The Shrinking Labor Pool

How will the construction industry attract a new generation of quality tradespeople?

When it comes to employment in the construction industry, the Bureau of Labor Statistics (BLS) paints a grim picture: Since January 2008, nearly 2 million jobs have been lost. Two-thirds of these losses occurred in what the North American Industry Classification System calls “specialty trade contractors”—in other words, skilled tradespeople. Even in a time of record industry unemployment, the applicant pool for skilled trade positions continues to shrink while the quality of those applicants declines.

Despite these setbacks, the BLS predicts that the construction industry could join health care and business administration as one of the fastest growing employment markets by 2020.

But contractors who are optimistic about future growth are still concerned about the quality of the labor pool. “There are a number of skilled tradesmen that are just gone,” says John Courson, president of the Home Builders Institute (HBI). “The labor pool may not have the trades skills the industry needs.”

Some believe the shortage is here already. “Everything that we see in the industry tells us that this is happening,” says Diane Greene, executive director of the Build Your Future campaign, a construction outreach initiative through the National Center for Construction Education and Research (NCCER).

CBO interviewed industry professionals for insights into the origins of this growing problem and steps business owners can take to address it.

The Baby Boom…and Bust

There is little doubt that the recession cut numerous jobs and forced many professionals to leave the construction industry, but the shortage problem that construction business owners face today began well before 2007. “The baby boomers are starting to retire, and they were the ones leading the way in the skilled trades. Frankly, there’s not a work pool ready to replace those guys,” says Kerrick Whisenant, president of the American Subcontractors Association (ASA).

With the last of the baby boomer generation moving into the 55-and-older age group by 2020, the next decade’s new construction jobs will not be exclusively the result of market growth. Instead, the openings will come from a need to replace tradespeople who have permanently left the workforce through retirement or permanent injury, according to the BLS’s February 2012 Economic News Release.

“Our problem is that our true craft professionals are in their 40s and 50s,” says Jennifer Wilkerson, marketing director for the NCCER. “We don’t see young people stepping up to take these careers.”

Without a new generation of workers taking the lead, the construction industry could face a labor supply shortage well before 2020. According to a 2010 FMI Report, nearly 1 in 5 members of the construction workforce will have retired between 2012 and 2014—increasing the industry’s tradespeople deficit to 1.5 million.

Youth Outreach

Today’s efforts to get youth involved in the construction industry begin with education. In October 2010, only 2.3 percent of the population aged 15 to 24 was enrolled in vocational courses, according to the U.S. Census Bureau.

Initiatives like the Build Your Future campaign hope to show students and youth the opportunities trades have to offer. The campaign creates videos for high schools that promote careers in the construction industry and works at the state and federal levels to recognize the industry through Careers in Construction weeks, which recognize professional development opportunities available to youth in construction.

Greene says the next step is “getting into the mainstream” and creating an awareness network that reaches students and owners. “Business owners can embrace initiatives like ours, or they can reach out at the local level,” Greene says. “They can offer internships to students and actually get engaged at local schools.”

But engaging students is only the first step. The construction industry needs trained young workers who can meet the demands of major projects, which is where organizations like the Home Builders Institute come in. “If we don’t provide training, we won’t meet the workforce demand,” Courson says. “It’s a demand that will feed on itself and gain momentum in the coming years.”

HBI’s training covers skills essential to all construction industry sectors, including commercial construction. The programs include a significant amount of time spent on jobsites. According to Courson, the HBI training programs had an 80 percent job placement rate in 2011. “By the time we place our students, they’ve been on the job,” he says. “We take a hands-on approach when it comes to getting our students involved in the construction industry.”

An Image Change

The negative perception of construction work has created another challenge in recruiting young workers. A 2011 report presented at the Associated Schools of Construction’s Annual Conference showed that, of the 260 students surveyed in South Carolina schools, only 49 percent of youth aged 15 to 18 years old considered a person working in the construction industry as “professional.” 

Wilkerson says students do not have all the facts about the nature of trade jobs. “We need to educate people on the level of professionalism in our industry,” she says. “What used to be shop classes have been elevated to very technical classes that require a great deal of expertise.”

Getting young students to see the trades as part of the digital, rather than mechanical, age will be key in winning their participation. The Pew Research Center’s Internet & American Life Project reports that 93 percent of teens aged 12 to 17 use the Internet on a regular basis, and a high percentage also use smartphones and tablets.

Emphasizing technology in fields like equipment operation and Building Information Modeling (BIM) could give youth the incentive they need to choose construction over other advancing industries, like manufacturing and health care. “The problem is people don’t know the careers we’re talking about,” says Wilkerson. “People have no idea the technology involved.”

Contractors have known for years that new technology has changed the way they plan and execute projects. To bring tradespeople back to the industry, those advancements need to be at the forefront of recruitment efforts.

For Whisenant, reshaping the construction industry’s negative image means accurately portraying the work involved.

During the worst years of the economic crisis, the manufacturing sector appealed to younger skilled workers for its clean workspaces, competitive pay and benefits, according to Whisenant. The construction industry will have to change if businesses want to win these tradespeople back and attract new ones. “We can up our benefits and up our pay to make it more attractive,” Whisenant says.

A Win-Win Situation

Companies benefit just as much as students from educational outreach. According to Randy Highland, a regional president for McCarthy Building Companies, these programs are not only useful for recruiting, but can also build a company’s image and provide a teamwork exercise for younger employees.

“It’s a little bit of a win-win situation,” he says. “Our folks enhance their team-building skills working with students and others in the industry. Throughout your career, you are going to have to coach others and take them under your wing.”

Highland knows this firsthand: His company has been involved with the ACE Mentorship program for 10 years. This program brings together architectural firms, construction companies and engineering groups to work in high schools across the nation.

Highland says the ACE Mentorship program exposes students to the construction industry and inspires them to join a college program, either in the trades or in construction management.

“We need to make sure these college programs have a robust group of entering freshman,” he says. “If those start to diminish, we’re going to have a huge problem.”

Highland suggests that companies without an internship program should create one as soon as possible. Also, business owners should consider contributing at the local level any way they can—through a mentorship, apprenticeship, etc.

“A company should do anything that could increase the visibility of our industry and put our industry in a positive light,” he says.

During these difficult times, building a positive perception of the construction industry might also help business owners remember why they chose this industry in the first place. “There’s a lot of reward in building something tangible,” Highland says.

Becoming an advocate for the construction industry

In this year’s State of the Union address, President Obama spoke directly to the skilled labor shortage issue in the U.S., and he asked for “a national commitment to train two million Americans with skills that will lead directly to a job.” The issue has become one of legislative importance, prompting the attention of both the president and federal agencies. But big questions remain for those in the construction industry—what is the government doing, and how can business owners contribute?

According to the 2011 Digest of Education Statistics, a publication of the National Center for Education Statistics (NCES), federal on-budget funds for vocational and adult education have declined at the elementary and secondary levels. The 2011 allocations amounted to approximately $1.7 billion, a nearly $300 million decrease since 2010. The bulk of this funding is concentrated in areas of technical training and education, such as the federal grants provided to states through the Carl D. Perkins Career and Technical Education Act. However, this act alone lost nearly $138 million in 2011.

Addressing this loss of confidence in vocational education will be key in efforts to combat the labor shortage. “Business owners need to be aware of legislative initiatives aimed at appropriating training dollars,” says John Courson, president of the Home Builders Institute (HBI). “If you want to build a workforce, it takes dollars.”

Becoming an advocate for the industry can mean more than just reaching out for funds. In April 2012, Secretary of Education Arne Duncan released a report detailing major changes to the Perkins Act that would reform how vocational programs are funded. These reforms, if implemented, offer ideas that encourage the participation of private-sector business owners. Central to this private-sector engagement would be the establishment of consortia among state governments, local schools and industry employers. Federal grants would have to be met by private-sector match requirements in the form of direct funds, equipment or training facilities.

With workforce projections for tradespeople becoming bleak, government advocacy may prove to be one avenue business owners can take to prepare their industry for future workforce challenges.