Construction Labor Shortage – Myth or Reality?

by Jeremy T. Vermilyea

Over the last few years, much has been made about the availability of construction labor, or rather, the lack thereof, and what to do about it.  This article explores the labor shortage issue and examines some possible remedies.

First, is the perceived shortage real?  The answer to that depends on where you look.  The National Center for Construction Education and Research mentions “the critical workforce shortage facing the construction industry.”  But the United States Bureau of Labor Statistics states that “[e]mployment of construction laborers is expected to grow more slowly than average for all occupations through the year 2014 as the construction industry in general grows more slowly than it has in the recent past.” 

Regionally, the Alaska Department of Labor reports a “critical shortage of resident workers with construction skills.”  The Oregon-Columbia chapter of the Associated General Contractors (“AGC”) reports on the increasing difficulty in recruiting skilled workers into the industry, combined with an aging workforce in Oregon.  The Departments of Labor in Washington and Idaho have also reported shortages of skilled and unskilled workers in the construction industry. 

At the same time, the cost of labor, and construction materials is increasing at rates greater than in other industrial sectors.  So the effect, at least anecdotally, is that there are fewer workers to do more work at a higher cost to the public and to consumers.  And it appears from news reports, regionally and nationally, that this shortage will grow more severe over time. 

The big question is why?  There is no simple answer.  The aging baby boomer population, the backbone of the American workforce for decades, has begun retiring, and subsequent generations provide fewer workers.  Our economy has evolved from primarily a manufacturing and construction-based economy to one based on providing information and service.  Our schools, at every level, have suffered huge shortfalls in funding, and vocational/technical education programs have been reduced or eliminated in nearly every state.  Furthermore, controls on immigration have come back to bite the construction as well as farming and some other areas of the economy.

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The fact that there is no clear consensus on the scope of the problem has not curtailed efforts to slow or remedy the perceived shortage.  Many such efforts focus on education.  In Oregon, for example, several construction-industry trade associations have banded together to help form the Northwest College of Construction (“NWCC”), which opened its doors in a refurbished warehouse in Northeast Portland in 2006.  There are also efforts by the AGC and Oregon Building Congress to revitalize technical training at the high school level, including establishing a charter school for construction in the Portland Metro area.  A number of other initiatives have been taken by different groups, all seeking the same thing—protect the long-term health of the construction industry by ensuring a sufficient and qualified supply of labor.

In Alaska, construction is a huge segment of the economy, and according to the Alaska Department of Labor, construction trade and craft workers averaged over $59,000 in earnings in 2004.  Yet despite the earning power of construction jobs, more than 20 percent of Alaskan construction jobs are filled by people who reside outside the state.  Alaska simply does not have enough trained construction personnel to fill all the available jobs.  To compound the problem, the Alaska Department of Labor estimates that construction job growth will exceed 15 percent over the next decade, while nearly 40 percent of the workforce is expected to retire during that period.  These estimates do not take into consideration the additional workers who will be needed if a natural gas pipeline should be constructed during that period—a project that could dwarf the size of the Trans?Alaska Pipeline project in the 1970s.