Tips for Tackling the Labor Shortage

By John Lack, Acuity Insurance

The labor shortage is one of the biggest challenges that contractors are facing today—and it is not just a labor shortage, but a shortage of skilled labor.

In fact, according to the Associated Builders and Contractors (ABC), the construction industry will need to attract nearly 650,000 additional workers in 2022 to meet the demand for labor—above and beyond their normal hiring. In 2023, that number declines with a presumed growth in construction spending, but not by much—to 590,000 new workers needed.

The increased demand for labor is being driven not just by growth in construction, but by other changes as well. The first change is the high rate of churn. ABC crunched the numbers and estimated that 1.2 million construction workers will leave their jobs to work in other industries in 2022. Additionally, an aging workforce is likely to lead to an even higher rate of departure. The number of construction workers aged 25-54 fell by 8% over the past 10 years, bringing the average age of retirement in the industry to 61.

For contractors, the labor shortage poses many problems, including having to turn down work, postponing projects, or experiencing delays in completing projects. Additionally, a short-handed work environment can lead to overworked employees, quality control issues, and increased costs for the company. Contractors need to be proactive and think creatively to address this shortage.

Photo of John Lack, Acuity Insurance
John Lack

Here are 10 tips to consider:

  1. Invest in technology. Adopting or increasing your investment in technology, tools, and equipment to save labor hours is always worth considering. Depending on one’s scope, this could include battery-operated tools, power screeds for concrete, lifts for overhead work, GPS or laser-guided equipment, drones, and robots.
  2. Review methods. Using the principles of lean construction can help maximize efficiency and minimize waste and time delays. More developers and builders are turning to off-site fabrication. Virtual construction, such as BIM (building information modeling), is saving time for everyone involved in the process.
  3. Improve company culture. Competitive pay is not the only reason people want to work for a company. Highlighting a work-life balance, benefits, and other opportunities will bring added value to the company-employee relationship. Consider using social media to showcase why tradespeople should want to work for your company.
  4. Communicate effectively. Overcoming any language barriers and communicating effectively with all employees can help open up opportunities. Some of my greatest employees were Hispanic and having management that could communicate well with them was very effective for enhancing the working relationship.
  5. Overcome stereotypes. More women are strapping on tool belts, operating equipment, managing job sites, and owning construction businesses than ever before. The industry has made strides in expanding employment for women, with associations such as Women in Construction helping to drive the change.
  6. Consider apprenticeships. Presenting apprenticeship opportunities to high school graduates and local trade schools can work well, providing temporary help and sometimes leading to full-time employment if the person’s character traits and skills work well with the crew. This also gives you the opportunity to develop the employee around your company’s values. Reaching out to schools and presenting opportunities about what your company has to offer may be time well spent.
  7. Offer referral bonuses. Compensating employees for referrals can be a great way to find applicants. Employees may know other tradespeople from past jobs or someone with good work ethics who wants to start a career in construction. Offering creative incentives to employees may result in qualified candidates.
  8. Advertise clearly. How you post a job position is very important. The more accurate you describe the position, the more likely you are to get the right candidate. Clearly describe the job, what it is like to work at your company, your preferences, and minimum requirements for the position.
  9. Invest in your employees. In these times, it is more important than ever to invest in your current employees. Many construction companies are working diligently to recruit skilled talent, but they sometimes overlook working to keep their current employees. Make sure your employees feel appreciated, know they are an important part of the company, and receive competitive benefits and salary.
  10. Network. Networking with industry associations and others in construction can help get the word out that you are hiring. Some of my best employees were those who had been in business for themselves at one time or another. They know what it takes to run an operation and are familiar with the behind-the-scenes work that no one sees. When an employee has walked in the owner’s shoes, there can be a connection. Temp agencies are also an option, but I would use them in construction only when necessary.

John Lack is Acuity’s Construction Consultant. Acuity insurance provides a wide array of insurance products to contractors and other businesses across 30 states.

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