While unemployment rate remains a prominent topic in political discourse, nearly 40 percent of employers have difficulty filling jobs due to insufficient talent X. Worse off, nearly 80 percent of construction businesses are having a hard time finding qualified skilled labor. For context, there are currently more than 140,000 vacant construction positions nationwide X. Although Americans’ desire for new homes, buildings, and facilities is through the roof, there simply aren’t enough skilled builders around to complete the work X. As it stands, carpenters, roofers, heating and cooling technicians, electricians, plumbers, and foundation crews all are in need of additional workers X.
Why do we have a shortage? The primary reason is that the workforce skews heavily toward middle-aged people and there aren’t enough young people getting into the trades to eventually replace them X. This is particularly rampant in the construction business, where the share of workers in the sector who are 24 years old or younger has declined in 48 states since the last housing boom in 2005 X. Although it contributes minimally to this dearth, it should also be noted that, one of the causes of the shortage is that commercial developers are increasing the number of projects they are doing X.
If you’re in real estate, the shortage of construction workers should be of particular concern.
Because the labor shortage comes at a time when supply and material costs are rising, it makes homebuilding more expensive, consequently contributing to an inventory shortage of single-family homes across the country, despite a strong economy and growing demand X. More specifically, construction costs increased by an estimated 6.2 percent in 2018—with increased labor costs and more expensive bid contracts X. Many real estate and construction companies try to recuperate their costs by focusing on luxury projects rather than individual residences and other smaller building projects X.
In addition to increased costs, this labor shortage is making it difficult to secure contractors and are conducive to delays. Good contractors are so occupied—doing estimates, quotes, and work they already have— that they are often unable to field calls of prospective customers X. The shortage has also prolonged the amount of time it takes to complete projects X. For example, more than one fifth of the 47,000 new student housing beds scheduled to open for the 2018-2019 school year missed their scheduled opening day because construction workers are so hard to find X. It is not uncommon for commercial construction projects to be held up, but with subcontractors in such high demand, many decide to move on to another project rather than wait out a delay X.
Unfortunately, there doesn’t appear to be an end in sight for this shortage.
Experts are projecting an additional 700,000 construction jobs over the next decade and are not confident that they will be filled X. The labor shortage could remain for years, eventually slowing the residential and commercial construction industries X. Regardless of what your role is in the real estate industry, this should be quite alarming, especially since there doesn’t appear to be any plan in place to address the situation.