Construction worker shortage tops sector concerns in 2019

Overall, construction firms are optimistic about prospects for projects in the coming year – however, a persistent worker shortage remains the top industry concern.

Seventy-nine percent of construction firms plan to expand headcount in 2019, according to a newly released survey from the Associated General Contractors of America and Sage Construction and Real Estate on Wednesday, in order to keep pace with growing project demand in the sector. That represents the third consecutive year of planned increases. However, nearly an identical number (78 percent) of construction firms say they are having a hard time filling both salaried and craft positions. That is down slightly from 83 percent at the outset of last year.

Headcount increases are expected to be muted. Only 7 percent of firms will increase headcount by more than 25 percent, while the majority will expand by 10 percent or less.

In order to attract more qualified workers, construction companies are raising pay. Nearly six in 10 respondents said they had increased base-pay rates, while 29 percent provided incentives and/or bonuses and nearly one-quarter of companies raised contributions or improved employee benefits.

Meanwhile, larger firms were more likely to invest in training programs to help equip workers with necessary skills.

Employee shortages were listed as the top concern — by far – among construction firms.

According to the Bureau of Labor Statistics, the sector added just 5,000 nonfarm payrolls between October and November – for a total of 7,312,000.

The effects of labor shortages are widespread. Thirty-seven percent of contractors said the labor shortages have raised the costs of bids and contracts, while others say it has prolonged the amount of time it takes to complete projects.

The effects have flooded into the housing market, where an inventory crunch – partially precipitated by the construction worker shortage – has caused prices to rise. Experts expect that trend to continue through 2019.

About four in 10 companies said they expect finding qualified talent to remain a challenge throughout the remainder of 2019, with one-quarter expecting the labor market to become even more difficult than it already is.