Ever since the U.S. emerged from its lock down, companies across all industries have endured painful labor shortages. Two years later, no relief is in sight. The AEC industry is no exception, particularly as it relates to construction workers. While it is a situation that demands AEC workforce solutions to address immediate needs, it is one that also presents an opportunity to make long-term improvements to construction workforce development and mentoring programs.
The effects of the construction worker shortage are far reaching. More than 90 percent of construction firms are having a hard time finding workers, according to a recent survey by the Associated General Contractors of America (AGC). To meet our nation’s construction needs, especially considering President Biden’s $1.2 billion infrastructure act, the industry needs more than 2,000 additional workers per day, according to the Home Builders Institute. That works out to 83workers per hour and one worker every minute.
Together with supply chain challenges confronting AEC firms, construction worker shortages are inflating project costs and injecting uncertainty into the timing of deliveries, according to AGC Chief Economist Ken Simonson. More concerning, the lack of qualified labor threatens our ability to make critical infrastructure upgrades, obstructing what should be full pipeline of some $1 trillion in national projects supported by the influx of federal infrastructure funds.
More generally, labor and skill shortages are not only eroding profitability across the construction value chain but are also threatening to temper economic growth. Every $1 billion in additional construction spending creates 3,900 well-paying construction jobs, according to the Associated Builders and Contractors. Fewer jobs mean less consumer spending and tax revenue.
Construction Workforce Shortage: How Did We Get Here?
Unfortunately, it appears that the AEC industry is stuck with these problems for the foreseeable future. And that impacts millions of us—over 10 million workers, market researcher IBISWorld reported for 2022. And that doesn’t account for architects, engineers and related industries, from material providers to logistic services.
McKinsey& Company blames these problems on structural shifts in the labor market. The number of job openings at the end of 2021 were double what they were just prior to the pandemic two years earlier, for example, but the historically low unemployment rate remained roughly the same in both periods. That marks a significant departure from the historical relationship between job openings and unemployment.
A few trends are behind this new paradigm. The pandemic accelerated retirements. And heightened concerns about physical and mental health, as well as a lack of childcare, have prevented the unemployed from reentering the labor market. Those changes have likely affected the construction workforce to varying degrees.
But two catalysts in particular have had a profoundly negative impact on what once was a steady stream of workers flowing into our industry. First, critical construction training programs have dragged their heels to restart following the pandemic, largely because of health safety fears. Second, immigration has-been an important source of construction labor. But net migration began tailing off in 2016, and the health crisis only exacerbated the decline.
New Approach to Mentor Programs Needed
Thedore situation in which the AEC industry finds itself today and thewless-than-rosy outlook mean that private companies, industry organizations, trade unions, foundations and government agencies must work together to create workforce development solutions. Some, like the ACE Mentor Program, are doing their part to attract high school students to AEC careers. But more needs to be done to excite students about working in our field.
I recently attended a White House gathering with other business leaders to discuss how the U.S. could address labor shortages, especially in sectors that require substantial education in science, technology, engineering and math(STEM). It became evident that we have the tools to significantly improve construction workforce development. The question is, how do we apply them to all communities, and how can we incentivize various training initiatives to work together to enhance the workforce pipeline?
Similar to the ACE Mentor Program, for example, building trade unions have an opportunity to expand their training programs and make them inclusive to all communities. Moreover, if unions and organizations like ACE began working together on training programs, they could broaden their reach into underserved neighborhoods to develop untapped resources. By participating in these initiatives, philanthropies like the DC College Access Program and the College Success Foundation, which promote STEM careers and provide college scholarships to students, could also boost the appeal and visibility of the AEC industry.
Those efforts alone, if employed sooner rather than later, could help address construction worker needs in the coming months. But to materially strengthen the workforce pipeline for the long term, the AEC industry should begin creating interest in STEM-related careers at the earliest stages of education. Ideally, in collaboration with training programs and scholarship funds, we could create applications or other methods to continue to cultivate student interest in STEM as they move through elementary school and high school.
Given the various pressures on the construction industry at the moment, AEC company executives may have trouble envisioning solutions that don’t pay immediate dividends. But if trade unions, the AEC industry, foundations, government and other parties with a vested interest in construction and STEM careers commit to work together to establish robust worker development programs today, we will strengthen our resiliency and prospects for growth tomorrow.