Reducing the Impact of Labor Shortages in the Construction Industry

June 26, 2023

Reducing the Impact of Labor Shortages in the Construction IndustryLabor availability is an increasing problem in construction markets. While the construction industry has incurred labor availability challenges in the past, few firms proactively plan how they will address these issues to mitigate impacts.

Many contractors and owners wonder what they can do to reduce the impacts of labor availability on construction projects following the COVID-19 pandemic. The details below explain why there is a construction labor shortage occurring and what you can do to bring new team members to your company.

1. Contract Language

Contractors should modify their contract language to include escalation, force majeure clauses, and well-drafted labor-related provisions. For example, a contractor could claim that a labor shortage is qualified as a force majeure if the contractor demonstrates that the lack of labor availability made work performance impossible. However, this demonstration could require an analysis of the following:

  1. The contract and bid documents
  2. The foreseeability of the labor shortage condition
  3. The extent and severity of the labor shortage condition
  4. The extent and severity of the hardship caused by the labor shortage condition
  5. Whether an appropriate labor supply was a mutual assumption in the contract
  6. Whether a notice of the labor shortage condition was sent promptly to the owner

2. Labor and Materials Cost Adjustments

Contractors should include reasonable assumptions for labor and material costs during the bid period. Being transparent about project details goes a long way. For example, someone stepping foot on a job site should know how many hours they will be expected to work that day and what skills are required to work safely. 

It’s possible that construction professionals are fed up with the organization of work schedules. When multiple people work longer hours because of absences, employees experience burnout.

3. Workforce Training

Companies should develop workers’ cross-training programs to create a diversified workforce. Establishing an apprenticeship program for occupations that do not require a college degree is a potential training method through on-site or classroom training. In some cases, employers are not required to pay for the training, as courses can be partially or fully funded by federal programs such as the Workforce Investment Act (WIA), state training programs, or educational institutions.

4. Workforce Stability

Impacted companies should create programs to develop and maintain workforce stability and improve working conditions. These programs could include tenure recognition programs, training programs to deal with occupation-related stress, and worker involvement in company operations. Companies can also use bonuses, overtime opportunities, loyalty rewards and promotions as incentives to retain their workforce.

5. Higher Wages and Benefits

Based on the supply and demand curve analysis described in the previous sections, increasing wages can improve labor availability. However, in extreme cases, if the supply of workers is inelastic for a certain period (unresponsive to wage changes), increased wages would not lead to changes in the number of qualified workers.

Improving employees’ fringe benefits might attract more employees, too. In some cases, employers are able to reduce their vacancy rates by improving fringe benefits instead of increasing wages. These changes might include upgrading health insurance offerings, creating retirement options for workers, or increasing the number of paid days off workers get each year.

6. Regional Labor Sourcing

Supply and demand for labor vary across each state. Contractors experiencing reduced labor availability in a specific market should source subcontractors and workers in areas where labor shortages are not a problem. Contractors can either pre-fabricate portions of the project in areas that are not experiencing labor shortages or compensate workers to relocate to the project site.

7. Re-engage at the Student Level

The construction industry must re-engage at the student level. By re-establishing and educating students about vocational schools and construction industry trade education, the industry may be able to attract high school students who are still deciding what they want to do for a career.

Students in high school may take an interest in the construction industry after hearing more about how they can climb the corporate ladder, grow their current skills, and earn a solid living by making a difference in their communities. Some professionals find the construction path after trying other jobs and discovering they want to be more active during their workdays.

Construction teams can potentially expand their staff with students who are ready to learn. Holding events at local high schools could be an effective way to recruit new talent.

8. Acknowledging the Great Resignation

The COVID-19 pandemic resulted in people reevaluating their career paths. Experts are referring to the Great Resignation as a time in U.S. history when individuals are quitting their jobs in search of something new or for early retirement.

Construction labor shortages could be explained by recent statistics mentioning millions of Americans have left their jobs since the start of the pandemic. If there’s one thing to take away, it’s that people are willing to jump ship on their careers if it means getting what they want — better work culture, higher pay, worker appreciation, flexible scheduling, and similar perks.

Acknowledging the Great Resignation in our post-COVID world gives decision-makers a chance to make changes that can attract new employees. You can potentially fill the gaps across teams by hiring part-time workers and paying attention to what your competitors offer.

9. Lack of Child Care Options for Construction Professionals

There may be qualified candidates in your area, but the lack of local child care options makes it difficult to apply or leave the house for work. The problem becomes more severe when construction training programs often take more than a few days to complete before someone can start.

Another way to fix construction labor shortages is to advertise flexible start and break times for employees. Someone might be more inclined to apply for a job with a construction company knowing they can drop their children off at school or pick them up at the end of the day.

It may not be feasible for every construction business, but organizing an in-house child care program could be a solution to your staffing problem.

Count on Spire Consulting Group for Staff Augmentation Services

The respect that construction workers once held must be regained. Owners, employers, and contractors must celebrate the work that skilled laborers provide, and recognize how they help to keep the economy moving forward.

Regardless of the trade, labor availability does not have to negatively impact your firm. With careful planning and effort, firms can take precautionary steps to mitigate any potential impacts on their daily operations.

Rely on Spire Consulting Group to help build your construction team. We specialize in construction management services that help you see your vision through. Contact us today for more information about how we can keep your projects moving from start to finish.

The content included in this article is for informational purposes only and does not reflect the opinions or recommendations expressed by any individual unless otherwise stated.

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