A staple of the national and local economies is the home building industry. Like many other sections of the country, multi-family rental housing development is outpacing single-family home projects as Orange County and the Hudson Valley emerge from COVID-19 restrictions imposed by New York State.
One of the critical factors in building affordable housing here and elsewhere is the availability of skilled construction labor, which was a problem prior to the pandemic that has only been exacerbated by COVID-19, which has led to massive job losses in the construction industry over the past five months or so.
Ed Brady, president and CEO at the Home Builders Institute, on a recent episode of "Building the Dream” series on TheHill.TV, noted that the housing industry can help revive the U.S. economy, but it must have a sufficient skilled workforce to do so. The Home Builder’s Institute is a non-profit partner of the National Association of Home Builders that is a national leader for career training in the building industry.
“Housing affordability is an ongoing issue,” stated Brady in a report entitled “Addressing Labor Shortage Key to Improve Affordability, Providing Job Opportunities in Wake of COVID-19" at nahbnow.com. “Labor is a third of the cost in a residential home. We continue to look at supply and at the labor force in trying to keep those costs down.”
Noting that the home building industry was hit hard by the Great Recession and had a labor shortage of 250,000 to 400,000 jobs, the industry now has to contend with the coronavirus pandemic’s impacts.
Brady added the housing industry has continued to look at a number of outlets and opportunities to attract workers who may not have considered a career in construction—including women.
“As we fully employ and fully develop the skilled labor throughout the country, the crisis will stabilize,” he predicted as the industry continues to train virtually as the coronavirus pandemic continues. “When there are 400,000 empty jobs, prices continue to rise. It will affect the affordability of housing just like land increases have affected affordability,” Brady related.
Judy Dinelle, building ambassador for 84 Lumber, stated in the NAHB Now report, “It’s not just about hiring women,” You have to create an environment for people to grow and not be stagnant. If you do it naturally, then you’re going to be able to draw more women into construction.”
Prior to the pandemic, the Associated General Contractors Association and Autodesk released a survey that detailed the extent of the construction labor shortage.
The survey, released a year ago, found that 80% of the nearly 2,000 construction firms that responded reported difficulty in filling hourly craft positions that represent the bulk of the construction workforce.
“Workforce shortages remain one of the single most significant threats to the construction industry,” said Stephen E. Sandherr, AGC’s chief executive officer when the survey results were released in August 2019. “However, construction labor shortages are a challenge that can be fixed, and this association will continue to do everything in its power to make sure that happens.”
All four regions of the country were experiencing similarly severe craft worker shortages at the time, with 83% of contractors in the West and South reporting a hard time filling hourly craft positions, almost identical to the 81% rate in the Midwest and 75% rate in the Northeast.
Seventy-three percent of firms reported it will continue to be hard, or get even harder, to find hourly craft workers over the next 12 months. One reason for their worries is that contractors are skeptical of the quality of the pipeline for recruiting and preparing new craft personnel. Forty-five percent say the local pipeline for preparing well-trained and skilled workers is poor. Also, 26% said the pipeline for finding workers who can pass a drug test was poor.
Construction firms reported they were employing a number of strategies to combat the labor shortages, including boosting pay and compensation. Two-thirds of firms reported they had increased base pay rates for craft workers. A total of 29% reported they were providing incentives and bonuses to attract craft workers. Firms were also taking a greater role in developing their own workforce. Forty-six percent reported they have launched or expanded in-house training programs and half report getting involved in career building programs.
“Construction workforce shortages are prompting many firms to innovate their way to greater productivity,” said Allison Scott, head of construction integrated marketing at Autodesk. “As the cost of labor continues to increase and firms look to become even more efficient, technology can enable better collaboration and ultimately lead to more predictable outcomes. There is also opportunity in untapped pools of talent such as tradeswomen, veterans, and young people looking for an alternative to the traditional four-year university.”
The construction industry, which lost hundreds of thousands of jobs during the COVID shutdown, is showing signs of rebound in some sectors. In April, as the pandemic took hold in the U.S., the AGC reported the loss of 975,000 construction jobs from March to April, which constituted nearly 13% of the industry’s employment and was, by far, the worst one-month decline ever. Unemployment among workers with recent construction experience soared by 1.1 million from a year earlier, to 1,531,000, while the unemployment rate in construction jumped from 4.7% in April 2019 to 16.6%.
The industry has recovered somewhat to the devastating early impacts of COVID-19. The AGC reported on Aug. 3 that private residential construction spending shrank by 1.5% in June as spending on single-family homebuilding plunged 3.6% to its lowest level since late 2016. In contrast, new multifamily construction spending climbed for the third month in a row, posting a 3.0% increase from May.
Association officials said that state and local budgets are getting hammered by declining economic activity related to the ongoing pandemic. The AGC urged Congress and the administration to quickly pass new infrastructure and recovery measures to help reverse the declines in public spending. They added that those new investments would help put many people back to work in good-paying construction careers.
“It will be hard to rebuild the economy if state and local governments lack the resources needed to improve roads, retrofit schools and keep drinking water safe,” said NAHB’s Sandherr. “Instead of letting people languish in unemployment, Washington can put people back to work simply by boosting investments in needed infrastructure and other construction projects.”
For the full “Addressing Labor Shortage Key to Improve Affordability, Providing Job Opportunities in Wake of COVID-19,” go to: http://nahbnow.com/2020/07/addressing-labor-shortage-key-to-improving-affordability-providing-job-opportunities-in-wake-of-covid-19/
