Reinforcing recent concerns about a shortage of skilled construction labor, a newly released survey found the squeeze is indeed being felt by a vast majority of contractors in Minnesota.
The industrywide survey of more than 1,600 construction firms by the Associated General Contractors of America (AGC) and engineering software maker Autodesk found that 70 percent of construction firms across the United States reported that they are having “a hard time” filling hourly craft positions that represent the bulk of the construction workforce.
In Minnesota, the squeeze was even more acute, with 78 percent of the 40 companies answering the survey indicating they were having trouble filling craft labor positions. The hardest workers to find: heavy equipment and crane operators, carpenters, work crew superintendents and truck drivers.
Amid heightened demand
Employers aren’t optimistic that things would be getting better anytime soon.
Eighty percent of them said it will either continue to be hard or become even harder to find a sufficient labor supply over the coming 12 months, with the same number characterizing the local pipeline for supplying skilled workers as either “fair” or “poor.”
The tight labor market is an especially vexing problem because it is coming at a time of heightened demand for their services. The same survey showed 62 percent of the Minnesota companies were looking to expand their craft workforce to keep up with the surge in projects.
AGC’s Washington-based leaders say the results mean that fewer firms in the short term will be capable of bidding on new commercial and public infrastructure construction projects. As a result, diminished competition will almost certainly translate into unexpectedly higher costs for developers and governments.
A recent high-profile example of construction-cost sticker shock came when Hy-Vee, in the midst of an aggressive expansion in the Twin Cities, decided not to build a store in White Bear Lake. A company spokeswoman said construction costs played a factor in the move.
The longer-term consequences of the labor shortage on the construction industry are more profound, said Tim Worke, AGC of Minnesota chief executive.
“The way contractors are coping with it now is by offering overtime, bonuses and their other kinds of perks to their existing workers,” he said. “For example, if you’re a local commercial builder and doing work in the North Dakota market, you’re offering Twin Cities metro wage rates for that project and covering their housing, meals and transportation.
“But in the bigger picture,” he added, “what this situation really shows is that the Minnesota construction industry is at a crossroads. A lot of our current workforce are white, male baby boomers, many of whom have come into the industry from a farming background. They’re getting close to retirement and the new workforce is more urban, less white and less male. How do you get them interested in the construction trades?”
How automation is changing industry
The other major element playing havoc with the current labor market is the mounting effect of automation on the construction industry. Worke said one reason it has taken nearly a decade to replace the 60,000 local construction jobs lost during the 2008 recession is that contractors have used technological advances to become more efficient and make do with fewer workers.
“These advances have meant that you can do the same job much more efficiently and much more safely than ever before,” he said. “For instance, a job that before the recession would require a five-man crew now might take only four. That trend will only accelerate into the future.”
He contended that the automation dynamic is “exacerbating a ‘disconnect’ in the industry about how we should train future workers, who we should train and how many we should train.”
As an example, Worke cited the continuing training of heavy equipment operators — a specialty that is likely to become highly automated in the future.
Don Jacobson is a freelance writer based in St. Paul. He is the former editor of the Minneapolis-St. Paul Real Estate Journal.