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The Hard Truth about Skills Gaps

Earlier this year, the ABC (Associated Builders and Contractors) estimated that the construction industry will need to attract an estimated 546,000 additional workers (that’s 546,000 above and beyond the normal pace of hiring) in 2023 to meet the demand for labor. It’s a startling statistic. In 2022, ABC says the construction industry averaged more than 390,000 job openings per month, which is the highest on record.

In fact, hiring remains a challenge for many industries. The NFIB Research Foundation May 2023 Small Business Optimism Index Report suggests 44% of business owners reported that job openings were hard to fill. More than half (63%) of owners said they hired or tried to hire in May, and of those owners, 89% reported few or no qualified applicants submitting themselves for their open positions.

No matter which way it’s sliced, labor is a challenge for industries like construction, as well as manufacturing, security, and healthcare, among others. The data suggests there are way too many jobs to fill, and that qualified candidates with the skills and experience needed are few and far between. In fact, about one-quarter of participants in the NFIB study said that labor quality was their top business problem.

Interestingly, ADP’s latest Pay Insights report suggests industries like construction, hospitality, education, and health services are doing a good job increasing pay for loyal workers. Construction ranked third in terms of highest year-over-year increase in pay for workers who’ve remained at their company for the last 12 months (6.7%).

Another new report from the ADP Research Institute similarly suggests construction is doing a good job retaining its workers, with 42% of construction workers saying they would recommend their company to others as a place to work. This is above the 37% average across industries in the U.S. Construction ranked fifth by this metric (percentage of workers that would recommend their workplace to others). The general tech space ranked highest at 53%, while manufacturing (36%), healthcare (33%), transportation and warehousing (33%) all ranked below construction.

ADP also reports only 20% of construction workers feel they’re being paid unfairly, which is the second-lowest percentage next to tech (17%). By contrast, 35% of healthcare workers feel underpaid, along with 32% of workers in transportation, and 28% in manufacturing.

It’s an interesting reality that even though tech and construction appear to provide good workplaces that employees would recommend to others, and workers generally feel that they’re being paid fairly, critical skills gaps still exist. In many industries, technology can help bridge skills gaps by making it easier and more efficient to train new employees and by automating low-level tasks, thereby freeing up humans to do tasks that require more skill and problem solving. While much of the talk around automation revolves around job loss and job displacement, finding qualified candidates remains shockingly difficult for employers who are eager to hire humans in so many industries.

If these reports are any indication of the current state of the worker shortage, there is no question it’s time to spark enthusiasm in these new generation workers, teaching them the skills necessary in whatever industry excites them. Ultimately, this just might be the ticket that saves a mom or pop business or an industry. And it doesn’t always take a four-year degree to leverage people, technology, and process.

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