Construction Revenues and Hiring Are Up. So What’s the Problem?

Dec 13, 2017 - 3:15pm

Senior Editor, Strategic Communications

bloomberg_hotel_construction_nashville_1200px.jpg

Construction of a hotel in Nashville, TN.
Construction of a hotel in Nashville, TN.

The only thing that can bring down the high of rising demand for a business owner’s product is not having the workers or tools in place to adequately give customers what they want. It’s a conundrum that the construction industry continues to deal with.

Contractors in the U.S. commercial construction industry remain optimistic about the state of the sector, closing 2017 on a high note, according to the Q4 2017 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index, released earlier this week. Demand for their services remain high, revenue forecasts are on the rise, and most contractors expect to hire more workers in the next six months: all signs of a lucrative future.

But underneath the optimistic outlook lurks significant challenges that sooner or later will catch up to the industry if they aren’t dealt with.  Anxiety on workforce readiness, concerns about the ability to recruit and retain adequate staff levels, and questions on how to prioritize improvements in jobsite efficiency are ever present, according to the Index.

Ninety-two percent of contractors are at least moderately concerned about the skill level of the workforce. Skilled laborers, like plasterers and experts who can work with drywall, are growing harder to find.  On top of that, almost 90%of contractors don’t think jobsites are very efficient.

“There is an urgent need for innovation in building materials and workforce development programs,” said Jennifer Scanlion, president and CEO of USG Corporation said.

The past year has unfortunately hammered that point home, repeatedly. Even before Hurricanes Harvey and Irma made landfall, the first quarter of 2017 had shaped up as the most expensive in more than 20 years, according to Bloomberg News. Thirteen storms, including hail and tornadoes, delivered billions in insured catastrophe losses nationwide. So far this year U.S. storm damages have reached an unprecedented $202.6 billion, the most expensive season ever.

One of the most brutal hurricane seasons on record exacerbated the need for skilled labor and efficiency gains which help wanted signs popping up, both figuratively and literally, in the wake of Hurricanes Harvey, Irma, Nate and Maria. 

And hovering in the background is the administration’s promised infrastructure plan, which will certainly rely heavily on skilled labor if it ever hopes to upgrade U.S. roads, bridges and other public works. In short, there’s a lot of reconstruction to be done, not enough trained workers to do it, and scarce programs to provide that training.

In the short term that means a busy and productive year ahead for the industry. But there will be a downside if the issue isn’t addressed.  A prolonged shortage of construction workers can lead to widespread delays, push labor costs sharply higher, and can lead to citizens and businesses being displaced longer than they would otherwise, which would have a corrosive impact on local economies and the quality of life across the country.

The commercial and nonresidential construction industry plays a pivotal role in economic growth in the United States. More than three million Americans are employed in the commercial construction industry, and the sector contributes more than $700 billion in construction spending to the nation’s economy. Keeping the industry healthy is vital for continued prosperity.

Ensuring an adequate and well-trained workforce is essential to safeguarding America’s economic vitality and spirit of innovation. Energizing the American economy starts with understanding this industry that is literally tasked with building this country brick by brick, helping to drive job formation, wages, and our collective standard of living.

“It’s great news that the majority of these companies are ready to hire,” said Thomas J. Donohue, president and CEO of the U.S. Chamber. But as worker shortages persist “sectors like commercial construction will have to find solutions through new innovations, technology and training to continue growing and moving the broader U.S. economy forward.”

More Articles On: 

About the Author

About the Author

Cordell Eddings
Senior Editor, Strategic Communications

Cordell is a senior editor and content strategist for the U.S. Chamber of Commerce's strategic communications team.