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Construction boom exposes labor shortage threatening homebuilding

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The housing upturn has strained a greying, shrinking pool of skilled tradesman, with few young laborers ready to pick up the slack

Homebuilder in Phoenix
A worker climbs on the roof of a home under construction at the Pulte Homes Fireside at Norterra-Skyline housing development on March 5, 2013 in Phoenix, Arizona.
Justin Sullivan/Getty

If you want a view from the front lines of the residential construction industry, talk to Randy Strauss. Seated in the front of his pickup truck and mobile office, with blueprints and files strewn about the passenger seat, Strauss calls me from a job site near Amherst, Ohio, roughly 40 miles east of Cleveland, where his firm, Strauss Construction, is based. He’s been part of the industry since he was a kid. His grandfather was a cabinet maker, and his father was a homebuilder who worked alongside his son from the year they started the company in 1979 to a month before he passed away at age 83.

When Strauss discusses the labor issues facing his industry, he likes to talk about a job site he was on last spring. While working on one of the Lake Erie vacation homes that are his bread-and-butter, he looked around at the nearly two dozen tradesman working on the site, from carpenters and plumbers to electricians. Of the 22 workers there, the youngest was 42. Many of the workers were the same ones Strauss had worked with for more than 30 years.

“Who’s going to build these homes 10 years from now?” Strauss says. “I’m 63. Ten years from now, it won’t be my problem. But I don’t know who’s going to be working in this business then. I sit in meetings with others in the construction industry, and ask, ‘who told their kids to be a carpenter?’”

Strauss’s work site last summer is a common sight in an industry that has seen its workforce dwindle due to a lack of vocational education at schools, a cultural shift away from traditional blue collar work, as well as a huge loss of talent during the last downturn. The Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS) show that nearly 200,000 construction industry jobs are unfilled across the country at a boom time for homebuilders, a jump of 81 percent in just two years. At 4.5 percent, unemployment in the U.S. construction industry is the lowest in a decade, putting increased pressure on foreman, project managers, and developers.

“It’s a huge issue,” says Strauss, “one that also impacts automotive dealers trying to find mechanics and factories. The young people aren’t coming out and working with their hands anymore.”

Electrician Thomas Kohler/Getty Images

As Strauss pointed out, the labor shortage in the construction industry is indicative of a wider, decades-in-the-making gap in vocational training that has had an impact on many sectors of the U.S. economy. At a time when the incoming administration is talking about massive infrastructure investments and helping the rural economy, action on this issue could have a massive impact on the effectiveness of such programs. It may even impact his signature campaign promise and construction challenge, building the Mexican border wall; many industry analysts and observers say labor shortages and the need to vet legal workers for such a massive public works project will be a huge challenge.

“Our president is going to build the wall,” says Strauss. “He’s going to have to hire immigrant workers to build it, because I don’t know who else is there to build it. You get into the Texas markets, near the Mexican border, and that’s who’s doing all the work down there.”

The construction industry is a victim of its own success. Many workers exited the industry after the downturn, looking to find immediate employment in the wake of a housing crash. The relatively quick upturn, fueled by low interest rates, has left the industry struggling with a greying labor pool and huge demand. Subcontractors are swamped with work, and according to the Urban Land Institute, the labor shortage in urban, suburban, and rural areas is pushing back some projects by months. The financial challenges of the labor shortage have become so pronounced, it’s forcing more and more builders towards luxury projects to help recoup the added cost of delays.

Construction labor employment data Urban Land Institute

According to John Courson, President and CEO of the Home Builders Institute (HBI), “far and away,” the number one issue is the lack of trained labor in the residential construction industry. At a recent industry convention in Orlando in January, he said the issue was all anybody could talk about.

“There’s been a pretty solid drumbeat for the last few years,” he says. “But I’ve never seen it rise to the crescendo it did last month. It’s a huge shift from the halcyon days of homebuilding between 2000 and 2006.”

The impact has been felt industry-wide. Courson said builders are telling him that they’ve been forced to stretch delivery times by weeks and even months, and the subcontractors paid to do skilled work such as masonry and electrical installation have more jobs than they can handle.

“The shortage is worse than you’ve heard,” says George C. Hess III, CEO of Vantage Homes Corp., which operates in the Colorado Springs area. His company, which builds 120 to 150 homes a year on average, could have done 20 more units last year if there was more manpower available. Their utility contractors they rely on just didn’t have enough skilled workers.

According to Hess, one of the underlying issue is the loss of vocational programs. Students are increasingly being told that they need to go to college to be successful, and shop classes being cut in the face of lower and lower school budgets, these kind of programs have disappeared in many schools. He says there are many students who would greatly benefit from exposure to different opportunities and a different path in school, not to mention the lucrative job opportunities available in the skilled trades.

“The vocational programs are being ignored at schools, all at a time when we have plumbers making $100,000 a year,” says Hess.

Many in the industry have begun investing in what Courson calls a “long-term solution to a short-term problem,” increased vocational education. The HBI has focused on educational programs targeting at-risk youth, ex-offenders, and veterans to help these populations find new, more immediate opportunities that don’t require a college degree (or loans).

“Many don’t want to sit behind a desk, so we want them to know this is a valid career path if you’re interested,” Courson said.

The HBI is also pushing vocational programs designed for high schools, which help students partner up with professionals to provide internship opportunities and create a quicker path to a job after graduation.

Student at the Career Technical Education Facility at Peyton High School in Colorado

In central Colorado, a pair of school districts have created an innovative model for providing this kind of education. In the fall 2015, Peyton, a rural district in the Pikes Peak area, opened the Career Technical Education Facility, a middle school that was converted into a woodworking shop and vocational training center. The program has proven so successful, the district has partnered up with nearly a dozen schools in the area, who now send students to study at the center. Created with local industry partners, who supplied materials and tools and helped shape the curriculum, the center gives students updated skills that make them more prepared for jobs in the industry.

“Instead of going into college debt, our students can exit this program with a skill, and have talents that can help them pay for college,” says Tim Kistler, superintendent at Peyton. “My kids are really excited about this. It just gives them more options, rather than the limited options they’ve been given in the past.”

Scott Campbell, superintendent at nearby Widefield School District says that vocational programs are expensive and often the first thing educators facing tight budgets may cut. But this partnership provided a great opportunity for his students, and he immediately got involved. Students from Widefield now take a round-trip bus ride to participate in the Peyton classes, doing homework via computer during the ride, and Peyton students have access to engineering classes at Widefield.

The schools want to expand the program even further, and plan to open an even larger vocational training center inside a 46,000-square-foot former potato-chip factory located south of the Colorado Springs Airport. The Peyton/Widefield Vocational Education Campus will offer new opportunities for both students and the industry in woodworking, metals, and construction, say the educators, and show how unique partnerships can create opportunity amid budget cuts.

“Our thought was we could create something big, but if it was just for Peyton students, what good would that do?” Kistler told the Colorado Springs Business Journal. “The long-range goal was to open a national training center, not just for Colorado Springs, but throughout the United States. There are so many abandoned buildings that can be taken over and repurposed for programs like this.”