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The Greater Impact of the Construction Labor Shortage Examined

01/26/2023 Blog

As the labor shortage continues, construction companies and clients struggle to find qualified contractors. The Great Resignation, an aging workforce, restrictions on immigration and rising inflation all contribute to the industry-wide shortfall. Here are the far-reaching effects of the labor shortage, plus what to do about it.

Causes of the Labor Shortage

The US currently lacks around 430,000 construction workers and the industry has only recovered 67% of the jobs lost in March and April 2020. What’s going on? There are several factors at play affecting the current construction labor shortage, including:

  • The Great Resignation: The pandemic forced people to reevaluate their priorities, leading to disgruntled workers quitting their jobs en masse worldwide. Many people in the construction industry retired earlier than normal as well.
  • An aging workforce: Baby boomers are beginning to retire, but there aren’t enough people to replace them. Younger professionals are showing less interest in joining the construction industry.
  • Higher wages elsewhere: The transportation and warehousing industries began offering better wages in 2021, prompting people to leave the construction field. Construction industry wages haven’t increased to match the pace of inflation.
  • Fewer immigrants: Due to COVID-era restrictions on immigration and travel, there are fewer traveling or migrant workers available to fill positions.
  • Time constraints: Lack of childcare and restrictive government office hours can make it hard to get the necessary paperwork to apply for jobs, attend training and start a new career.

For some construction companies, only a few of these issues may be to blame, while other workforces bear the brunt of multiple coinciding problems. Either way, the result is there aren’t enough workers for the currently available openings and experts don’t see that changing anytime soon.

The Labor Shortage’s Effects

Being short-staffed leads to safety concerns, increased costs and slower build times. Here’s what that means for contractors and clients.

Project Delays

It goes without saying, but having fewer construction workers means projects are taking longer. A project that a full team could complete in days might take weeks for a skeleton crew and construction jobs can last months or even years, depending on the work involved.

Lack of Quality Control

With fewer workers comes higher pressure, which could lead to missed quality checks and lower performance. Construction is already a risky business — trying to do it without a whole crew is asking for trouble because staff members normally double-check each other’s work. Additionally, workers may feel rushed to complete a job because they have so many clients demanding their attention.

Safety Issues

A lack of quality control can lead to dangerous working conditions because people can overexert themselves and get injured in the process. Overlooked safety checks can also lead to industrial accidents.

Consequently, organizations must frequently refresh their workers on safety and training policies to minimize risk. It’s also important to renew their certifications regularly. Forklift operators, for example, must renew their licenses if they’re in an accident or a near miss. They also have to renew it every three years, no matter how well they’ve been driving. Ongoing training isn’t just good for safety but also for recruiting new employees into the construction industry.

New Technology

One surprising way construction firms are trying to compensate for the labor shortage is by embracing automation. Investors are pouring money into construction startups and while labor-saving technology hasn’t entirely caught up with the demand for workers, it’s a promising solution for the construction industry. There are several ways automation can help.

Modular construction — such as 3D printing — allows construction companies to build prefabricated homes, move them to the desired location and then construct them on-site. Machines can also perform physical tasks like laying bricks and paving roads, working alongside construction crews to complete jobs in record time.

Construction software can automate a build’s design, planning and management processes. Building information modeling, for example, combines the designs of general contractors and planners to identify problems before taking the project to the job site. This makes the building process safer and more efficient.

Rising Costs

Inflation and supply chain issues have caused skyrocketing material prices. In 2020, the wholesale cost of plywood went from $400 per thousand square feet to an eye watering $1,500 — retail prices were no better. Thankfully, lumber costs have fallen back to their pre-pandemic levels, but the price hike took a toll on construction companies. Now, the cost of ready-mix concrete and gypsum materials is on a steady climb.

Employers are already having to pay more for materials. Simultaneously, many feel pressured to increase employee wages to attract new talent and compensate workers for staggering food and rent prices. The result is customers are eating the cost.

Addressing the Labor Shortage

Solving a multifaceted problem requires an equally varied approach. The first step is to target the source — high schools must promote the trades as a viable career path. With most schools only touting the benefits of college, it’s no wonder few students are drawn to construction jobs. On a national level, promoting immigration will also be necessary, as immigrants comprise a sizeable portion of the construction industry.

Firms must raise employee wages to keep pace with inflation. Moreover, employees are increasingly demanding a healthy work-life balance, so contractors may need to restructure their business model to allow for ample breaks, time off and a healthy workplace culture.

Paid training will also play a vital role in solving the labor shortage. It attracts new employees, upskills existing workers and pulls people on the sidelines back into the labor pool. Many people would apply for construction jobs if they didn’t need prior experience.

How the Construction Industry Can Bounce Back

More workers are leaving the construction industry than entering it. The labor shortage doesn’t seem to be going away anytime soon and though it’s a significant challenge, hiring a full staff is vital for contractors to protect their firm’s reputation and employees’ health.

They can do so by providing ample training opportunities to hire new talent, upskilling current workers or reskilling employees to change roles. Offering better wages and a stronger work-life balance is crucial when attracting and maintaining a solid workforce.


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