More construction firms cut the number of employees than added any over the past year for the first time since the pandemic, but contractors still face a widespread shortage of skilled workers and overwhelmingly expect to add workers, according to a new workforce survey released Sept. 3.
The Associated General Contractors of America and the National Center for Construction Education and Research found that 37 percent of respondents reduced their headcount by at least 5 percent in the past 12 months, compared with 34 percent who increased it by at least 5 percent.
But 73% expect to add employees over the next year and only 8% expect further reductions.
“While some companies are adjusting to weaker demand, many contractors continue to compete for a limited supply of skilled workers,” AGC Chief Economist Ken Simonson said during a media conference announcing the results.
The survey, conducted in July and August, received responses from 1,830 people representing companies of different sizes and market sectors. About 87% reported vacancies for hourly craft workers and 82% for salaried positions. Nearly nine in 10 companies with vacancies said those jobs are as difficult or harder to fill than they were a year ago.
Half of respondents said that available candidates lack the necessary skills, certifications or licenses. Electricians were the hardest trades to find, cited by 81% of companies looking for them, while 75% of companies looking for superintendents reported difficulty filling these jobs. Project managers and supervisors followed with 74%.
Keep new workers
The problem goes beyond recruitment. Eighty-three percent of companies reported at least some turnover among new field employees within their first 90 days. The mismatch between worker expectations and the reality of construction was the most cited reason for early departures, followed by physical demands and travel or scheduling requirements.
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“We still can’t find enough, so we better figure out how to conserve what we get,” said Boyd Worsham, president and CEO of NCCER.
ACE Electric faces this problem as it expands rapidly. Human Resources Director Mindy Bates said the Valdosta, Ga.-based electrical contractor has brought on more than 500 employees this year, but has had to hire about 700 because of turnover.
A mismatch between expectations and job reality is contractors’ top explanation for why new field employees leave within their first 90 days. Click on the graphic to enlarge.
Chart courtesy of AGC/NCCER
ACE now brings new employees to Valdosta for a weeklong orientation that covers safety, company culture, benefits and career paths instead of sending travel hires directly to their first project. Bates said the change, better job planning and expanded workforce development, including in-house programs for field staff managers, superintendents, project managers and estimators, have helped reduce turnover by more than 40 points over two years.
“You can’t hire your way out of this situation,” Bates said. “We also have to grow it from within.”
ACE also provides new hires with written and practical skills assessments. When a worker’s abilities fall below the level claimed during hiring, the company can offer a lower rating and salary rather than sending the employee home.
“You’ve had someone who has gone out of their way to lie to you just to get here because they can’t wait to work,” she recalled telling her colleagues. “Let’s find out something else.”
Bates said 83 percent of workers offered a downgrade within the past year accepted it, though he said ACE has not yet analyzed subsequent turnover for that group.
Holder Construction Senior Manager Aja Gower said contractors ultimately need to turn today’s entry-level recruits into experienced workers that the industry lacks.
“We hope to solve this problem in five years because the people entering these programs today will be ours [field crew leaders] in five years,” he said of Holder’s workforce programs.
Projects affected by the shortage
Labor shortages delayed projects for 42% of respondents, with labor gaps between contractors or subcontractors being the most cited cause of delay. Only 26% reported no significant project delays.
Data center construction is intensifying competition in some markets. About 28% of respondents performed data center work in the past year. Among companies that reported workforce effects from these projects, 58% cited increased competition for skilled workers, 49% increased wage pressure and 36% more difficulty filling vacancies.
ACE, which expanded into the Columbus, Ohio market amid growing data center work, has reached a point where labor availability is affecting the projects it can take on.
“We have to turn down the job,” Bates said. “Most of the time we have to turn things down, it’s because of the leadership it takes to execute these jobs, especially the big hyperscale ones.”
Immigration enforcement is creating another unequal constraint. Twenty-nine percent of companies reported at least one direct or indirect effect in the previous six months, ranging from 42% in the South and 37% in the Northeast to 22% in the West and 17% in the Midwest.
Simonson cautioned that the survey does not establish that the application itself caused project delays. Evidence of that connection remains anecdotal, he said, and larger non-residential projects may have some ability to re-sequence work if a particular trade is affected. But mission-critical projects offer less leeway: “You can’t afford to miss a day of work.”
