Worker Shortages Forcing Firms to Turn Down Work

August 28, 2014

Although construction employment rose in 223 metro areas between July 2013 and July 2014, some construction firms report turning down work due to a lack of skilled workers. Sector employment declined in 72 metro areas and was stagnant in 44 in this period, according to analysis of federal employment data by the Associated General Contractors of America (AGC). Twenty-five percent of firms report labor shortages are forcing them to turn down work, according to a new survey conducted by SmartBrief.

"Many construction firms looking to expand their payrolls are finding a surprisingly tight labor market," said Ken Simonson, AGC's chief economist. "These expanding labor shortages threaten to impact construction schedules as firms struggle to find enough qualified workers."

Dallas-Plano-Irving, Texas added the largest number of construction jobs in the past year (9,400 jobs, 8 percent), followed by Houston-Sugar Land-Baytown, Texas (8,900 jobs, 5 percent) and Philadelphia, Pa. (8,500 jobs, 12 percent). The largest percentage gains occurred in Lake Charles, La. (27 percent, 2,900 jobs), Crestview-Fort Walton Beach-Destin, Fla. (26 percent, 1,000 jobs) and Monroe, Mich. (23 percent, 500 jobs).

The largest job losses from July 2013 to July 2014 were in Phoenix-Mesa-Glendale, Ariz. (-4,800 jobs, -5 percent), followed by Bethesda-Rockville-Frederick, Md. (-3,500 jobs, -10 percent) and Newark-Union, N.J. (-2,500 jobs, -7 percent). The largest percentage decline for the past year was in Steubenville-Weirton, Ohio-W.V. (-22 percent, -400 jobs), followed by Vineland-Millville-Bridgeton, N.J. (-16 percent, -400 jobs), Cheyenne, Wyo. (-12 percent, -500 jobs) and Fond du Lac, Wis. (-12 percent, -300 jobs).

AGC officials noted that as construction employment expands in many parts of the country many firms report having a hard time finding enough qualified workers. A survey conducted by SmartBrief, in partnership with the AGC, found that two-thirds of firms report having experienced labor shortages during the past year. Those shortages are having an impact on construction activity, with 25 percent of firms reporting they turned down work during the past year because of a lack of labor.

Labor shortages are also having an impact on construction salaries, with 70 percent of firms reporting they are paying more for skilled labor than they did last year. Thirteen percent of respondents described those wage increases as "significant." Responding firms noted that carpenters, project managers and supervisors are the hardest positions to fill right now. They are also having difficulty finding qualified laborers, estimators, electricians, plumbers and ironworkers.

AGC officials said the survey results underscore the need for action on a series of measures outlined in the association?s Workforce Development Plan. Those measures detail steps federal, state and local officials should take to make it easier for schools, associations and businesses to establish career training and education programs.

According to the survey results, labor shortages appear more widespread in the South and Midwest than in the Northeast or West. The survey was distributed via the AGC SmartBrief newsletter in early June. Over 500 newsletter subscribers completed the survey, 48 percent of whom are general contractors and 28 percent of whom are subcontractors.