Construction spending in the U.S. has reached its highest level in more than seven years, but a severe shortage of available workers threatens to derail that growth and could lead to higher costs or project delays, local builders say.
In Ohio, 96 percent of construction firms report they are having trouble filling available positions, according to a survey released Thursday by the Associated General Contractors of America.
Nationally, 86 percent of firms report they are having trouble filling positions, up from 83 percent last year and 81 percent in 2013.
Local and national builders attribute the growing shortage to an aging workforce; large numbers of laid-off construction workers who left the industry for other sectors during the recession; and the lack of quality training programs to attract young people to the industry.
Construction saw a “huge exodus” during its five-year downturn in employment, with 2.3 million workers retiring or leaving the industry, said Ken Simonson, the AGC’s chief economist.
“Thirty percent of the people who were working in 2006 in construction on payrolls were not on payroll by January 2011 when it bottomed out,” Simonson said.
“Both the length and the depth of that drop-off meant that you really emptied out the possibility of people coming out of high school, out of training programs for several years and getting jobs,” he said.
Growing competition for existing workers is prompting contracting firms to change how they operate, including raising workers’ pay, increasing benefits, relying more heavily on subcontractors and turning to temporary labor firms, the AGC report said.
Southwest Ohio contractors are enjoying the largest backlog of work they’ve seen since 2007, said John Morris, Ohio Valley Associated Builders and Contractors president. The backlog for the Middle States region that includes Ohio rose to 7.33 months for the second quarter, a 14 percent increase from the same period in 2014, according to ABC data released Wednesday.
Current large area construction projects include the Interstate 75 modernization through Dayton; I-70 widening; the $350 million Liberty Center development in Liberty Twp.; Dayton Metro Library’s $187 million system overhaul; Dayton Children’s Hospital’s new $140 million, eight-story patient tower; the $45 million Water Street District development in downtown Dayton; and an estimated $50 million in projects at Austin Landing in Miami Twp.
“Given the high demand for construction and construction workers, you should see one of two things happen: Either the pricing of those projects goes up and is reflected in higher margins for the contractors, which is a good thing; or the project would be delayed and the amount of backlog would be extended,” Morris said.
However, those things aren’t happening because many area projects have strict timeline requirements, such as Liberty Center, where work needs to be done by October so that stores can open in time, he said.
Home construction in the region also is being impacted, particularly among subcontractors who build about three-quarters of the house, said Kathleen Unger, executive director of the Home Builders Association of Dayton.
“The greatest shortage is happening with carpenters, framing crews, bricklayers, masons — pretty much everything that you need to build a house. It is a difficult situation for them, labor and subcontractor shortages,” Unger said.
Many high school construction trade programs “have fallen by the wayside” due to budgetary constraints, reducing the number of new workers available as the industry rebounded, she said.
Morris said there is “tremendous opportunity” for people interested in construction careers.
“To be hired, trained and have a long-term future in a growing industry, because the construction industry has not rehired or brought people into the industry as much as it should have in the past few years, and basically everyone is hiring and investing in training,” he said.