The number of construction workers needed to keep up with demand is approximately 740,000 new workers per year for the next three years, according to a report from the Home Builders Institute (HBI). The HBI said a lack of skilled labor is a key limiting factor for improving both housing inventory and affordability.
“The construction industry needs more than 61,000 new hires every month if we are to keep up with both industry growth and the loss of workers either through retirement or simply leaving the sector for good,” HBI president and CEO Ed Brady said in a news release. “From 2022 through 2024, this total represents a need for an additional 2.2 million new hires for construction.”
The HBI Fall 2021 Construction Labor Market Report provides a more grim forecast for the need for skilled labor than the organization's market report released in April 2021. In the spring report, the HBI estimated the construction industry was short 200,000 workers. Employment estimates are generated based on analysis of Bureau of Labor Statistics data by the NAHB.
According to the HBI, the number of open construction sector jobs averages between 300,000 and 400,000 each month. This is compounded by an aging workforce in the industry. The median age of construction workers is 41, and the share of construction workers aged 25 to 54 decreased to 69% from 72.2% between 2015 and 2019.
“The construction worker shortage has reached a crisis level,” Brady said. “The situation will become more challenging in the coming year when other industries rebound and offer competitive wages and benefits to prospective employees.”
Despite the worker shortage, construction wages compare favorably with most jobs in the U.S. economy. Half of payroll workers in construction earn more than $50,460 annually, and the top 25% make at least $71,000, according to the HBI. In comparison, the U.S. median wage is $49,150, with the top 25% making at least $67,410. The share of women in the construction industry has increased, though, growing from 10.3% in 2019 to 10.9% in 2020.
“We need to build the next generation of skilled tradespeople in construction,” Brady said. “One of our most important tasks as an industry is to work with parents, educators, and students, as early as the middle school years, to demonstrate that young people can have the promise of great jobs and careers in the trades.”
In the report, Brady outlined several steps home builders can take to increase the number of skilled construction trade workers in the country. The steps include: reaching out to secondary school students to change their perception of careers in construction, increasing worker pay while balancing the need to keep homeownership affordable, attracting more women into careers in construction, training and placing more minority and lower-income youth and adults for job opportunities, and increasing trade skills education for veterans and transitioning military.
Brady also said builders can work for bipartisan approaches to sensible immigration policies. According to the HBI, the share of immigrants in the construction trades in 2020 was 30%.
In addition to outlining the need to fill skilled trades positions, the HBI report also found home sales significantly outpacing home construction, resulting in growing backlog and supply-chain bottlenecks. According to the report, more than 12 million new households have formed since the beginning of 2012, while approximately only 10 million new homes for ownership and rent have been built during the same time period.
“The U.S. is experiencing a historically low supply of homes for sale, especially at the lower price points that newly formed households tend to need,” Brady said. “For residential construction to expand and housing affordability to increase, more skilled building trade workers must be recruited and trained for the home building sector.”
The HBI, based in Washington, D.C., trains skilled workers for the building industry. The organization provides pre-apprenticeship and advanced training, certification programs, assistance in obtaining apprenticeships, and job placement services for students. The HBI releases its Construction Labor Market Report on a biannual basis in the spring and fall.