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Shortage of Workers in the Construction Industry Reach Crisis Levels

The housing market across the United States is still seeing strong demand nearly two years after the World Health Organization declared a pandemic. Yet, the supply of houses that are for sale continues to wane.

According to a new study by Realtor.com, the country still needs to build 5.24 million homes, an increase of 1.4 million compared to 2019, to satisfy the existing demand.

This does not come as a surprise. The housing shortage has been going on pre-pandemic and was only exacerbated in the past two years as mortgage rates fell. From 2012 to 2021, about 12.3 million households were formed. However, during the same period, only 7 million new single-family households were built.

The demand for housing would have been good for the construction industry. The activity will not cease. There will be new construction projects for builders across the nation. There will also be strong demand for construction supplies, equipment, and, of course, laborers. However, in the past year, the industry was inundated by shortages, especially in labor.

Construction Workers for Hire

The pandemic lockdowns that occurred shortly after the virus started spreading widely across the world also caused millions of people to lose their jobs. As offices and retail establishments closed, workers found themselves without a source of income. The pandemic also led to one of the worst economic recessions in the history of the U.S.

But when construction activity resumed, builders struggled to fill open positions.

The problem is not the lack of people willing to do manual labor. The shortage of workers within the construction industry can be traced back to 2008 during the Great Recession. When the housing market went from boom to bust, the country experienced a steep economic slump. It halted construction activity and workers left to pursue other careers. They have not been back since.

Meanwhile, old tradespeople are reaching retirement age. There are fewer young people who are interested in working in the industry. Plus, during the pandemic, the training of would-be workers was halted.

The industry needs to hire 61,000 new workers every month over the next three years in order to keep up with the demand for new housing. In total, 2.2 million more skilled workers are needed.

Ed Brady, the CEO of Home Builders Institute, called it a crisis.

Lack of Workers Stalls House Construction

The shortage of labor in the construction industry has been a huge blockade that prevents builders from fulfilling projects rapidly.

Even if construction materials and equipment are available, there is still a need for skilled workers. It is easy to find a high-quality skid steer loader for sale, but the problem is hiring a worker who can drive and operate it. In some cases, companies had to hire applicants with zero experience working in construction just to fill open positions.

In fact, the supply of homes across the country has repeatedly hit a record low over the past two years because there are not enough new houses being built right now.

The problem is, with limited supply, the cost of owning a house will continue to rise at a record pace. Builders cannot afford to build low-cost homes when the cost of labor is sky-high.

Future of Construction Work

However, builders are optimistic that the situation will improve in the future. There are people who are realizing that to get a job in construction, they do not need to go to college. Yes, there is training involved, but workers do not have to attend university for four years and go into debt to find a job. Moreover, skilled trade jobs can provide a decent living wage.

There are also new interests in careers in construction among young people. Experts predict that building information modeling (BIM) and virtual design and construction (VDC) will be among the up-and-coming career options that will capture the interest of the next generation of workers. A few universities, including Purdue in Indiana, are already offering degrees in BIM and VDC.

As of now, companies are trying to attract workers by offering higher wages and sign-on bonuses. From 7.26 million construction workers in September 2020, the number of Americans who are now working in construction went up to around 7.45 million.

The construction industry in the U.S. is in dire need of millions of workers to complete projects on time and satisfy the severe demand for new houses, especially single-family homes, across the nation. It is a problem that has been around before COVID-19 but was exacerbated by the pandemic. The lack of workers is causing the cost of owning a home to rise.

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