The construction industry will need to add nearly 650,000 additional workers on top of the normal pace of hiring in 2022 to meet the demand for labor, according to a model developed by the Associated Builders & Contractors (ABC).
“ABC’s 2022 workforce shortage analysis sends a message loud and clear: The construction industry desperately needs qualified, skilled craft professionals to build America,” says Michael Bellaman, ABC president and CEO. “The Infrastructure Investment & Jobs Act passed in November and stimulus from COVID-19 relief will pump billions in new spending into our nation’s most critical infrastructure, and qualified craft professionals [that] are essential to efficiently modernize roads, bridges, energy production and other projects across the country. More regulations and less worker freedom make it harder to fill these jobs.”
ABC’s model uses the historical relationship between inflation-adjusted construction spending growth, sourced from the U.S. Census Bureau’s Value of Construction Put in Place survey, and payroll construction employment, sourced from the U.S. Bureau of Labor Statistics, to convert anticipated increases in construction outlays into demand for construction labor at a rate of approximately 3,900 new jobs per billion dollars of additional construction spending.
This increased demand for workers is added to the current level of above-average job openings. Projected industry retirements, shifts to other industries and other forms of anticipated separation are also factored into the model.
Based on historical U.S. Census Bureau Job-to-Job Flow data, an estimated 1.2 million construction workers will leave their jobs to work in other industries in 2022. It is expected that this will be offset by an anticipated 1.3 million workers who will leave other industries to work in construction.
“The workforce shortage is the most acute challenge facing the construction industry despite sluggish spending growth,” says Anirban Basu, ABC’s chief economist. “After accounting for inflation, construction spending has likely fallen over the past 12 months. As outlays from the infrastructure bill increase, construction spending will expand, exacerbating the chasm between supply and demand for labor.
Basu adds that another concern within the workforce shortage is the declining number of construction workers between the ages of 25 and 54. According to Basu, that rate had declined 8 percent in the last decade.
The industry’s average age of retirement is 61, with more than one in five construction workers are currently older than 55, according to the Centers for Disease Control & Prevention.
The qualifications of workers looking to enter the industry is also posing a problem.
“The scarcity of qualified skilled workers is an even more pressing issue,” Basu says. “Since 2011, the number of entry-level construction laborers has increased 72.8 percent, while the number of total construction workers is up just 24.7 percent. … More than 40 percent of construction workforce growth over the past decade is comprised of low-skilled construction laborers, who represent just 19 percent of the workforce.
“The roughly 650,000 workers needed must quickly acquire specialized skills,” Basu adds. “With many industries outside of construction also competing for increasingly scarce labor, the industry must take drastic steps to ensure future workforce demands are met.”
Looking forward to 2023, ABC says the industry will need to bring in nearly 590,000 new workers on top of normal hiring to meet industry demand, presuming that construction spending growth slows next year.
“Now is the time to consider a career in construction,” Bellaman says. “The vocation offers competitive wages and many opportunities to both begin and advance in an industry that builds the places where we work, play, worship, learn and heal.”