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Labor Shortage Causing Construction Firms to Turn Down Work

A new report shows 25 percent of firms indicate labor shortages are forcing them say "No" to jobs.

Wed September 03, 2014 - National Edition
Construction Equipment Guide

Construction employment expanded in 223 metro areas, declined in 72 and was stagnant in 44 between July 2013 and July 2014, according to a new analysis of federal employment data released Aug. 27 by the Associated General Contractors of America. As employment grows, 25 percent of firms report labor shortages are forcing them to turn down work according to a new survey conducted by SmartBrief, an industry leader in curated business news and custom content, in partnership with the association.

“Many construction firms looking to expand their payrolls are finding a surprisingly tight labor market,” said Ken Simonson, the association’s chief economist. “These expanding labor shortages threaten to impact construction schedules as firms struggle to find enough qualified workers.”

Dallas-Plano-Irving, Texas, added the largest number of construction jobs in the past year (9,400 jobs, 8 percent), followed by Houston-Sugar Land-Baytown, Texas (8,900 jobs, 5 percent) and Philadelphia, Pa. (8,500 jobs, 12 percent). The largest percentage gains occurred in Lake Charles, La. (27 percent, 2,900 jobs), Crestview-Fort Walton Beach-Destin, Fla. (26 percent, 1,000 jobs) and Monroe, Mich. (23 percent, 500 jobs).

The largest job losses from July 2013 to July 2014 were in Phoenix-Mesa-Glendale, Ariz. (minus 4,800 jobs, minus 5 percent), followed by Bethesda-Rockville-Frederick, Md. (minus 3,500 jobs, minus 10 percent) and Newark-Union, N.J. (minus 2,500 jobs, minus 7 percent). The largest percentage decline for the past year was in Steubenville-Weirton, Ohio-W.V. (minus 22 percent, minus 400 jobs), followed by Vineland-Millville-Bridgeton, N.J. (minus 16 percent, minus 400 jobs), Cheyenne, Wyo. (minus 12 percent, minus 500 jobs) and Fond du Lac, Wis. (minus 12 percent, minus 300 jobs).

Association officials noted that as construction employment expands in many parts of the country many firms report having a hard time finding enough qualified workers. A survey conducted by SmartBrief, in partnership with the Associated General Contractors of America, found that two-thirds of firms report having experienced labor shortages during the past year. Those shortages are having an impact on construction activity, with twenty-five percent of firms reporting they turned down work during the past year because of a lack of labor.

Labor shortages also are having an impact on construction salaries, with 70 percent of firms reporting they are paying more for skilled labor than they did last year. Thirteen percent of respondents described those wage increases as “significant.” Responding firms noted that carpenters, project managers and supervisors are the hardest positions to fill right now. They also are having difficulty finding qualified laborers, estimators, electricians, plumbers and ironworkers.

Association officials said the survey results underscore the need for action on a series of measures outlined in the association’s Workforce Development Plan. Those measures detail steps federal, state and local officials should take to make it easier for schools, associations and businesses to establish career training and education programs.

According to the survey results, labor shortages appear more widespread in the South and Midwest than in the Northeast or West. The survey was distributed via the AGC SmartBrief newsletter in early June. More than 500 newsletter subscribers completed the survey, 48 percent of whom are general contractors and 28 percent of whom are subcontractors.

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