The skilled labor shortage in construction is a well-known critical issue facing the industry, but the severity of the lack of qualified workers reveals problems that demand immediate solutions if the U.S. is to meet growing construction demand.

According to results of a workforce survey conducted by the Associated General Contractors of America (AGC) and Autodesk, 93% of construction firms report they have open positions they are trying to fill, and among them, 91% are having trouble filling at least some of those positions – particularly among the craft workforce that performs the bulk of on-site construction work.

“The most common explanation for difficulty in filling positions cited by 77% of firms is that available candidates lack the skills needed to work in construction or cannot pass a drug test,” stated Ken Simonson, chief economist with AGC.

“We’ve also seen in the national employment reports that unemployment in construction as of July was actually running a little bit lower than other industries,” he said. “That’s extraordinary for an industry that doesn’t always keep people on the payroll after one project finishes. At 3.5%, that essentially means there’s almost nobody out there with construction experience looking for a new job in construction.”

The results of the survey underscore the need for public officials to invest in new construction-focused workforce development programs, but a panel of construction professionals in a webinar put on by AGC said the industry needs to attack the problem from every angle, including education and training, public relations and things as simple as employers improving wages, benefits and workplace conditions.

“Firms are increasing pay and improving benefits. They’re getting more involved in construction education programs to help ensure new workers have basic essential skills and they are boosting investments in their own training programs as they accept more workers who lack those key skills,” Simonson noted, pointing to workforce development initiatives by the AGC and its chapters, such as the Construction Is Essential targeted digital recruiting campaign, and its Culture of Care workplace retention program.

“Federal, state and local leaders must invest in the kind of career and technical education programs that will expose more existing and future workers to the many career opportunities that exist in construction,” Simonson said. “These programs also provide the kind of essential skills employers are seeking.”

On a very different note, Simonson suggested federal officials should also take steps to allow more workers to lawfully enter the country to help meet unfilled demand. Later in the online discussion, panelists talked about promoting the benefits of a career in construction to other untapped labor pools, including retail and hospitality industry workers displaced by restrictions due to the Covid-19 pandemic.

Panelists also discussed looking to individuals with past incarcerations as potential job candidates, as many are looking to improve their lives but to date have had limited employment options.

“I’ve hired a couple of young ladies that had been incarcerated and I’ve had great success on it,” said LaTasha McCall, owner/president at LM2 Construction Inc. in Kansas City, MO. “I’ve had more success with the women and men that we got that were incarcerated versus the people that we hire right out of high school.”

The TradeUp program was noted as a potential solution, as it offers career guidance and leadership development, as well as training, certification, and qualification for construction, utilities, manufacturing, ports and terminals, to people in other fields looking to make a change. TradeUp directly connects workforce development funding sources and community organizations with employers to help people move into skilled trades careers.

Potential solutions aside, the current shortages stand to have an increasingly detrimental impact on project completion.

“Construction workforce shortages are severe and having a significant impact on construction firms of all types, all sizes and all labor arrangements,” said Simonson. “These workforce shortages are compounding the challenges firms are having with supply chain disruptions that are inflating the cost of construction materials and making delivery schedules and product availability uncertain.

“Eighty-two percent of firms report projects they work on have been delayed because of supply chain challenges and two-thirds (66%) have projects that have been delayed because of labor shortages,” he added.

“Without enough workers to keep pace with demand, the federal government’s new infrastructure funding and more recent investments in semiconductor factories and energy infrastructure projects will not deliver as much as promised, Simonson warned.

Results show all types of firms are experiencing similar challenges. Nearly identical results were reported by contractors that use exclusively union craft labor and by firms that operate as open-shop employers; by firms with $50 million or less in annual revenue and ones with more than $500 million in revenue; by companies in all four regions of the country; and by contractors doing building construction, highway and transportation projects, federal and heavy work, or utility infrastructure.

Supply chain problems and labor shortages are making construction more expensive. Eighty-six percent of firms have raised base pay rates for their workers while 70% have passed along rising materials costs to project owners during the past year.

Cost and supply chain challenges have prompted some owners to cancel or delay projects; 58% of respondents report owners canceled, postponed or scaled back projects due to increasing costs, while one-third of firms report projects were impacted due to lengthening or uncertain completion times.

Many construction firms report they are taking steps to overcome workforce shortages. In addition to the fact most firms have raised pay rates, 45% are providing incentives and bonuses and a quarter of firms (24%) have also improved their benefits packages.

Technology is playing an important role in helping firms cope with labor shortages and other challenges. Eighty-seven percent of firms agree their employees need to possess digital technology skills to be successful as firms adopt new technologies. And while few candidates possess key construction skills, nearly two-thirds of responding firms say at least half of the people they are hiring possess the technology skills they need.

“While the majority of construction firms today are struggling to find skilled workers to fill open jobs, the labor shortage is only going to intensify as more workers retire,” said Allison Scott, director, customer experience & industry advocacy at Autodesk. “What’s inspiring is that construction firms recognize this and are taking a proactive approach to preparing future workers for careers in construction.

She added, “The renewed investments in career development and training programs, as well as a focus on digital skills, demonstrates the industry is committed to taking action to build the next generation of the workforce.”

AGC is calling on federal, state and local leaders to invest in career and technical education programs that expose more existing and future workers to the many career opportunities that exist in construction. The association is also urging federal officials to allow more workers to lawfully enter the country to help meet unfilled demand until the domestic pipeline for preparing workers is rebuilt.