The Root of the Labor Problem

If you’re reading this, chances are you may be struggling to hire the skilled laborers you need to successfully run your construction business. And—as you probably know by now—you’re not alone.

The Numbers

According to the Bureau of Labor Statistics, throughout Q1 of 2018, employers sought to fill an average of nearly 223,000 construction jobs each month—the largest need since 2007. However, the factors leading to the current shortage aren’t as cut and dry.

Influences related to generational timing and economic uptick have diverged to create an industry crisis. Retiring baby boomers, lingering negative ideas surrounding construction as a viable career path for millennials, declining technical school enrollment, a lack of trade classes in high schools and the lowest unemployment rate in decades have all contributed to the problem.

And the problem has grown so much that the Q3 2018 USG and United States Chamber of Commerce Commercial Construction Index reports that 91 percent of more than 2,700 contractors, managers, builders and trade workers surveyed are having a difficult or moderately difficult time finding skilled workers.

Construction Career Collaborative

The Construction Career Collaborative (C3), a nonprofit organization in Houston, Texas, has formed an alliance to find a solution. Beginning at what they believe to be the root of the problem, C3 uses safety and craft-training programs and collaborations with local endorsers and contractors to meet labor needs across the industry.

Angela Robbins, associate director of people development, compliance and operations at C3, frequently leads craft-training sessions, and last month she presented at the Associated General Contractors’ (AGC) 2018 Construction HR & Training Professionals Conference. Following the event, Robbins took time to talk with CBO about the state of labor in the construction industry, why C3 believes a sustainable craft workforce can be created and how exactly they’re doing it.

CBO: What caused the skilled labor shortage in construction?

AR: There are a variety of reasons why the construction industry has regressed to an unskilled and unsustainable craft workforce over the past 35 years. In the local Houston market, for example, in an effort to be “low-bid,” construction companies shifted from hiring a workforce of skilled employees (who receive a W-2) to hiring independent subcontractors (who receive a 1099) to avoid paying benefits and lower their cost burden.

Compounding the problem, craft training is the foundation for construction career paths, but is often neglected. Without formal skills training linked to a specific career path, the industry cannot demonstrate that construction offers a prosperous career—not just a dirty job—to young people considering a future in the craft trades.

Add the repercussions of changes at the federal government level, such as the implementation of the No Child Left Behind Act, which cut funding for career and technical training in public education to focus on sending all students to college, and you are left with a small pool from which to select replacements for the aging construction workforce.

CBO: How is this issue impacting the industry and its future?

AR:According to AGC, 80 percent of companies that responded to their recent annual workforce survey are not able to locate and hire qualified candidates, and the lack of incoming young people, combined with an aging (and retiring) skilled craft workforce, will only exaggerate the problem.

As a result, productivity will continue to drop, and costs will continue to rise until the industry begins to make major changes in how we recruit and train craft workers. Either we voluntarily make these changes, or they will be forced upon us.

CBO: In your opinion, what is the solution?

AR: The solution must come from a combined effort to change the perception among young people and the general public, as it relates to careers in the construction trades, through increasing training opportunities in high schools, trade schools and community colleges. The industry must partner with those schools that have the labor pool in their classrooms, and begin to train them in construction basics in addition to math and computer skills.

In Houston, we see success in combatting this problem when community-based initiatives like United Way Thrive, SER Jobs for Progress and Community Family Centers partner with local contractors to train and develop workers who can be placed directly into the field. But it can’t stop there. As we recruit new employees into the industry, we must simultaneously offer them rewarding work and a career path that includes the opportunity to master their craft, be promoted to higher levels of pay, and take on more responsibility as a result.

CBO: Tell us more about the mission and vision behind C3.

AR: C3 is a collaborative effort of building owners, contractors, specialty contractors and design professionals to create a safe, skilled and sustainable craft workforce. We believe that a trained, skilled craft employee is a safer employee that also does high-quality work—and more of it—in less time, with less rework, which creates demand for his/her services.

Then, through the economic law of supply and demand, the craft worker’s wages grow naturally, attracting more people to a career in the craft trades. Construction employers benefit from greater productivity, efficiency and higher-quality work, thereby making them more profitable. Building owners receive high-performing buildings with lower maintenance costs and longer building life cycles. C3 is a rare example in which all parties benefit from participating in the process.

CBO: What solutions does C3 offer business owners?

AR: C3 works with contractors to help them define and develop new craft training programs or refine and refresh existing programs. This approach, combined with a strong connection to building owners who believe that the sustainability of a skilled craft workforce is a priority, allows C3 to mandate that all companies working on C3 projects employ craft workers who are: W-2 employees, protected by workers’ compensation insurance, credentialed in OSHA 10 or 30 safety training, provided with ongoing safety refresher training, and enrolled in craft training linked to a career path.

CBO: What do business owners have to gain from these methods?

AR:By using C3’s endorsement structure, companies are able to demonstrate their level of craft-training program implementation and success as a key component of their qualifications in the pre-bid process. This increased focus on providing a safe and skilled workforce improves construction quality and reduces the cost of a building’s construction and operation for owners and users across its life cycle. Then, companies can win more work, create more profitable operations, upgrade their technologies and build for the future.

CBO: What does the future of the industry look like?

AR:Skilled craft professionals are increasingly in high demand, and I don’t see that changing in the future, making it that much more urgent that members of the industry work together collaboratively to create a sustainable future for themselves through strong programs.

But simply paying a skilled craft worker as an employee isn’t enough. The smart business owner realizes that managing talent is a priority and creates programs to train and retain skilled craft workers. Business owners who don’t prioritize will continually be stuck in a hiring cycle as their contract workforce cycles through the door, rarely staying long enough to gain better skills.

The more an employer invests in the future of an employee, the more that employee is likely to stay and invest back in the company. Business owners who refuse to train and provide incentives for employees will lag behind the competition.