Subcontractors Spent $97B More Than Planned in 2022
Date Posted: April 25, 2023
Posted In: Workforce,
From Construction Dive: U.S. subcontractors paid $97 billion more for materials and labor than expected in 2022 as profitability dropped, according to the third National Subcontractor Market Report survey by Billd, an Austin, Texas-based construction financial support firm.
Although 61% of businesses surveyed saw revenue growth, 57% saw a drop in profitability, according to the report, which was released earlier this month. An overwhelming majority of subcontractors had to pay for labor and materials before getting paid themselves, with an average wait time of 74 days.
Despite a quarter of them struggling with obstacles to secure financing, 72% of respondents are planning for growth this year, even in the face of unpredictable input costs, the report found.
Dive Insight:
“The financial burden of material and labor has always been difficult to quantify, the full extent a bit hazy. Knowing that subcontractors spent an extra $97 billion almost feels like putting a face to a name,” the report reads. “For some, it’s the missing cushion in their profit margins. It represents 97 billion instances of subcontractors financing the entire industry, all while navigating uncertainty in their payment cycles and subpar access to capital.”
Even with high inflation rates in 2022, labor and material spending accounted for a larger bump in expenses.