The shortage of construction labor is wreaking havoc on homebuilders, but it’s welcome news for workers in the field.
Companies like Shea Homes, Hovnanian Enterprises Inc., and Beazer Homes USA have all identified the scarcity of workers as a factor that’s causing an industry slow down. Meritage Homes Corp. even lowered its forecast last week because of rising labor costs and the difficulty it’s having finding enough workers to finish projects, Bloomberg reports. The worker shortage is so acute in Arizona that Active Lifestyle Communities, part of Shea homes, is telling customers that their homes may not be completed for a year—about twice the time it usually takes.
There are a bunch of reasons why construction workers are hard to find.
Many construction workers left the field when the housing market collapsed during the recession. They entered sectors that were healthier at the time, such as trucking, and oil and gas production. Despite housing’s rebound, the laborers aren’t returning, in part, because the pipeline of talent has dried up as schools have cut shop classes and two- or four-year colleges attract would-be workers. Plus, increased enforcement along the Mexican border could be keeping foreign workers from entering the country and seeking jobs in the field, Bloomberg says. The fallout of those factors has come as buyers sign contracts faster than they have since before the housing crash.
While that’s bad news for homebuilders—52% of them told the National Association of Home Builders that they experienced a labor shortage in June, up from 46% last year—it’s good news for folks in the field or those looking to enter it.
The scarcity of workers in construction means employers are paying higher to lure laborers to the industry. As of August, average hourly earnings in the construction industry were up 2.8% over the prior year. That’s ahead of the wage growth across all industries—2.1% for the year in August.
Pay in the field may continue to rise since the shortage of workers is unlikely to get better anytime soon. The Bureau of Labor Statistics projects that the United States will need 25% more construction laborers by 2022—a figure that far outpaces the growth of the U.S. workforce overall. A similar increase—24%—is expected for carpenters.
