Magazine article Risk Management

The Struggle to Find Skilled Laborers-And What the Industry Can Do about It

Magazine article Risk Management

The Struggle to Find Skilled Laborers-And What the Industry Can Do about It

Article excerpt

With the Bureau of Labor Statistics employment data released for May, many in the construction industry are asking, "How low can the unemployment rate go?" The 5.2% construction unemployment rate is a 16-year low for the month. We have not seen a rate this low in any month since it was 4.5% in 2006.


A low unemployment rate is typically positive news. But seeing rates this low, coupled with six straight years of declines in the year-over-year construction unemployment rate during May, is cause for concern. Many contractors have voiced concerns over the lack of skilled labor available, but the industry hasn't done much to alleviate their concerns.


Unfortunately, this is nothing new. We've been speaking about the skilled labor shortage for the past several years, as we did after the last economic downturn. We only have to go back to 2000 to see a very similar pattern. Following the economic downturn of the 1980s, we witnessed a surge in construction starts and an associated lack of skilled labor. What's more alarming is we are experiencing these shortages for nearly the same reasons we did in the 1990s and early 2000s.


After the layoffs of the 1980s and corresponding high unemployment rates that ensued, it was believed that the first wave of baby boomers would reach retirement age and leave the construction labor force.

But this didn't happen. Since boomers weren't retiring as anticipated--due to increased healthcare costs and decreased Social Security and pension payments--the industry took a stance that it would forego some of the training programs that were historically invested in.

This lack of training is one of the reasons the industry now has a shortage of middle-aged, skilled workers who are ready to take leadership roles at this point in their careers. Coupled with a lack of new, younger workers entering the industry--due to a perception of better opportunities elsewhere--the skilled labor shortage is magnified.

In the 1990s the economy began to improve, and the technology industry was booming. Most industries became increasingly reliant on the usage of computers, and new workers began seeking employment in positions that utilized this new technology.

As time progressed, vocational and training schools that were once prevalent became nearly extinct, and an increasing number of laborers entering the workforce were college educated. Between 1975 and 2013, college enrollment of graduating high school seniors rose from 49.1% to 66.1%. Upon completion of school, these workers chose, and are continuing to choose, other fields to work in. As a result, the construction industry continues to fall further behind.


A short-term solution that many contractors are using to retain their workforce is offering increased wages, bonuses, overtime opportunities and retention rewards. …

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