Every industry faces difficult challenges year after year, and the construction industry is no exception. Over the last two years, the construction industry was hit hard by the pandemic, supply chain delays and inflation. But looking ahead to 2023, some of those challenges could be easing. Reports show,
- Rising construction costs should stabilize at 2%-4% in 2023 and 2024, on par with historical averages
- Supply chain-related disruptions are expected to ease
- Construction demands are expected to remain healthy for the near term, due to the demand for new construction and government infrastructure projects
- US multifamily performance is strong, and demand continues to exceed supply
Yet, some challenges still remain. The biggest challenges for the construction industry in 2023 are all centered around labor. According to LinkedIn, labor challenges for 2023 include a smaller talent pool, an aging workforce and strong competition for workers.
The construction industry has been dealing with serious labor issues even before the pandemic. Currently, 92% of contractors report moderate to high levels of difficulty finding skilled workers. And of that 92%, over a third report turning down work due to skilled labor shortages, according to a US Chamber of Commerce Commercial Construction Index.
Looking ahead, here are some top construction workforce challenges for 2023.
Workers Expecting Higher Wages
Workers want to make more money. In 2023, construction companies will be challenged with an increased expectation of wages from employees. Your employees will demand a wage increase because inflation is high, and the cost of living has increased.
According to the Bureau of Labor Statistics (BLS), the consumer price index rose 8.2% over the past 12 months. The biggest increases were shelter, food and medical care. As these costs continue to rise, your workers will either demand a higher wage to cover them or look at competitors who will pay them more.
To face the challenge of increased expectations of wages, construction companies will need to adjust budgets to accommodate higher wages. They may also need to reevaluate their benefits packages and include items that employees demand and that will set them apart from the competition. For example, offering flexibility like tech breaks, letting workers self-schedule or switch shifts and encouraging PTO. There are also various health and wellness benefits that will strengthen your workers like gym memberships, fitness trackers, health screenings, smoking cessation programs and stress management education. Using benefits software can help empower employees to make decisions about benefits that work for them.
Lack of Qualified Workers
Not only are there more jobs than workers, but many of those workers aren’t qualified. In 2023, construction companies will continue to face the challenge of recruiting and hiring qualified workers. The lack of qualified workers is due in part to the number of Baby Boomers who are retiring. According to the US Census, all Baby Boomers will be retired by 2030. This issue lies in the fact that this generation makes up a huge portion of workers in the construction industry.
Between 2003 to 2020, the number of workers 55 and older in construction nearly doubled from 11.5 to 22.7%, according to the BLS, and two-thirds of workers are 25-54. The average age for a construction worker in 2020 was 42.5 years old.
Not only does this make the competition to attract skilled workers tight but construction companies might also have to offer more training to unskilled workers. Investing in a learning management system (LMS) can give construction companies an edge when it comes to employee development. An LMS can track training completions and certifications that can help shrink the skills gap between employees.
Competing with Other Industries for Workers
Construction isn’t the only industry that is experiencing worker shortages. In 2021, more than 47 million workers quit their jobs looking for better work/life flexibility, better pay and strong company culture. And while construction is reeling from worker shortage, it isn’t the only one. According to the U.S. Chamber of Commerce, labor shortages are impacting:
- Wholesale and retail trade – 70%
- Leisure and hospitality – 60%
- Durable goods manufacturing – 50%
- Professional and business services – 30%
- Financial activities – 25%
With several industries facing worker shortages, construction companies will have to work even harder to recruit workers to not only their company but the industry as a whole. Promote your company culture and benefits to show candidates that construction is a growing, viable industry.
An applicant tracking system (ATS) can also be used to make hiring easier by building your own candidate pool. Talent pools contain potential candidates who have shown interest in your company or previously applied for positions but weren’t selected at the time. Storing applicant information in your ATS allows you to build a database of quality talent that you can tap into when you have an opening, reducing your time to hire, and giving you an edge over the competition.
Convincing Young People to Get into Construction
It will be difficult to boost numbers in construction when so few young people are entering the industry. According to the BLS, 61.8% of 2021 high school graduates ages 16 to 24 were enrolled in colleges or universities. The focus on higher education, over a trade, has steadily increased over the past 40 years. According to the National Center for Education Statistics, in 1969 there were 8 million students enrolled in postsecondary institutions and in 2019, 19.6 million were enrolled.
The push for higher education, and less for trade schools, is likely part of the reason for a decline in young people pursuing careers in construction. Other factors could include the working conditions in construction, like irregular hours, working outdoors in inclement weather and the potential for accidents.
To combat these challenges, recruiters will need to push the benefits of construction to potential workers, including those who are still in high school. These benefits include:
- Ability to earn money from day one through paid on-the-job training
- A variety of available positions for a variety of skill levels
- Free from tens of thousands of dollars in debt from student loans
Attend high school job fairs, offer mentorships to students and find other ways to keep your doors open to students to help promote any interest in starting a career in the construction industry.
Bigger Need for Specialized Skills
As the construction industry gets more technically advanced, there will be an increased need for specialized skills. In the last couple of years, technology in construction has skyrocketed to include things like:
- Augmented reality
- Smart construction wearables
- Construction exoskeletons or exosuits
- Factory, collaborative and autonomous robots
- AI and machine learning
- Modular construction
- 3D printing
- Building information modeling
With all the technological advancements, construction workers will have to be more specialized than ever. Construction companies will have to quickly adapt to these changing technological needs and one way to do that is through training. Training and development programs administered through an LMS can assign and track employee training to make sure employees stay up to date on changing technology.
Learn more about how HR software can solve some of the construction industry’s biggest workforce problems. Download the e-Book, Top Construction Workforce Challenges for 2023.
Or, contact one of our representatives today to ask questions or schedule a demo to see Arcoro’s software in action.