Construction Labor Challenges to Continue in 2019
Ongoing changes in the construction industry have left many companies with numerous opportunities as well as significant challenges. The Bureau of Labor & Statistics recently reported they expect construction to be one of the fastest growing industries with an expected 4.5% annual growth rate for several years. Growth areas include residential construction, office and commercial construction and renewable energy construction. While this is good news for many companies, it is also bittersweet because of the labor challenges industry companies are currently facing. According to the Associated General Contractors (ACG) 2018 Worker Shortage Survey Analysis, the industry-wide labor crises for skilled craftsman is becoming critical. According to the survey, 80% of companies indicated they are having difficulties finding skilled labor to fill openings, which represents a bulk of the current labor needs. The survey also provides insight into the changes companies are making with pay and other benefits to attract new employees. To help clients, prospects and others understand the survey results and impact to their business, Hanson & Co. has provided a summary of key information below.
Key Survey Findings
- Hiring Challenges – Participants were asked to identify how they would describe the current situation in filing hourly and salaried positions for projects. According to the results, 80% indicated they are having a difficult time filing hourly positions, 10% are having no issues, while 9% indicated they have no current openings for these positions. For salaried positions, 56% of respondents indicated they are having a difficult time filling salaried positions, while 14% are having no issues, while 29% indicated they have no current openings for these positions. It’s obvious the shortage for hourly labor appears to be getting worse and industry companies may continue to struggle in their recruiting efforts.
- Hiring Needs – The survey asked participants to segment their hiring needs to understand if growth or replacement is the driver behind increased hiring. It appears that much of the hiring is occurring due to the need to accommodate growth needs. According to the survey, 76% of respondents are hiring hourly craft personnel, 39% are hiring hourly office staff, 59% are hiring salaried field personnel and 52% are hiring salaried office personnel. Hiring for replacement purposes accounts for far less of the hiring trends. According to the survey for replacement purposes, 16% are hiring hourly craft personnel, 22% office hourly personnel, 16% salaried field personnel and 20% salaried office personnel.
- Increased Difficulty Filling Positions – The survey wanted to identify the areas where companies are struggling the most to find new labor. According to the survey, 72% of participants indicated it is more difficult to find pipe layers, 68% indicated difficulty finding sheet metal workers, 67% are struggling to find carpenters, 67% are struggling to find concrete workers, 64% are struggling to find roofers and 64% are struggling to find heavy equipment operators. Other positions that companies are struggling with include brick layers, iron workers, plumbers and electricians.
- Employee Turnover – The survey wanted to gain insight into the amount of employee turnover due to other employers. According to the survey, 51% of participants indicated they have lost hourly craft workers to other construction firms, 25% to other industries and 36% have not lost employees to either. For salaried employees, the turnover rate is much lower with 39% of participants reporting that they have lost employees to other construction companies, 15% to other industries and 54% have not lost employees to either. These numbers reflect the importance of developing a robust recruiting, benefits and other programs and incentives to attract needed talent to a company.
- Changes to Pay and Benefits – Given the challenge in finding hourly labor, the survey wanted to understand what changes, if any, companies are making to benefits to attract new employees. According to the survey, 62% of companies have increased base pay rates, 25% offer incentives and bonuses, 24% have increased the employer portion of benefit contributions where as 9% are considering increases in pay and benefits and 11% have no plans to increase pay or benefits to attract labor.
While the expected growth in the industry presents new opportunities for many companies, the challenge of attracting and retaining needed labor remains. The survey highlights outlined above provide additional insights into industry-wide trends and issues that companies are facing. If you have questions about the survey, hiring best practices or need assistance with a construction tax or audit issue, Hanson & Co. can help. For additional information please call us at 303-388-1010 or click here to contact us. We look forward to speaking with you soon.