Worker Shortage an Ongoing Challenge for Construction Firms in 2018

In a recent survey of more than 1,600 construction firms conducted by Associated General Contractors of America, respondents reported that their companies will struggle to find and retain workers for the upcoming 2018 summer construction season.

The survey showed that the labor shortage spans all regions of the country and impacts both union and nonunion firms of all sizes, including various specialty markets.  Specialties needed include carpenters, electricians, bricklayers, concrete workers and plumbers.  Most firms surveyed believe these labor challenges will continue or even become a greater challenge over the next 12 months.

According to the survey, firms are hiring roughly the same number of workers as in past years; however, the quantity of job openings has increased significantly.  The result is that contractors are taking more time on average to fill open positions, and therefore, must pay more overtime to existing workers and spend more on training lesser-experienced hires.

In order to attract new workers, firms are engaging directly with career services organizations at high schools, colleges, and vocational programs in order to make connections with workers early in their careers and aid in recruitment.

Firms are responding to the labor shortage by increasing base pay rates and offering new benefits and bonuses to retain workers.  Firms are also increasing their usage of subcontractors to complete work as well as staffing firms to find workers.  Additionally, firms are investing in new equipment, tools and machinery designed to use man hours more efficiently.  To a lesser extent, firms are increasing their utilization of offsite prefabrication and virtual construction methods to make more efficient use of man hours.

As firms improve pay and benefits, they continue to make strides to improve their own margins on employee labor.  According to a Construction Financial Management Association annual benchmarking poll of construction companies, average revenue per full-time equivalent employee (FTE) increased from approximately $338,000 to $352,000 in 2016 and 2017, respectively.  This translated to an increase in gross profit per FTE from approximately $46,000 to $51,000 in 2016 and 2017, respectively.

While the labor shortage is not a new challenge for the construction industry, it will continue to require the attention and careful management by firms in 2018. If you have any questions about the worker shortage challenge, contact us. 

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2023 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
New Research and Development Capitalization Requirement Shuffles System
Contractors May Benefit From SALT Cap Workaround
Construction Talent Retention
Construction Talent Foundations
8 Bonding and Surety Trends to Watch in 2023
Construction, ESG BY Jay Meglich
Opportunities and Challenges in the Current Construction and Engineering Environment
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×