Construction Labor Shortages Continue

Generally, US construction firms are optimistic about 2019. Forecasters project industrywide growth in the commercial, residential and industrial sectors. Still, a persistent labor shortage of skilled workers remains a serious concern. According to the National Association of Home Builders, over 300,000 construction jobs are currently unfilled. Generally, studies suggest labor shortages could dampen robust economic growth in 2019.

Labor Shortage Persists as Hiring Surges

In 2019, 79% of US construction firms plan to expand their headcount to keep pace with growing demand. However, while construction workers are in high demand, a shortage of labor supply will likely mute labor force increases. Despite high demand the Bureau of Labor Statistics found a meager 22,000 jobs were created in the last quarter of 2018.  Accordingly, experts predict that due to labor shortages only 7 % of construction firms will increase headcounts by more than 25 %, with most firms growing less than 10%.

Increased Pay, Benefits and Skill Training May Not Be Enough

In order to attract qualified workers, construction companies are increasing pay. In the past year, 60% of workers saw increased base pay while an additional 29% of employers provided other incentive packages. However, many construction companies believe that pay and benefit advances are not enough to meet labor demands. Concurrently, due to the mismatch between jobs and qualified applicants, 63% of companies in the marketplace also plan to invest in additional training to meet the skills gap.

Ultimately Labor Shortages Drive Up the Cost of Real Estate

Above all the effect of the labor shortage in the construction industry will likely cause increased building costs. 37% of contractors said the labor shortage is driving up the cost of bids. Moreover, additional data points suggest that high labor demand is causing increases in both the cost and duration of construction. Studies show that about 40% of companies expect the talent gap to remain through 2019. Meanwhile, as experts expect the labor crunch to continue, it is likely that an inventory shortage may develop nationally for residential, commercial and industrial real estate. Therefore, if the labor shortage persists expect the price of available existing residential, commercial and industrial real estate to increase.