The skilled labor shortage in the construction industry is having a “harmful impact” on the overall economy, according to the Fall 2023 Home Builders Institute (HBI) Construction Labor Market Report.
The nonprofit organization reports there were 363,000 open construction sector jobs as of July, and the running annual average number of openings in the sector totals approximately 723,000.
“Inflation control relies heavily on our ability as a nation to recruit, train, and employ new workers in the trades,” says HBI president and CEO Ed Brady. “Boosting the residential construction labor workforce increases productivity, which has a positive impact on monetary policy, interest rates, and housing affordability.”
The HBI projects that despite a recent weakening in the count of open construction sector jobs, housing production will increase in 2024, driving up the demand for labor and putting a larger spotlight on the labor shortage.
One oft-cited contributor to the labor shortage is the aging construction workforce. The HBI’s fall report indicates the share of construction workers aged 25 to 54 decreased from 72% in 2015 to 67.7% in 2021. Workers younger than 25 represent just 10% of the construction workforce, compared with 13.6% for the overall economy. Additionally, the share of construction workers 55 or older is 22.3%. The median age of workers in construction is 42.
“When you combine the growth in construction with the number of workers required to replace those leaving the sector permanently, you’re talking about needing more than 60,000 new hires every month,” says Brady. “Between now and 2026, we will need more than 2 million new skilled workers in construction. That is a daunting proposition.”
While wages are not the sole motivation for choice of occupation, the construction industry can offer stronger compensation than other private sectors. According to the Bureau of Labor Statistics, average hourly earnings in the overall construction industry have increased 5.4% over the past year and approached the $36 per hour range in March 2023. Comparatively, average hourly earnings in manufacturing were $31.80 and $27.67 in trade transportation, and utilities. The overall private sector average hourly earnings were $33.20.
Through its initiatives, the HBI looks to encourage recruitment to several untapped cohorts for the construction sector, including women and veterans. The share of women in construction has increased recently, rising to 10.9% in 2022 from 9.1% in 2017. Construction also attracts 6.5% of all employed veterans.
According to the HBI, immigrant workers now account for 24% of the construction workforce, down slightly from the record high share of 24.4% in 2016. Hispanic workers make up close to a third of the construction labor force, a new record-high share. Additionally, the share of self-employment in the sector has decreased to 23% of the labor force.
