The softening of the U.S. housing market means short-term demand for construction labor will likely also soften, according to a new report from the Home Builders Institute (HBI). As part of the Fall 2022 HBI Construction Labor Market Report, the estimated number of construction worker growth required for the sector is approximately 740,000. This estimate is level with the figure from the organization’s Spring 2022 report. Additionally, from 2022 to 2024, the construction industry will need an additional 2.2 million net hires.
“While housing demand will slow during a downturn, there will remain a severe shortage of skilled construction workers now and after the economy recovers,” says HBI CEO Ed Brady. “That is because for many decades our country has not encouraged enough young people and others to consider careers in construction.”
According to the report, economists estimate the U.S. faces a shortage of homes for sale or rent of at least 1 million units, with a lack of construction labor a key limiting factor for improving both housing inventory and affordability. In recent months, the number of open, unfilled jobs in the overall construction industry totals between 300,000 and 400,000 positions. While the count is slowing as home building activity decreases due to higher interest rates, the HBI forecasts the nation will require additional construction workers to reduce the existing housing deficit.
According to the report, women make up a growing share of construction employment, reaching a new record high of 11% in 2021, a 1.9% increase in share since 2017. The median age of construction workers is 41; however, the share of construction workers in the 25 to 54 age cohort has been steadily declining over time due to aging trends. Hispanic workers account for nearly a third of the construction labor force and immigrant workers account for roughly a quarter of the construction workforce, according to the HBI.
“Over the long run, additional residential supply must be added. For construction to expand further, more workers must be recruited and trained for the construction sector,” says Brady. “Put simply, a housing downturn won’t solve the nation’s crisis level shortage of skilled workers for home building.”
Despite ongoing labor shortages in the industry, construction wages compare favorably with the overall economy. Half of payroll workers in construction earn more than $49,070 annually, compared with the U.S. median wage of $45,760. The top 25% in the construction industry earn at least $75,820, while the top quartile in the overall economy earns at least $68,590.
In order to mitigate the labor shortage, the HBI has stressed the importance of appealing to middle school and high school students to help create a young, more diverse construction workforce and combat the aging trends at play in the industry. The institute says it is important for the industry to work closely with unions to train and place thousands more in the skilled trades. The HBI recently opened a BuildStrong Academy in Houston, which will provide tuition-free training to individuals interested in pursuing a career in the trades. The HBI operates similar academies in Denver, New Orleans, and Orlando, Florida. The HBI has pledged to open 15 additional academies by 2027.
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.