Source: NAHB analysis of state data
Source: NAHB analysis of state data

A carpenter's wage, averaged across the state of Colorado, is $40,800. Drywallers and ceiling tile installers take home about the same, while electricians' average yearly pay in Colorado is $47,390, and plumbers even more ($49,160), and roofers less, at $37,210.

The source for this information, compiled by the National Association of Home Builders, is Occupational Employment Statistics (OES), Bureau of Labor Statistics, 2015. As a service, the NAHB economics team has pulled together data points like this to try to get their arms around Workforce Demand so that builders in various regions of the country can see what they're up against as they try to manage and model their labor costs as volume heats up through the summer and fall months ahead.

In that same state of Colorado, for example, based on a math model of housing starts and remodeling spending, there's a shortfall of about 5,000 laborers needed to do the work in 2016 (supply of 57,952 laborers, vs. demand of 62,451). In Texas, the shortfall is even more dramatic. The NAHB estimates that there are 169,693 skilled and semi-skilled subcontractors in the residential construction labor force in Texas. The shortage in Texas, the NAHB calculates based on predicted starts and remodeling jobs, is 140,000 workers.

The current situation is unsustainable. Why?

Home builders today face wishing a lesser of two evils. One, is a continuation of lower volume, fewer starts than normal, so that the current level of capacity can keep up with the pace of construction without getting overheated, exponentially expensive, and out of control. The other, amidst higher demand and more normalized new housing construction, would be a labor capacity stress test.

Smart people are doing smart things about the challenge. Smart people are also beginning to admit that as they model out the current trends, diminishing returns are unavoidable:

  • Fewer young people entering into construction trades careers
  • More restrictions and impediments to immigrant labor
  • More drop-outs continuing to pursue careers else-wise due to the unpredictability and unreliability of employment through volatile business and housing economic cycles
  • Fewer people continuing their education and training
  • Workflows, scheduling, and processes remaining stagnant vs. improving
  • Contractor payment systems remaining outdated vs. improving

With some bright-spot exceptions, current trends run to end game: two few people to do the work builders need done at a cost that can be applied to a profitable business.

George Casey is right here when he talks about innovation being at the heart of the solution to one of home building's greatest challenges. Innovation in process; innovation in leadership; innovation in culture building; innovation in recognizing value for what it is.

What's old is new again when it comes down to trust, passion, and a people-centric business. Innovate or die.