Looking For Labor

June 29, 2022

EMPLOYEE ENGAGEMENT, by Dr. Thomas C. Shleifer

Contractors are now recognizing the shortage of skilled labor as their biggest problem. Inflation and supply problems, most believe, are temporary and can be overcome. Not being able to put together a full crew, however, will inhibit growth and profitability for some time to come. What’s more, contractors tell me, they see no ready solutions. The construction workforce has been shrinking for the last ten years with no end in sight. We will need to attract nearly 650,000 additional workers on top of the normal pace of hiring in 2022 to meet the demand for labor, according to a model developed by Associated Builders and Contractors. (Not going to happen this year)

Where Have All Our Workers Gone?

  1. The baby boomer generation, that has been the skilled labor backbone of the construction industry for 50 years, is retiring. It is estimated that 29% of the current construction workforce will retire by 2026. That number will grow to 41% by 2031. That means nearly half of the entire construction workforce will be gone in a little over a decade.
  2. White collar jobs in climate-controlled environments are more plentiful than ever before and in recent years are beginning to match construction pay scales. Apparently, the younger generations seem to prefer comfortable indoor work to hard physical labor in inclement weather. (It's not a mystery.)
  3. Younger construction employees are also exhibiting the highest turnover rate. On average, the turnover rate in the construction industry hovers around 21.4%. However, for employees 24 or younger the turnover rate is about 64%. This turnover compounds the labor shortage problem.
  4. Finally, our industry's continuing labor shortage has enticed us into raiding employees from our competitors through the back and forth bidding up of wages. We can all see where that is heading.

What Can Be Done?

  • About baby boomers retiring. - To put it bluntly, NOTHING! We are experiencing the end of an era. We must accept that and set about attracting an entirely new skilled labor force. Coaxing boomers back out of retirement will help for about six months or a year, then they will re-retire and we're back to square one. Better we should begin now to identify and learn how to recruit a new labor pool.
  • Construction Work is Not Attractive to Gen-Z and Millennials - We will not change their mind. I get a lot of pushback on this and shooting the messenger will not change reality. We must find out how we can improve construction working conditions to better suit the younger generation's wants and needs. To brand them as lazy or entitled will not solve our problem but only make it worse. That attitude prevents us from looking at “OURSELVES” and finding ways to make construction careers more attractive to modern workers.
  • High Turnover Rate - Raiding our competitor's labor force is only exacerbating the problem. We've installed revolving doors in our trailers and as fast as some come, others leave. It’s clear that we must attack the labor shortage problem head-on and look for long term solutions to keep employees on the job.

A Bird in the Hand...

Since we realize that there is nothing we can do about 50% of our labor force retiring by 2031, we must begin to look at how we can attract replacements, and how we can keep the employees loyal to our company-and not ready to leave at the drop of a dime. This is a long-term problem requiring a long-term, step-by-step solution and the first to act will win. Important first steps might include:

  1. Limit future contracts to work you can easily complete with your existing work force. Even though this post pandemic market may look enticing, if you have no one to do the work you won't make a profit in the end.
  2. Hire a human resource professional immediately. HR professionals, some with experience in construction, are best suited and have the skills to help you build a new workforce. Under no circumstances try to solve this problem yourself.
  3. Have your new human resource manager interview every existing employee to discover how many are looking for new jobs and why they want to leave your company.
  4. Second, assign your new human resource manager the task of finding out why the modern labor force isn't coming into construction and what changes in construction working conditions will it take to attract them. You already know money alone won't do the trick.
  5. Third, your new human resource professional should open an ongoing dialogue with every employee to listen and respond to their immediate needs and long-term wants. A factor in high turnover rates in younger employees is the lack of engagement and connectedness they feel in the workplace. In an industry as fluid as construction, keeping the entire workforce connected and engaged is challenging. It will take the dedicated attention of a human resource expert.
  6. The fourth initiative assigned to your new human resource professional is to start connecting to younger workers through mobile communication devices. Gen Z’ers are digital natives: they’ve grown up in a world where the internet and mobile devices have almost always been at their fingertips, and they are quick to learn and adopt new technology. Mobile applications are an essential part of Gen Z’s day-to-day life. Research shows that 75% of Gen Z’ers rate their mobile device as their primary device of choice, 25% spend more than five hours on their mobile phones every day, and 73% cite texting and chatting as their primary mobile phone activities. Through the establishment of an “employee-only” website or the use of a social media platform, the human resource manager should provide constant daily contact with every employee of the firm. This will reduce turnover dramatically.