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Report: 90% of Contractors Worried about Labor

Tuesday, June 12, 2018

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Labor shortages and rising steel prices are among some of the top concerns shown in the Q2 2018 United States Gypsum Corporation + U.S. Chamber of Commerce Commercial Construction Index, which was released just last week.

The quarterly guide is designed to gauge the outlook for and confidence in the commercial construction industry, the Chamber notes, and looks at survey answers from a group of more than 2,700 commercial construction “decision-makers.”

The Q2 Index

This quarter marks the fourth consecutive quarter that more than 90 percent of contractors said they were concerned about labor shortages. About 47 percent of respondents said they expect to have problems finding skilled workers to worsen in the next six months.

© iStock.com / flukyfluky

Labor shortages and rising steel prices are among some of the top concerns shown in the Q2 2018 United States Gypsum + U.S. Chamber of Commerce Commercial Construction Index, which was released just last week.

“Contractors’ pipelines for new business are consistently healthy, however, that optimism is challenged by a growing shortage of workers—a trend that’s persisted for more than a year,” said Jennifer Scanlon, president and chief executive officer of USG Corporation.

“In order to sustain the strong pipeline of work, it’s important that industry leaders think about process and product innovations that can help complete projects on time and advance the industry.”

A growing concern this quarter, however, comes on the heels of tariffs on steel and aluminum recently imposed by the Trump administration. About 63 percent of contractors identified steel price fluctuations as a main concern, an increase from 30 percent in this quarter last year. Moreover, 86 percent of contractors think that the tariffs will have at least a “moderate” impact on business.

“The commercial construction industry is vital to the growth of the U.S. economy. Steel and aluminum tariffs and continued workforce shortages threaten to slow the industry’s growth and job creation,” said Thomas J. Donohue, president and CEO of the U.S. Chamber.

Despite these concerns, contractors maintained a good economic outlook with a composite score of 73, just one point down from Q1. According to the index, the main drivers of the positive outlook include:

  • Backlog: Contractors currently hold an average of 9.3 months of backlog, which represents 73 percent of ideal backlog levels and indicates a stable market with room for growth;
  • New Business: Contractors have high confidence in the market’s ability to provide new business for the next 12 months with 96 percent of contractors report high or moderate confidence in the demand for commercial construction; and
  • Revenues: 52 percent of contractors expect to see revenue gains in the next year, an increase of 12 percent year over year.

   

Tagged categories: Commercial Construction; Commercial contractors; Consumer Reports; Industry surveys; Labor

Comment from Tom Schwerdt, (6/21/2018, 10:13 AM)

Yet unemployment in Construction remains noticeably higher than the country as a whole. I regularly point this out in these articles, yet the author(s) never seem to pick up on it for the next one. https://www.bls.gov/news.release/empsit.t14.htm


Comment from Michael Halliwell, (6/25/2018, 12:11 PM)

Tom, I get your point, but in looking at the stats, unemployment in construction is always higher than the country as a whole. I think part of that has to do with the sectors of construction and skilled trades...if you don't need welders or plumbers, they might skew the numbers if they aren't willing/able to work as a laborer (union rules and other factors come into play). Also, when the country is running a <4% unemployment rate, can you lure a teen or early 20-something to be a laborer if they can get the same money (or more) at a less physical job?


Comment from Tom Schwerdt, (7/3/2018, 8:50 AM)

Michael, the traditional response to a lack of labor response is to increase the pay being offered ;) - construction general labor used to be an area where a teen could make real money, much more than working retail or fast food. In many areas, retail and fast food wages have gone up significantly.


Comment from Michael Halliwell, (7/13/2018, 12:31 PM)

Yup....the traditional construction response doesn't work as well when either a) the unemployment rate is so low that everyone is offering more in order to get bodies or b) you get governments raising minimum wages (like here). Either way, it's harder to get teens into construction.


Comment from Tom Schwerdt, (7/19/2018, 9:53 AM)

It would be useful to chart median laborer pay vs median fast food (or retail) wage over time for the past 30 years. Constant dollars preferred.


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