The cost to build things in southeastern Wisconsin is rising rapidly.

According to area developers, the causes of rising costs are threefold: a shortage of workers, rising material prices and increased infrastructure costs.

"It's too expensive to develop," said Wolf Korndoerfer of Mount Pleasant-based housing developer Korndoerfer Homes. "You can't make a full developer's profit."


It's becoming harder to find workers to fill significant job openings, which has pushed wages higher, thus increasing overall costs.

"There are a lot of highly skilled construction workers that are retiring. And then during the recession of 2008, a number of highly skilled people left the construction trades," said Stewart Wangard, the founder of Wauwatosa-based Wangard Properties.

According to the U.S. Census Bureau, fewer than half of the construction workers who lost their jobs during the recession had returned to working in construction by 2015.

A 2017 poll conducted by the Associated General Contractors of America showed that nearly three out of every four contractors have reported labor shortages.

Current workers have been able to jump between different companies and jobs, bringing higher wages thanks to the tighter job market.

In mid-2017, the average yearly wage for "construction and extraction occupations" in Wisconsin was $52,700 — nearly $6,500 higher than the state average for all jobs, according to the Bureau of Labor Statistics.


Even with good pay, Wangard says, many young people are still wary, or just plain unaware, of what the construction fields can offer.

Construction workers "can make money faster, and probably have a more enjoyable lifestyle, than a lot of the people who are working on a computer keyboard every day," Wangard said.

Welders usually earn upward of $20 per hour in Wisconsin, according to the Bureau of Labor Statistics.

Tariffs on materials a factor

"You can't ignore the fact that the tariffs put in place in 2018 have had a huge impact on construction," Wangard said.

The widely publicized tariffs on Chinese trade — including 25 percent on imported Chinese steel and 10 percent on aluminum, imposed since March 1, 2018 — are only part of the problem. Wangard said that quickly improving the U.S.'s trade deals with Canada would also be beneficial.

A 21-percent duty on Canadian lumber imports was imposed in November 2017, worsening an upsurge in the price of softwood lumber which is commonly used in construction.

Adjusted for inflation, the cost of softwood lumber more than doubled between September 2015 and April 2018, according to the Bureau of Economic Analysis.

Infrastructure and land

There's another problem on the horizon, Korndoerfer says: There isn't much infrastructure-ready land left in the area to develop.

Now that demand for housing is rising, it's become more difficult to profitably construct new houses and apartments.