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Big 3 Risks in Construction

I have been writing about the labor shortage in multiple vertical markets for many years, covering manufacturing, construction, and even recently discussing the shortage of healthcare staff on The Peggy Smedley Show. Industries that are critical to the foundation of our country will falter if we don’t entice the younger generation to such careers—and the repercussions will be felt wide and far. Here at Constructech, I have even gone so far as to argue that finding the right workers is putting our country at risk. In fact, I went as far as to interview Whitney Jones who leads the Submarine Industrial Base Program to discuss the criticality of hiring a new generation of workers, which is truly national security.

We need the workers to build the infrastructure that will underpin our nation’s footprint. It’s just that simple. I have been spending countless resources trying to emphasize the problem that exists so that as readers you do more than just read. You act. You go the extra mile to train, educate, inspire.

The April Jobs Report is out that looks at the labor market in construction, and it shows that the construction sector added 15,000 positions and the jobless rate dipped to 4.1%. Still, there are risks, according to Selective Insurance, which published its General Contractors Risk Report and presents data and observations for the various risks general contractors often experienced in both residential and nonresidential construction.

Here is what it found. There are three key risks and trends across general contracting to watch. Let’s unpack each of these for a minute.

Inflation: Perhaps this goes without saying, but inflation is hitting nearly every vertical market hard. Construction is no exception. Higher material and commodity prices increased the need for protection against property damage during construction. Clearly there is economic risk when it comes to paying for labor and hiring workers.

Lack of Skilled Labor: The labor shortage created a need to hire more inexperience workers, which resulted in increased incidents of injury and workers’ compensation claims. Selective Insurance observed contractors hiring inexperienced or young workers, which resulted in higher levels of claims from residential general contractors than any other age group. Quite candidly, this doesn’t surprise me. We have seen this firsthand on the Living Lab project.

Subcontractor Risk: The research also found responsibility for subcontractors’ errors has long been a general contractor risk—but now it is heightened even further with high prices, labor scarcity, and material shortages.

On this blog, I recently shared a Travelers Injury Impact Report, which suggests roughly 34% of injuries occurred during an employee’s first year on the job, resulting in almost 7 million missed days of work. Perhaps this is because they haven’t received the proper training or are too unexperienced to know how to protect themselves on the job.

Here is the challenge construction faces with unskilled labor, which of course is multi-faceted. Even though it seems jobs are bouncing back some, we are not teaching the next generation the skills necessary to have the right skills. This will be detrimental to the construction industry. It is resulting in more injuries and that means workers are not going home safely to their families at night. Too often young workers are making some very costly mistakes. In addition, sloppy work means our homes, buildings, and infrastructure are not as resilient as they will need to be in the days to come. It means the beauty we once saw in what was built is lost and complaints are on the rise. What once was considered best in class is now just work completed. It will also cost construction companies significant amounts of money, which is not something contractors can afford on today’s thin margins.

There are certainly some solutions to consider. For one, we will see the push for more women and minorities in construction. This is a conversation I had with Claire Rutkowski, SVP, CIO champion, Bentley Systems, Kat Lord-Levins, chief success officer and SVP, Bentley Systems, and Lori Hufford, VP, engineering collaboration, Bentley Systems, in a three-part video series about women in infrastructure. They give tips on how to attract and train young workers in construction and the next steps we need to take.

I would also argue we need to go back to the basics and train workers in the craft. The virtual world is great, and there are a lot of opportunities there, but we also need to learn how to work in the world that exists right in front of us. If not, our infrastructure will in fact falter.

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