Photo from above of 3 people in hardhats gathered around a table examining blueprints. Industry Trend label in the upper left corner of the image

The construction industry is still dealing with a labor problem. Hundreds of thousands of workers need to be introduced to the industry in the next decade — but in the short term, industry instability has resulted in fluctuating hiring rates.

“It’s a pretty universal problem,” says property investor Stephen Prince. “You take the supply chain issues and you take the labor issues — it’s a formula for disaster in a country that’s built on growth, construction and housing.”

With construction leaders noting that the labor issue has reached “crisis level,” many experts have been pointing out that much of the industry may have been overlooking some major points when it comes to labor.

“The industry is conservative, but it means the payment side needs innovation, so take a look at how you structure benefits.”

– Mischa Fisher, Chief Economist, Angi

Competitive compensation and benefits are still key

When looking at the labor issue, many are concerned that the construction industry isn’t thinking correctly about truly being competitive with other industries when it comes to labor.

“Overall, the national story is that compensation in construction is not a science, but it is now competing with a labor market that has come a long way in compensation and benefits,” says Mischa Fisher, chief economist for home services marketplace Angi. “The industry is conservative, but it means the payment side needs innovation, so take a look at how you structure benefits.”

While it used to be considered that construction had a considerable premium for its employees over the rest of the overall labor market, “the average hourly wage in the rest of the private sector has come up, and that is squeezing what contractors are offering as a premium to go out and work in 100 degree heat,” says Associated General Contractors of America (AGC) chief economist Ken Simonson.

The social changes seen in the last few years are becoming more and more of a factor in the way that people see the labor market, as well.

“Employees as a group have more power than they had a few years ago and that power is reflected in higher wages,” says Laura Conover, president of Conover Consulting. “Paying competitively now means raising the floor on compensation while ensuring those with more tenure and/or higher performance are not paid less than those new to the organization.”

Focus on employee retention is just as important as hiring new workers

This shift has some saying that employers need to look at employee compensation differently in order to recruit more people to the labor market, but compensation similarly goes a long way towards helping with retention.

“The number one thing that every employer can do is keep the people you have.”

– Branka Minic, CEO, The Building Talent Foundation

Retention is a major key that some are missing when analyzing the problem, as well, according to Branka Minic, CEO of the Building Talent Foundation. 

“The number one thing that every employer can do is keep the people you have,” Minic said. “Before you hire and struggle to hire, then try to keep the ones you have.”

As others in the industry have noted, many of the same focuses that employers are using when it comes to attracting new labor apply to retention. As compensation goes beyond just the monetary gain of a job, things like better insurance policies similarly incentivize people to stay at their jobs. 

“Unbelievably, employees will stay to keep that coverage,” says financier Gary Bartecki. “I have experienced this personally and that is what they say.”

Innovation and implementation of new technology are crucial to construction’s future

In the Building Talent Foundation’s 2021 Homebuilding Workforce Engagement Study, the top reason that respondents gave for staying in their construction job was the opportunity for career advancement and for learning new skills. The top reason that respondents gave for considering leaving a construction job? The lack of these same kinds of opportunities.

“The top reason people love their jobs is not compensation, it’s actually access to training,” Minic says. “Also very high on the list was their immediate supervisor and their leadership skills in being able to motivate and engage crew members. Those are the nonmonetary benefits or parts of the job that came as very important for engaging and retaining workers.”

“Making a living wage is important, but upward mobility and feeling valued at a company matter to most people,” added Erica Floyd, editor-in-chief for Equipment Today.

She says that the language around recruitment and retention needs to change; optimally, language should make it clear that with innovation and technological advancement in the industry these jobs specifically do contain the opportunity for upward career growth, adding that “those higher-paying jobs, with more disposable income available sans student loan debt, are also safer and more engaging than in the past.”

Si Katara, president of HeadLight, pointed out that this need in the construction industry offers a chance for employers to expand the opportunities for growth it presents to its workforce.

“On the horizon are significant developments in analytics and IoT capabilities, supply chain, communications, new design and engineering processes, cloud-based collaboration tools, innovative materials, AI, augmented reality, building analytics, 3-D printing and so much more,” Katara said.

The push for construction technology innovation has been coming from the payment side already since even before the COVID-19 pandemic. Innovative technology speeds up projects and improves payment for those on all sides, making businesses more profitable and keeping them in better standing to compensate their workers.

As the industry innovates, there’s going to be a lot of changes for both workers and employers, adds Fisher.

“I think we’ll see leading companies continue to innovate…to attract and retain top tier talent, and they’ll gain market share in the industry because they can actually meet consumer demand with their larger workforces,” he noted. “I also think we’ll continue to see new product innovation from manufacturers that improves install speeds to also save on labor.”