Signs abound that a nationwide shortage in skilled construction labor may threaten projected growth, especially given a recent uptick in industry activity, and many construction executives expect the situation to worsen during the coming years. According to a construction labor survey conducted by the Associated General Contractors of America and SmartBrief, respondents from the Midwest and South are suffering from more widespread shortages
than the West and Northeast.
Credit: SmartBrief/AGC

Data released on August 1 by the Bureau of Labor Statistics indicated that the construction industry is surging, with July employment at the highest level since May 2009. The sector added 211,000 jobs and employed more than six million workers in July 2014. According to a study by the Associated General Contractors of America (AGC), nonresidential construction employment increased by 9,100 for the month and has grown by 2.6 percent since July 2013.

According to a survey conducted by AGC and SmartBrief, the dearth of workers is already affecting operations around the country, and respondents suggest that a shortage of skilled labor is not limited to any one sector, but a persistent problem across all of them. General contractors accounted for 47.7 percent of those who answered the survey, followed by those who described themselves as subcontractors at 28.1 percent.

Notable results from the survey include:

• Two out of three companies in the construction industry have faced a labor shortage over the past year. "Many construction firms are already having a hard time finding qualified workers and expect construction labor shortages will only get worse," said Stephen Sandherr, the AGC's chief executive officer. "We need to take short- and long-term steps to make sure there are enough workers to meet future demand and avoid the costly construction delays that would come with labor shortages."


• One out of four companies say the shortage of skilled labor has forced them to turn down work. While unemployment rates in the construction industry have fallen from more than 20 percent in 2010 to single digits in recent months, skilled professionals available and qualified to perform are few and far between, and competition is growing more intense by the day in markets with high demand.


• Seven out of 10 companies say they're paying more for skilled labor this year than they did last year, according to the survey, and 13 percent of survey respondents described wage increases as significant. "Many construction firms looking to expand their payrolls are finding a surprisingly tight labor market," said Ken Simonson, the AGC's chief economist. "These expanding labor shortages threaten to impact construction schedules as firms struggle to find enough qualified workers."


• More than 80 percent of companies are willing to pay more for skilled labor, according to the survey, with five percent of respondents willing to pay "significantly more." As competition grows more intense in markets where construction is bouncing back, anecdotal reports of firms poaching workers from other job sites and failure of crews to show up for jobs as scheduled have proliferated in the media, a trend which could compound costly delays, placing projects behind schedule and over budget.