For years, I have been talking about the need to attract and retain workers in the construction industry. For far too long, the gap has been too wide, causing projects to stall. Will we make progress in the year ahead? Let’s take a moment to look at what the data show in the construction sector as there is both good news and bad news on the horizon.
Last month, the U.S. Bureau of Labor Statistics released numbers that show total nonfarm payroll employment increased by 216,000, with employment trending upward in industries such as construction and transportation. Construction added an average of 16,000 jobs per month in 2023, compared to the 2022 average monthly gain of 22,000. In December, construction employment continued to trend up (+17,000).
While we are making a little bit of progress, quite frankly, it is not enough. The ABC (Associated Builders and Contractors) suggests the construction industry will need to attract an estimated 501,000 additional workers on top of the normal pace of hiring in 2024 to meet the demand for labor. We are saying labor, but I must wonder if this is completely accurate.
We need to recognize the various classes of workers that are needed today and how they have changed since the Industrial Revolution. We need to recognize how knowledge and digital transformation is playing a role in our growing economy and that it is also impacting the numbers we are seeing from ABC and others.
For instance, ABC does not state whether any of these jobs are knowledge workers, information technology workers, or blue-collar workers? While we know most of what is needed are laborers or trades, there are still many superintendents and other field managers that are required to complete construction projects.
ABC’s model uses the historical relationship between inflation-adjusted construction spending growth and payroll construction employment to convert anticipated increases in construction outlays into demand for construction labor at a rate of approximately 3,550 jobs per billion dollars of additional spending. This increased demand is added to the current level of above-average job openings. Projected industry retirements, shifts to other industries, and other forms of anticipated separation are also part of the computations.
Many of you may remember last year’s number was similar: 546,000 workers were needed in 2023. Looking even further out, in 2025, ABC is boldly reporting the industry will need to bring in nearly 454,000 new workers on top of normal hiring to meet demand—and that is presuming construction spending growth will slow significantly in the next year.
While 2025’s 454,000 is certainly better than 2024’s 501,000 and better than 2023’s 546,000, there are still a lot of workers that are needed to help build our homes, cities, and infrastructure of tomorrow. It is still roughly half a million people. That is equivalent approximately to the number of people who live in the entire state of Wyoming.
Last week, I wrote about how there is new funding coming through major grants for infrastructure projects, but at the same time I questioned: Is there enough workers to go around to do all these projects? I am afraid the gap is just too wide still.
As I have written and noted time and time again, we need a multi-faceted approach to solve this challenge. We need mentors to inspire and lead our trades. We need to entice both new and existing workers through scholarships and incentives. We need to focus on the overall health, wellbeing, and safety of workers. We need to focus on leveraging the right technologies and knowledge workers to both attract the right workers and fill in the gap. We need to couple data and workers for a better tomorrow. The time is now. The question still remains: Who will step up and take the lead?
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