Well, it’s official—construction workers are essential. And we are not just talking about the fact that states and lawmakers across the country labeled us as such during the COVID pandemic, but housing overall is an essential item for the economy’s health.
But there is a problem. There are not enough laborers to build the houses and perform the remodeling necessary to keep up with the demand.
The construction industry is one of the top industries in the U.S., contributing $1.2 trillion dollars to our economy every year. About half of that is new construction (residential and commercial buildings), and the other half is repairs, renovation and replacement. Add real estate to that number, and you get closer to $1.6 trillion. Not bad for 365 days of work. In fact, the housing market is the life blood of the U.S. economy and employment, with every new home being built creating 3 new jobs and nearly half of all small businesses having some connection to the construction industry. While the banking and loan issues in the housing industry of the great recession (2008/2009) took down the economy, it is this same industry that will save us by creating the momentum and jobs necessary to get us out of the COVID recession.
When you break it down to basics, our challenge is two-fold. First, there are not enough housing units in the U.S. Whether it be new homes or existing homes, our inventory levels are at one of the lowest points in history. Some suggest we need anywhere from 2.5 to 5 million more new construction housing units to catch up with actual U.S. housing needs. We came into this recent recession low on single family home inventory (actually good news), so builders and contractors need to get to work building and remodeling more homes, thus creating more jobs. Imagine if we actually built 5 million homes, and the formula of three new jobs created per home was applied to it…we would need 15 million workers.
Secondly, the bigger issue: there are not enough people coming into this industry, especially on the laborer side. We have a definite workforce development (WFD) crisis. There are over 700,000 construction companies in the U.S. alone, each with a need for workers. The number of people employed in the construction industry (currently 8.8 million) has grown at a rate of approximately 2.5% for the last several years, even though housing needs are double that percentage. It is estimated (even using flat housing growth rates) that the construction industry will be short a minimum of 880,000 workers over the next three years. When you add this gap to the trend of the reduction of immigrants coming into the country (down 15%) over last few years, it makes this issue even greater, as immigrants make up nearly 30% of the construction worker population.
So how do we bridge the gap?
Growing Our Worker Base
A lot of people, companies and associations are “talking” about the workforce development issue, but very few are actually doing anything to address it. We as an industry (or as product category leaders) need to be more focused and creative in leading the development of workforce solutions. There are people to fill the positions—they just don’t know it yet. Many different people can fill this void. The challenge is to find them, convince them of a career in construction and then train them well.
Nearly 35% of high school graduates do not go on to college, and many of them struggle to find the right career or any true career other than temporary, hourly jobs. This issue will be tremendously exaggerated post-COVID, as the typical jobs graduates find are in limited availability or will be saturated with more experienced workers laid off from other jobs. Why aren’t more young adults considering our industry? In two words: perception and parents. The perception is that construction and carpentry are less-than-optimal careers to get into. Primarily because of their parents. Parents are their own worst enemies, as they push college as the only logical choice for their children, but then complain when their son or daughter is still living at home three years after college graduation. Over half of college graduates do not even work in the field in which they earn a degree. And more importantly, the average student comes out of college with a $40,000 student loan to pay off over the next several years.
What about career changes or displaced workers? Even before COVID, we had workers across the U.S. being laid off. Think about all the automotive plants that were shut down with thousands of workers furloughed. These workers are an excellent profile of workers to go in construction—hard workers who can pass drug tests, understand the importance of quality, and love to work with their hands to create something meaningful. What could be more meaningful than building or remodeling a home where families live?
And what better group to represent your company than retired military personnel. There are nearly 19 million veterans living in the U.S. today (7.6% of our population), and the average age of retirement is 40 years old. They know how to follow a process and lead projects and people. And they show up on time. Imagine the structure, commitment and work ethic impact these employees would have on your jobsite.
Finally, let’s not forget immigrants and refugees. Many of those finding refuge in the U.S. are also looking for jobs. These are dedicated, grateful and hard workers. The only barrier may be language, which many contractors remedy by putting a bilingual chief on the crew to provide direction and training.
As a manufacturer or association, a pre-trained laborer pool is a huge asset to the builders or contractors you serve, as this expands the number of jobs they can take on and reduces quality issues. This helps reduce the constant focus on price, as this is much more important than saving a few pennies on the product.
The construction industry offers stability for those who embrace it. Not only is it deemed essential, it can offer good security for those willing to jump in. Instead of being strapped with a $40,000 student loan, think instead that the average pay for a job as an installer can be nearly $40,000, plus other benefits like health care. A strong way to start a career and support a family. Plus, the more experience you provide workers on the jobsite, the more potential they will have to grow and develop their career and your business. Many tradesmen can move up through the ranks of a company to become a foreman (average pay $70,000).
Succession planning of family-owned construction businesses are struggling as the sons and daughters of these companies want little to nothing to do with our industry. I teach an entrepreneur class at the University of Notre Dame, and many of these smart and passionate millennials desire to be entrepreneurs; but we as a construction industry have done nothing to make our industry appealing to this younger generation.
A Case Study in Success
Interrupt recently worked with the Vinyl Siding Institute (VSI) to put together a comprehensive Workforce Development strategy and program to help fill the void of needed workers and talent trying to find a career. Vinyl siding products are on the vast majority of homes across America, installed by thousands of contractor companies. Vinyl siding is a great example of a category that can take advantage of a workforce development initiative because it is not only the highest demand cladding product, but manufacturers have designed it to be one of the easiest materials to install, and there is a comprehensive training and certification in place. And over the years, VSI has developed a comprehensive certification and training program to ensure they are training qualified crew members for the siding contracting companies across North America.
So, those looking for a career in something meaningful like home building and construction can begin their new career. Check out https://www.vinylsiding.org/work-in-vinyl-siding/ to learn more about filling the construction industry labor needs with the next generation of workers.
Watch our recent On the Spot below on how we helped the Vinyl Siding Institute create a strategy to tackle their industry's workforce challenge.
6 Considerations for Success
Training is Key: Establish a strong and replicable training program that can be delivered either in-person or virtually. You should assume only 50% will pass certification, so make sure to get the proper numbers in training classes.
Tell a Career Story: Starting a career for one of the largest and most essential industries with good pay and benefits is a lot more compelling than posting for an hourly job that may call you off. We as an industry must position this as a strong career opportunity—not just a part-time manual labor job.
Make & Leverage Partnerships: Work with trade schools, community councils and industry associations that have connections to the groups of people who may be the best fit for your training. Leverage their local or national credibility and lists of candidates.
Leverage Market Activity: If there is a plant or business that has layoffs, have a turn-key program and communication plan in place to reach out to these people to give them an alternative to unemployment.
Involve the Contractors/Builders: When you train, make sure the companies (recipient of your efforts) are all-in with you and involved in the sessions, interacting with potential job candidates once training is complete. Get them hired and to the jobsite quickly.
Give Them Stability: Once you have workers trained and employed, make sure there is a retention program in place to keep them from jumping ship, as they are a valuable commodity in the local market. Nearly 50% of all construction laborers are hourly or part time. No wonder they go from contracting company to company, working and leveraging the best pay. If you’re not loyal, they won’t be either.
The opportunities in the construction industry are endless—and, oh yeah, essential. Those companies and associations that find a path to solve the workforce development crisis will be the big winners. When you help builders and contractors solve one of their biggest issues of growth, you become more value to their success, and the conversation about price diminishes. Don’t just talk about the issue. Do something about it and you will be rewarded.
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In these uncertain times, bold leadership is imperative. Now is the time to invest and advance your company’s position in the market. Your leadership approach will have an direct impact on your business’s future success.