Industry in Crisis: Part One
A Skills Gap and Subsequent Labor Shortage Threatens the Future of the AEC Industry
“The construction industry is being pinched on both sides of the labor pool, resulting in a depleting workforce in the industry.” – Turner Construction Senior VP Rory DeJohn, March 29, 2017
During the spring 2017 testimony before a U.S. Senate subcommittee on Commerce, Science and Transportation, Mr. DeJohn grimly outlined a picture of an industry in dire need of help. Before his testimony was finished, he illustrated his points with data. “In 2011, there were 58,000 students pursuing civil engineering degrees. That number remains unchanged today, even as construction activity has grown by nearly 50 percent since 2011.”
Mr. DeJohn also added: “Construction employment is now at its highest level since 2008. Today, 6.8 million people show up to work on a construction project every day—in every state and every city across the country. Together, they will complete in excess of $1 trillion of construction this year. While impressive, there are approximately 100,000 fewer people working in our industry today than in 2007, when we completed approximately the same amount of work.”
Mr. DeJohn has made it abundantly clear that at a minimum, there is more work out there than there are workers to do the work—and that is a big problem.
You might be thinking, “Is the situation this bad? Industry leaders are actually testifying before government officials in hopes of discourse towards a resolution?” The answer is a resounding “Hell yes.” Thanks, in part, to other disturbing statistics like one uncovered by the Los Angeles Times. The collection of data on wages from the U.S. Bureau of Labor Statistics’ Current Employment Statistics Program shows construction workers make more than five dollars an hour less today than they did in 1972, when pay in the field peaked. Workers in 1972 yielded $31.87 an hour while workers in 2016 yielded $25.97 an hour. Granted, “peaked” means the industry was at its best for pay, but we are talking about 1972—some 45 years ago—so even factoring inflation and economic change, one would definitely take this as a stifling lack of fiscal prosperity.
So How Did We Get Here?
As is the case with most scalable arguments, there is no one reason or one cause for an entire industry to be facing a crisis like this one, but there are a few contributing factors that certainly haven’t helped the situation. With a shortage on both the trades side of AEC and the engineering/technical side, a number of aspects come into play that have culminated in this unfortunate situation.
Let’s start with the trades. One interesting trend Mr. DeJohn mentioned in his testimony comes in the form of median age. According to his findings, the average age of construction workers has gone from 36 years old in 1985 to 43 years old in 2017. That means younger people are becoming less and less interested in careers in construction, with workers now closer to retirement age as the norm.
This gap is leaving the industry with the critical roles of skilled workers left unfilled. And this is not just a North American issue, either. Manpower Group’s 2016 report on employers’ talent shortages lists skilled trade workers as the number one hardest role for employers to fill for the fifth straight year.
The U.K. is reporting very similar trends across the board, and it is rapidly becoming a costly issue. According to a Construction Industry Training Board report, among companies surveyed in 2016, more than half of employers that have had hard-to-fill vacancies report having lost business or turned down bidding for work (54%), while half of employers (50%) that have had hard-to-fill vacancies also cite an increase in operating costs. They are also facing an engineer shortage, and with Brexit here, temporary fills from other countries is less likely. According to Engineering UK, there is currently a 20,000 per year shortfall in the number of engineers coming out of school, making the findings that the U.K. needs an additional 1.8 million engineers and skilled workers by 2025 to sustain current industry volume all the more overwhelming.
So What Can We Do?
The bottom line is that, left unchecked, these skills gaps and labor shortages can ultimately lead to the slow demise of the industry as we know it. However, it’s important to remember that while the situation is certainly a pressing issue, it took time for the industry to find itself in this predicament; therefore, it will take time for the industry to dig its way out. Over the course of the next couple of posts within this skills gap shortage theme, we will be examining what some of our friends, peers and innovators are doing to help combat this tough situation. There are steps that can be taken by companies and communities of all sizes to help remedy this issue and drive our proud AEC community back among the forerunners of worldwide industry.