4 Strategies to Overcome the Construction Workforce Shortage
Solving one of the industries most pressing problems.
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Today’s Overview:
The construction industry is facing an undeniable challenge: a significant workforce shortage. In other words, there are not enough construction professionals to complete all the work that is available. By 2024, the industry will need over 342,000 new workers in addition to standard hiring.
Several factors contribute to the industry’s workforce shortage, notably: (1) the aging workforce, (2) impacts of the COVID-19 pandemic, and (3) a reduced interest in construction careers.
To navigate this challenge, this article presents four actionable strategies: (1) Prefabrication/Off-site Construction, (2) Lean Construction, (3) Leadership Training, and (4) Technology Adoption. With a strategic mindset, you can transform these challenges into opportunities for success.
4 Strategies to Overcome the Construction Workforce Shortage
The construction industry is facing an undeniable challenge: a significant workforce shortage.
In other words, there are not enough construction professionals to complete all the work that is available. This isn't just an issue for construction firms; it's a concern for our entire economy.
The good news is wherever there is a problem, right behind it is an opportunity.
So instead of dwelling on the problem, I thought it would be productive to understand its origins and explore potential solutions.
If you plan to be in the AEC industry for the next 5+ years, this labor shortage will touch you in some way (if not already). By staying informed and proactive, you can be prepared and even use the situation to your advantage.
In this article, we'll look at this problem from three different angles:
Where are we? The current state of the market according to ABC.
How did we get here? The causes of the labor shortage.
Where should we go? Four tangible strategies to combat the shortage and ensure your projects keep running smoothly.
Where are we? The State of The Market:
The Associated Builders and Contractors (ABC) developed a model for forecasting construction employment.
According to a new analysis by ABC, in order to meet demand, contractors will need to hire an estimated 546,000 workers in 2023, and that’s in addition to the industry’s normal pace of hiring.
Key Takeaways:
The construction industry needs to recruit hundreds of thousands of skilled professionals annually to support America's economy and infrastructure initiatives, says Michael Bellaman, ABC president and CEO.
ABC's model connects construction spending growth and payroll construction employment to forecast labor demand. Roughly 3,620 new jobs are needed per billion dollars of extra construction spending.
Over 390,000 job openings per month were recorded in the construction industry in 2022, the highest ever.
ABC Chief Economist, Anirban Basu, highlights ongoing construction worker shortages due to factors like significant demand from large-scale projects, fewer younger workers in skilled trades, and a prevalent skills shortage.
Nearly 1 in 4 construction workers are above 55 years old, leading to impending retirements that will further reduce the workforce. The industry is especially losing its most experienced and productive workers.
Since 2012, 4 out of 10 new construction workers have been laborers, while skilled worker numbers have stagnated or, in some areas like carpentry, decreased.
ABC is focusing on recruitment, education, and upskilling. In 2021, ABC members invested $1.6 billion to educate 1.3 million course attendees.
By 2024, the industry will need over 342,000 new workers in addition to standard hiring, assuming construction spending growth diminishes next year.
How did we get here? Causes of the Labor Shortage:
As with most complex problems, no single factor has led to the shortage of construction workers entering the field. A combination of several factors over time have made the industry less appealing to the younger workforce.
Understanding these reasons can help you as a practitioner fine-tune your retention strategies and adapt your delivery methods accordingly.
Here are the top three based on the data:
1. The Aging Workforce
One contributor to the shortage is the average age of the workforce. The average construction worker is now 42 years old. About one in four construction workers is 55 or older.
As these experienced workers retire, there aren’t enough young workers stepping in to fill their boots.
The increasing gap between young trainees and retirees has been widening for over a decade. Simple math tells us this will lead to a labor crunch.
2. Impacts of COVID-19 Pandemic
When the COVID-19 pandemic hit, many construction sites shut down to keep people safe. Workers were sent home, and some lost their jobs because projects were stopped or delayed.
With less work available, many construction workers either had to find jobs in other industries or wait until it was safe to return to work. Additionally, the fear of getting sick made some workers hesitant to return, especially to crowded job sites.
As a result, the construction industry faced a shortage of workers, even when projects started up again. This all led to a big challenge in finding enough skilled people to get the job done.
3. A Reduced Interest in Construction Careers
Over the years, the emphasis on trade skills in schools has dwindled. Once-common classes like woodworking or shop have become rarities. This reduces early exposure to these skills, making students less likely to consider them as career paths.
Meanwhile, society has been championing careers that require college degrees over those that might need an apprenticeship. The narrative has been: “for real success, go to college.” This mindset overlooks the value and potential of professions like plumbing or electrical work.
Many also view construction jobs as outdated, unsafe, and with no growth potential. Changing this outdated perception is crucial to attracting the next generation of builders.
Where should we go? Solutions to the Labor Shortage:
Though the current construction industry faces significant hiring challenges, I believe there is still plenty we can do to attack the problem from both sides:
OFFENSE: Attract and retain the new generation of workers.
DEFENSE: Adapt our project methods to deliver quality with fewer hands.
Let’s explore four primary solutions to bridge the construction industry’s skills and labor gap.
I believe these strategies represent the biggest opportunities for the industry's future. With the right approach, you'll not only overcome challenges but also thrive in the industry.
1. Prefabrication / Offsite Construction
Prefabrication, or “prefab”, is the process of assembling parts of a structure at a manufacturing site and then transporting them to the construction site for integration. This method has become a powerful solution to the construction industry's workforce shortage.
Here’s why prefabrication stands out:
Efficiency: Prefab leverages top talent to produce consistent and high-quality structures, with fewer hands needed on the actual construction site. This streamlines the building process, addressing the talent gap head-on.
Reduced Strain: Workers, stretched thin due to labor shortages, often shoulder the workload meant for several individuals, particularly in a physically demanding environment. Prefabrication shifts a significant portion of this workload offsite. This not only streamlines tasks but also reduces the physical demands on workers. Furthermore, it limits the need for frequent site commutes, cutting down the associated strains of daily travel.
Better Work Environment: Prefabrication happens in controlled factory environments, minimizing exposure to unpredictable elements and potential onsite hazards. This control translates to safer conditions, with reduced risks from weather or precarious site locations.
Economic Benefits: Streamlined processes mean potential cost savings. Firms might then have the flexibility to offer competitive compensation, attracting and retaining talent. Plus, the faster build times with prefab allow professionals to tackle more projects within the same time-frame, potentially boosting their earnings.
Prefabrication is becoming a popular choice for builders, who are adopting a “prefab-first attitude” and experiencing substantial benefits when behaving like a manufacturer.
Building off-site addresses common hurdles like labor shortages, schedule setbacks, and procurement challenges. With its enhanced efficiency, better work environment, and cost advantages, prefabrication strengthens the construction industry's ability to weather tough times.
2. Lean Construction
Lean Construction isn't just a methodology; it's a shift in perspective. At its core, it's about maximizing efficiency, collaboration, and value, particularly in the face of workforce shortages.
By streamlining operations and focusing on value, it's possible to get more done with fewer resources.
Here's what Lean Construction brings to the table:
Waste Reduction: Instead of traditional methods for communication and accountability that tend to harbor wasteful elements, Lean processes equip project teams to balance workloads while reducing waste. The whole purpose of lean is harnessing every resource to its fullest — be it materials, tools, or manpower. This means that even with fewer workers, projects can maintain momentum.
Better Planning: Efficient scheduling through Lean planning assists companies facing labor and material shortages. By using methods like the Last Planner System® and digital construction scheduling tools, teams can avoid arriving at unprepared sites. These tools ensure workers have the right information to work effectively, reducing delays from material lead times and decreasing rework. As a result, there's less waste of time, money, and effort.
Emphasis on Teamwork: Collaboration is at the heart of Lean Construction. A unified team, where every member understands their role, can achieve what might traditionally need a larger workforce.
Optimal Tool Utilization: Lean Construction is about using the best tools for the job. With the right tools in hand, tasks are accomplished faster, reducing the manpower typically required.
Lean Construction transforms workforce challenges into opportunities for continuous improvement. It's an impactful solution to combat the pressing labor shortages in the construction industry.
* Related article: The Lean Construction Playbook
3. Provide Professional Development & Leadership Training
“People don’t leave companies, they leave bad leaders.”
A workforce thrives under good leadership. To address the workforce shortage in construction, businesses need to focus on nurturing their existing talent and attracting the next generation.
By emphasizing leadership and development, companies can retain their employees and maintain a robust talent pipeline. Here’s how:
Hire for Character, Train for Skill: Consider hiring individuals with strong character and the right attitude. While they might lack specific expertise, they can be trained. People with the right character align with your company values, are more adaptable, and can quickly acquire necessary skills. Over time, they can be invaluable assets.
Engage the Next Generation: To ensure a continuous inflow of talent, tap into the younger generation. Collaborate with schools, post on social media, conduct outreach programs, and showcase the potential of the construction industry. Show teenagers and young adults that a career in construction can be as fulfilling as any profession requiring a four-year degree. Hopefully you can see there is opportunity for anyone and everyone to find success in the design and construction industry. It probably offers more diverse opportunities for types of work than any other industry.
Invest in Ongoing Training: Commit to continuous learning. Showing that you want to take care of your employees and help them grow is an important aspect in internal retention to overcome labor shortages in the construction industry. Implement training programs tailored to the needs of your team, from upskilling to specialized training in areas facing shortages. Consider apprenticeships, leadership academy’s, or mentorship; they're excellent for transferring knowledge and keeping your current workforce motivated.
The ethos behind "The Influential Project Manager" is rooted in this solution. Leadership isn't about being at the top; it's about cultivating more leaders.
My vision is to improve the construction industry and uplift its professionals. By nurturing a greater pool of leaders, we pave the way for a robust and resilient industry.
4. Explore New Construction Technology
Navigating the skilled labor shortage requires construction leaders to adapt and innovate.
Integrating modern technology, from 3D printing, AI, to drones, can boost productivity, attract a tech-savvy younger generation, and decrease the reliance on manual labor.
Here's how technology can reshape construction and how you can get ahead:
3D Printing: This revolutionary technology allows for rapid creation of building components, even entire structures, with precision and reduced manpower. It’s especially useful for producing custom or complex parts efficiently. The automation involved in 3D printing minimizes labor-intensive tasks and can lead to faster project completion.
Automating with Artificial Intelligence: AI-driven tools and software offers a solution to the workforce shortage by taking over repetitive tasks and augmenting human capabilities. For instance, AI can be used to analyze construction plans, manage schedules, respond to e-mails, record meeting minutes, detect quality issues, and identify potential problems. This allows construction managers to better distribute resources and plan tasks. As a result, the need for a large workforce diminishes due to the increased efficiency AI brings.
Increased Productivity: Efficient construction project management software can streamline tasks, from communication to document handling, enabling teams to focus on crucial tasks even with limited manpower.
Efficient Resource Management: By investing in technology and machinery, companies can achieve the same output with fewer workers. For instance, purchasing a small excavator allows a single operator to accomplish tasks that would traditionally require a three-person crew using hand tools. Similarly, using drones for site surveys eliminates the need for a dedicated site surveyor.
Final Thoughts
Overcoming the labor shortage to build a robust and resilient future for all is an achievable goal.
For contractors to successfully navigate this landscape, it's important to continuously refine and evolve strategies to attract and retain talent.
By harnessing the power of prefabrication, lean construction, leadership training, and innovative technology, we can lay a foundation for a brighter, more efficient tomorrow.
As previously noted, I believe these solutions represent the biggest opportunities for the industry's future. With a strategic mindset, you can transform these challenges into opportunities for success.
Until next week,
Kyle Nitchen
Influential Ideas
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Great newsletter- I think you do a great job of highlighting some issues on labor shortages in construction. However I think you are missing two key factors: 1) declining birthrates in the US and 2) our broken immigration system where immigrants have historically been a source of construction labor.