Construction Labor Shortage and Skills Gap to Worsen

The skilled labor crisis in construction is going to get considerably worse during 2022 and 2023, experts warn. This crisis was caused by the pandemic which saw many construction workers leaving the industry.

“The pandemic resulted in a 14.5% decline in construction employment from February to April of 2020,” says Dr. Anirban Basu, chief construction economist, Marcum LLP. “Rather than helping the situation, that further exacerbated industry challenges by persuading some workers to enter retirement earlier than anticipated and inducing others to seek employment in other industries, including those that offer the ability to work remotely and/or on flexible schedules.”

The exodus continued despite substantial increases in the wages of skilled construction professionals. “Over the past 12 months, construction wages climbed 5.1%, increasing $0.19 in January 2022 alone,” Basu explains. “Construction input prices have also raced higher. Not only does that squeeze industry margins, it jeopardizes industry recovery altogether by causing certain project owners to delay or cancel projects because of elevated bids.”

Quoting from the JOLTS Analysis report, 4.4% of construction jobs did not get filled last year. This number is expected to rise over the next two years. The reason for the increased need for skilled construction professionals is that the infrastructure spending bill has made available funds for new projects. With every $1 billion in spending, construction gains 3,900 jobs.

A recent study showed that the construction industry would need to add 650,000 workers, in addition to normal demand, in order to meet needs in 2022. Add that concern to an aging workforce that is heading for retirement and the issue is further compounded. “An added concern is the decline in the number of construction workers ages 25-54, which fell 8% over the past decade,” says Basu. “Meanwhile, the share of older workers exiting the workforce soared.”

Another 2019 study showed that 41% of the current construction workforce is expected to retire by 2031.

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