Labor Shortage Squeezes Builders
Date Posted: May 8, 2017
Posted In: Ideas, Workforce,
From The Wall Street Journal: A growing labor shortage in the commercial real-estate industry is driving up the costs of some projects and could complicate lawmakers’ plans for a $1 trillion infrastructure-spending program, contractors say.
“Ever since we came out of the great recession, many folks in our industry have been saying: it’s coming, it’s coming, it’s coming,” said George Nash Jr. , director of preconstruction for Branch and Associates, a Roanoke, Va., contractor. “Today the problem is there.”
Construction businesses, excluding those building single-family homes, employed close to 4.2 million workers in April, up 3,000 from March, according to an analysis by the Associated Builders and Contractors, a trade group. That was the highest employment level since November 2008, though still below the record 4.4 million workers employed in the nonresidential construction segment in February 2008, the analysis said.
Labor pressures are increasing in the construction industry as hiring overall accelerates across the U.S. economy. On Friday, the Labor Department reported that nonfarm payrolls rose by a seasonally adjusted 211,000 in April and the unemployment rate fell to 4.4%, the lowest level in almost a decade.
Among the hot pockets of construction activity are office development in New York and condominium and rental-housing projects in downtown Los Angeles, Boston and Miami. Big infrastructure projects include the modernization of Chicago’s O’Hare International Airport and a tunnel in Seattle that will replace a viaduct vulnerable to earthquakes.
Contractors throughout the country said that as the workload grows, they are beginning to see shortages of electricians, carpenters and other subcontractor laborers.
When they bid out jobs two years ago, several contractors said, two or three subcontractors would typically respond for each part of the project. Today they are running into situations in which there is only one bid, making it harder to hold down costs, they said.