struggling to find these workers. The current situation is most often attributed to what can be summarized as the 4 R’s – Recession, Retirement, Reputation and Reduced Immigration. Each of these factors contribute to the current labor shortage, which is driving up costs and leading to a higher reliance on subcontractors.
Where can construction companies turn to find their employees? To start, companies must be willing to adapt to changing times and to stray from the status quo of how the industry traditionally operated. Younger generations, women and current employees all provide opportunities for growing and retaining a company’s labor force.
Students, Generation “Z” and Millennials
Less than 9.4 percent of the industry’s workforce is younger than 25 (1). Going back to the reputation issue, construction has not traditionally been shown to high school students and other young people as a lucrative career path. Students are encouraged to attend college, obtain a degree and spend their days working a corporate office job. Young people need to be shown the benefits of a career in the construction industry in order to help change the perception of the industry. Tools for recruiting students include the following:
- Vocational and training programs– By offering training programs in schools, students can gain access to resources to open their minds to other career paths beyond the traditional collegiate route. Students who are not inclined to spend the next four-plus years sitting in a classroom gain experience in the trades and build their skills all while getting a feel for whether the profession is a good fit for them. Construction companies can partner with local schools to run these programs, creating relationships that benefit both parties.
- Compensation & Benefits – By updating compensation and benefits packages to meet the desires of younger generations, companies can overcome the generalization that construction workers are paid low hourly wages, thereby attracting individuals who were previously focusing on corporate office jobs.
- Technology – In a world where pictures can instantly be shared with friends and food can be delivered with the tap of a finger, the younger generations expect technology to be just as prevalent in their workplaces. Investing in technology can show potential employees that the company is forward-thinking and open to change from antiquated systems. Though implementing new technology will most likely be costly up front, in the long run it can help immensely with attracting and retaining employees. Furthermore, new technologies are streamlining and improving the construction process to improve working conditions and maximize the efforts of workers.
Considering that women currently comprise “only 9 percent of the construction workforce and only 3 percent of the skilled trades” (2), this represents a huge opportunity for adding to the construction workforce. Women are just as capable of men, but perhaps feel shut out of the industry due to it being primarily male-driven. Connecting with local organizations training women in construction provides an opportunity to show females how they can contribute to your company and opens a much wider labor pool.
Companies must keep their current employees satisfied in order to avoid increasing their labor shortages. Due to the labor shortage in the industry, workers have the upper hand when choosing employers. Companies should focus on retaining employees, especially those well below retirement age. To do this, companies should offer continuous training and opportunities for advancement as well as providing competitive compensation packages.
It is likely that employers may need to provide more training as a tool to broaden and populate their workforce. In designing new training initiatives and determining potential new hires, employers may want to take advantage of the Work Opportunity Tax Credit (WOTC) offered by the Internal Revenue Service. By hiring individuals from certain targeted groups (prior to January 1, 2021), companies benefit not only by diversifying their workforce but also by receiving a Federal tax credit which could help reduce the cost of any initial training that may be required. The individuals hired benefit by being given access to jobs and training previously unavailable to them.
In order to address the labor shortage issue, construction companies need to adapt to the changing times and demands of workers. By focusing on younger generations and groups not traditionally associated with construction, including women, the industry can add and strengthen its labor pool, helping to relieve the current labor burdens.
Written by: Beth McGinty, Audit Senior
Beth McGinty is a senior in the accounting and auditing department. She joined Thompson Greenspon as a staff auditor in 2014 after graduation. Prior to joining the firm, she interned for the U.S. Department of Justice, as a member of the Resource Management and Planning Staff of the Executive Office for U.S. Attorneys.
Beth is responsible for providing accounting, auditing and tax services to clients primarily in the nonprofit, construction, and employee benefit plan industries. She is currently pursuing her CPA license.
Beth graduated summa cum laude from Spring Hill College in Mobile, AL in 2014 with a Bachelor of Science in Business Administration, with a concentration in Accounting. During college, Beth was a member of Sigma Beta Delta (International Honor Society for Business, Management, and Administration), provided peer tutoring services in accounting and worked as a volunteer tax preparer as part of Impact Alabama’s Voluntary Income Tax Assistance Program.