Construction Growth Outpaces the Workforce

Several years after enduring a precipitous downturn, the construction industry is dealing with an equally ominous threat: widespread labor shortages. A serious gap exists between the upcoming demand for labor and the number of available workers with the skills needed to fill those positions. With construction spending in New York City growing faster than the labor pool, the local market is desperately trying to keep pace.

“Owners are always seeking better ways of expediting the delivery of projects,” said Gavin Middleton, Chief Operating Officer at Lehrer Cumming, a growing NYC-based owner advisory firm. “But this often requires more manpower and extended shifts for an already extended labor market.”

According to FMI’s 2019 Industry Outlook, total construction spending in the Mid-Atlantic region (including New York, but also New Jersey and Pennsylvania) should increase 5 percent year over year, from $153.6 billion to $161.3 billion. The trend will hold in coming years as well, with spending expected to increase at a rate of 4.5 percent between now and 2022.

At the same time, construction industry unemployment has dropped to an 18-year low. In fact, the latest job openings data from the Bureau of Labor Statistics suggests that since 2014, while the number of jobs openings has almost doubled, the number of hires has increased by just 14 percent. This large and growing gap between workforce demand and supply has led to rising labor costs, expanded project schedules, and an increasing number of quality issues resulting from both understaffed teams and under-qualified personnel.

To address these problems, construction business owners and other hiring entities have started exploring all viable options for employing and retaining qualified workers. Strategies include:

• – Increasing and improving recruiting efforts by establishing recruiting channels for key target groups and positions
• – More accurately forecasting labor needs in the short-, medium-, and long-terms
• – Retaining qualified workers during periods of slow work, when possible, so that those workers are available as soon as demand increases again. This includes prioritizing supervisory training to foster loyalty with key talent
• – Investing more (and more intelligently) in skills training and continued education programs for employees: This should include classroom training if possible, utilizing a local pool of universities and professional associations.
• – Utilizing the effective training and apprenticeship programs that contractors have developed in cooperation with unions and technical training schools, such as NEW (Non-Traditional Employment for Women): These programs can be effective in placing younger and more diversified workers on projects.
• – Working harder to organically develop internal talent: This includes designing or adapting training and mentorship programs to prepare employees for the organization’s current and future needs and goals.

As one of the key drivers in any economy, the construction industry continues to offer employment opportunities to many workers. Although numerous risks are associated with our industry, it is still a cornerstone of our local economy: Not only does it pay well, it is also the second-fastest-growing employment sector in New York City during the past eight years, as reported by the Office of the New York State Comptroller. The industry continues to create thousands of well-paying jobs every year, and while there are signs the construction boom may have peaked, construction activity remains strong.

“All of us, regardless of our role in the development process, have to continue to preserve and promote careers in construction,” Middleton said. “It offers a lifetime of opportunities and benefits everyone involved.”