Almost 20 years ago, there was a surplus of skilled workers in the construction industry. Demand for construction work was at an all-time high, and business owners didn’t have to worry whether or not there was enough labor to get their jobs done. But now, construction and other trade industries are facing a huge skilled labor shortage.
“When I first went into business in 2005, it was really booming,” says Mikki Paradis, owner of PDI Drywall in Raleigh, North Carolina. “There were a ton of people wanting work.”
Today, 89 percent of contractors have trouble finding skilled workers. And they’re lucky if they can find enough skilled tradespeople to finish their jobs on time. 83 percent of general contractors say the skilled labor shortage makes meeting deadlines difficult. Some are turning down new projects because they can’t keep up with current jobs.
According to Alicia Smith of F&S Building Innovations in Roanoke, Virginia, general contractors are not the only ones affected.
“The labor shortage spans across every facet of construction, from plumbers to electricians to mechanical installers. Everybody is facing the same shortage,” Smith says.
What is Considered Skilled Labor?
To identify the skilled labor shortage, we first need to understand what qualifies as skilled labor.
Skilled labor refers to labor that requires highly specialized skills and dedicated training to perform: those qualified to do skilled labor must undergo training and experience for that role. They include complex mental and physical tasks and are usually recognized in an official capacity, such as a degree or license.
On the whole: the skilled labor shortage is a lack of workers with the necessary specialized training and experience.
7 Reasons for Skilled Labor Shortage
Firstly, we’ll cover the main reasons for the current skilled labor shortage. There’s no single factor that’s causing the problem, but the combination of these reasons has all done serious damage to the workforce and the trade industries as a whole.
1. The Aging Workforce and Retirement Rates
Not only are skilled trade sectors struggling to find new workers, but plenty of baby boomers are starting to retire, creating an even larger skilled labor shortage. By 2026, 29 percent of the current construction workforce is expected to retire; by 2031, that number is expected to rise to 41 percent.
This isn’t restricted to the trades sector either: many industries face the imminent retirement of their core workforce and a lack of new hires.
In addition to these challenges, COVID-19 took its own twisted toll on the construction labor force. Mandatory shutdowns have forced layoffs and furloughs, while the virus caused extended sick leaves, hospitalizations, and deaths.
Retirement and losses aren’t just one person: they represent many decades of skill and experience.
2. Shifts in Educational Focus Away from Trades
To make matters worse, as many skilled workers leave the industry, fewer high school graduates enter the construction trades, worsening the skilled labor shortage.
“[Part of the construction shortage] is because the two youngest generations of the workforce heard nothing but ‘college, computers, and business’ through their childhood,” says Mike Falahee, owner of Marygrove Awnings in Livonia, Michigan.
Mike is right. In the past few decades, college has moved from an option for higher education to the perceived primary path for a good career, with degrees making someone inherently more ‘hireable.’ The focus is on getting into a good college, not all the options available to students and high school graduates.
However, there is already some improvement. An Associated Press article covers the reinvigoration of trade programs as college entrances dip: more students are seeing the benefits of reduced costs and stable work. We may have seen the peak of college saturation already.
3. Lack of Apprenticeship and Training Opportunities
But as students wish to return, they require options and trade schools to attend. From that same article, the Tennesee College of Applied Technology had a waitlist for hopeful students wanting placement in their trade programs. Recently, they had to open night classes to keep up with demand.
As we covered in the retirement factor, the skilled labor shortage covers both new workers and leaving workers. The same apprenticeships and opportunities are no longer available as mentors leave the industry.
4. Perception and Social Value of Skilled Trades
With the incredible push in the last few decades to gain a college education, the counter-perception became that those who didn’t get a college degree were less skilled or less intelligent than those who have.
Once regarded as a cornerstone of the local economy and a respectable career, the perception of trades has shifted into unappealing jobs without the same respect. It’s a shame, but trade careers have been pushed aside for other aspirations.
This isn’t helped by the wage premium placed on degrees: many jobs require unrelated degrees for entry-level work and basic wages.
This brings us to our next factor.
5. Economic Fluctuations and Job Security Concerns
The effects of the recession still reach the trades today. Many young adults now watched their parents and the entire country struggle through the recession. Job losses and the rise of insecure work have underscored the attitudes and expectations of students today. Students want secure, stable jobs that can weather economic changes, and many trades are seen as inherently unstable.
Add into the mix already-skilled workers leaving the trades due to these factors.
For example, workers started exiting the construction industry at the end of 2007, when the recession hit. By 2009, 115,000 people per month were leaving the field. By 2011, over 2 million workers had left the construction industry, taking their knowledge and skills with them for good.
There has been a resurgence in construction trade programs: according to Business Insider, enrollments are up 19.3%, matching pre-pandemic levels, and the economic burden of college debt discourages students from pursuing college degrees.
6. Decline in Technical Education Enrollment
All of these factors, including reduced social value, an overfocus on colleges and job security concerns, have resulted in fewer enrollments in technical colleges and education programs.
A survey of adults aged 18 to 25 shows that only 3 percent intend to pursue a career in construction. The survey also shows that the three most sought-after careers for this age group are in the medical, business/management, and tech/IT fields.
But as mentioned above, we’ve seen this slowly turn around. With proactive changes, the industry can capitalize on changing attitudes and encourage more students to consider the trades.
7. Rapid Technological Changes
As technology changes, so do the options for careers, training and futures. The proliferation of the internet and the gig economy has tangled the career paths of many students and changed the perception of future-ready jobs.
These technological changes work in tandem with the other factors described above.
What are the negative effects of shortages?
The skilled labor shortage is a significant problem facing the trades industry, but what are some of the costs and effects this shortage is having on field service businesses and firms?
Let’s get into it.
Project delays and increased operational costs
This one is very straightforward: if you don’t have the crew on the job, the job doesn’t get done. The skilled labor shortage is a direct contributor to critical staffing issues in a variety of trades and field service roles. General contractors can win bids, but without a full team, work will simply take longer.
Anyone who’s worked on a complex field project knows the harm of delays. When this is magnified in multiple project stages or as part of everyday field work, delays increase operational costs as similar projects take longer. This means more overhead costs and a longer time until a project can be finalized and invoiced.
Increased wages for employers
Healthy competition is always a good thing for businesses, as a balance can be struck between fair compensation and profitability. The skilled labor shortage has resulted in an imbalance, with high demand for workers tipping the scales for a seller’s market.
As a result, employers are paying a lot more for the same labor.
Compromised quality of work and safety
It’s an unfortunate but common issue: the push to meet deadlines with a shortage of labor equals rushed work and unsafe conditions. The pressure to finish means mistakes and issues can slip by, with necessary processes like documentation and reporting not being completed to a quality standard.
All of these risks add up and unfortunately, understaffed crews can cause even greater delays with lower quality work and unsafe working conditions.
Decline in industry growth
Projects are both taking longer and costing more, which doesn’t make trade industries attractive. Field service businesses needing to raise prices can turn off customers as people deal with inflation and higher living costs. Construction projects that hire managers and general contractors may be too expensive to be viable, so the project never gets off the ground.
This equals fewer projects and a depressed market. It can be a vicious cycle.
Tips to Combat the Skilled Labor Shortage
Yet, amid all these struggles, there are ways your field service business can combat the labor shortage. Some involve fortifying your personal business, and some involve committing to industry-wide change.
Unfortunately, the labor shortage may get worse before it gets better. We’re seeing shifts in perception and more focus on getting new talent into the industry, but it will take time to get there.
You’ll have to fortify your field service business to thrive despite the broadening labor gap. From learning new ways to attract and retain skilled workers to incorporating technology so you can get more work done with fewer laborers, here are eight ways you can strengthen your business against the labor crisis:
1. Positive Work Culture
Your first line of defense against the skilled labor shortage is to ensure that you’re attracting the skilled workers who are still in the industry. The best way to do that is to center your company’s culture around treating workers well and making the most of your network.
When Paradis first went into business, she noticed that many contractors projected an attitude that said, if I have work, you're lucky if I give it to you. And they took advantage of their laborers.
However, even though the industry had a surplus of workers at the time, Paradis recognized this attitude as a competitive disadvantage. She decided to run her company differently.
“That [attitude] was never something that I participated in,” Paradis says. “I did not drop [workers’] pay. I did not alter how I treated them. It's our company ethos that we treat others with the same respect that we would want to be shown. And that has a huge amount to do with why PDI has fewer problems finding skilled laborers.”
Smith agrees. “At F&S Building Innovations, we really strive to create a culture where people are not just a number. When you become part of the F&S team, you're part of our family. And it's not like that at a lot of construction companies. A lot of people will come here and say, ‘We were just a number somewhere else.’”
Despite the competition and increased asking wages, work culture is necessary for an employee’s life. By encouraging a positive and supportive workplace, team members will want to stick with employers that respect them.
“When a sub has to choose between working on my job or another job, they will choose my job,” says Paridis. “Because I've got years worth of investments in having relationships with people.”
2. Coordinating partnerships between your industry and educational institutions
Trade schools don’t just help students learn a trade. They also help place those trained students into apprenticeships and jobs at your company. Technical colleges are always looking for opportunities with local businesses to train and place their students, and by reaching out to local programs, you can access current and future students in your industry. Partnerships boost your field service business’ reputation as part of your community and support the next generation of skilled tradespeople.
The benefits of partnering with a trade school don’t stop there. Some trade schools also help contractors better train their existing workforce.
F&S Building Innovations has recently launched a new trade school, Build Smart Institute.
Smith says, “If a company comes to Build Smart, whether they're an electrical contractor, a plumbing contractor, or a light gauge steel framer, they can say, ‘Hey, we need this type of training for our team.’ And we can customize a curriculum for them. We've done this for quite a few local companies already.”
3. Proactive and Involved Apprenticeships
It’s one thing to find apprentices for your business, another is keeping them and guiding them to become members of your team.
Smith says, like every other construction company, F&S struggled to find qualified craftsmen and lead carpenters. So they implemented a very aggressive apprenticeship program to combat the problem. So far, it’s been very successful despite facing a few challenges.
“F&S has grown extremely rapidly over the last three years,” Smith says. “In three years, we went from 50 employees to about 80. And training them, that’s been a struggle.”
She says part of the problem is that apprentices can often become gophers instead of being taught the important aspects of the construction trade. When that happens, apprentices don’t have the skills they need to become valuable employees. They also don’t develop the relationships that make them want to stay with the company that trained them.
“We recognized that, so as soon as we implemented our apprenticeship program, we designed a mentor program to ‘train the trainer.’ We teach the folks that are working with the apprentices and give them the tools to bring these apprentices along.”
She explains that mentors should never just point and say, “Do this, do that.” Mentors should train apprentices by showing them hands-on how to perform a process. And trainers should always explain to apprentices the “why” behind what they're doing.
“Does [training mentors] take a little bit more time?” Smith asks. “Yes, it does. But ultimately, we're producing apprentices that come out of our apprenticeship program ready to go into a full-time position.”
If you’re on the fence about starting a registered apprenticeship at your company, here are a few stats that prove the benefits:
- 89 percent of employees who complete a registered apprenticeship stay with the company that trained them for at least three years
- For every dollar companies invest in an apprentice, they get $1.46 back
- Siemens USA gets an estimated 50 percent rate of return from its apprenticeship program
These resources and your effort represent a long-term investment in the future of your field service business and a proactive way to combat the skilled labor shortage.
4. Promoting vocational education and training programs for your team
An excellent way to combat job security worries and economic concerns is by providing your crew with the opportunities to upskill. Training doesn’t have to stop after hiring, and offering team members further education and specialization not only shows them that your business is invested in their success, but means your field service crew has the latest skills and training.
This is the perfect way to maximize your current workforce and supplement your team with new skills, and it shows potential employees that they will be supported and uplifted by your business.
5. Competitive Compensation
Another reason that Paradis struggles less than some to keep skilled workers is because, as she puts it, “I never mess with my guys' pay.”
“I have to pay these guys what I would pay myself if I was doing the same job,” says Paradis. “The last place that I want to make money is from off their back. Because without their back, I wouldn't be where I am. PDI has always paid above industry standard.”
Yes, it’s difficult in this economic climate to offer competitive compensation, but the returns of retaining skilled workers are worth it.
6. Safe Workplaces
Mike Falahee argues that along with paying low wages, many construction companies don’t offer enough of a “safety net” for workers. He suggests creating wellness plans that incorporate preventative maintenance and education to lower accident rates, as well as paid time off and medical costs for anyone who gets injured on the job.
“Whatever the plan looks like, it would make a difference in potential employee’s decision making,” says Falahee. “There is no shortage of people who enjoy physical, tactile work in the outdoors,” he says. “But there is a shortage of people willing to sacrifice their bodies for a meager wage while gambling on falling into worker’s comp and disability.”
Smith agrees that safety has to be the first priority.
“Let's face it, if we're being real, safety precautions are aggravating,” says Smith. “When you have to put in safety precautions, it takes twice as long to accomplish a job.
“But you've got to look at the flip side. What happens if you don't put in those precautions, if someone is injured, or heaven forbid, someone loses their life?”
Taking the extra time to be safe is worth it, and employees will be more likely to stick with employers that put safety at the forefront.
7. Applying automated processes
The solution to the skilled labor shortage isn’t restricted to simply getting more people in the workforce: technology provides a range of automated solutions to get more work done with fewer people.
For example!
Want to lay brick quick?
Check out the Semi-Automated Mason (SAM), the first commercially available masonry robot. Matt Hearn, Senior Project Manager for Rabren General Contractors, used it. And he was able to complete a brick wall that would have normally required 12 masons, using only four. And it only took one week to complete the wall instead of two.
Need dozers to run 24/7 but don’t have the manpower?
Do like Mortenson and partner with Built Robotics to make your machines autonomous.
Or, do like Mikki Paradis and use common sense products like drywall stilts to make the laborers you have more productive.
No matter what part of the construction trades you’re in, there is new technology that can help your company thrive in the midst of the labor shortage.
8. Utilizing Digital Software
Millennials and Gen Z’ers were born embracing technology. So, if your field service business isn’t using technology to get things done, you aren’t going to attract a new generation of workers.
Tablets and smartphones are as important on today’s job sites as power tools. Software apps like ClockShark allow quick, real-time communication, and they make collaboration between the office and the field much more efficient. The ease that younger workers have with tech can make the onboarding and training process faster and more effective. The best time-tracking apps mean your employees can focus on their work and streamline finicky processes like manual timesheets.
Encouraging the Next Generation of Skilled Workers
As you can see, there’s no one core issue to the skilled labor shortage, nor is there one perfect solution. Change is already happening as more students turn to the trades for a solid career, and your business can be a part of that!
An investment in the next generation is an investment in the future.
