Earlier this week, Ed Brady, the president and CEO of the Home Builders Institute (HBI), said younger people need to be more aware of the opportunities in the sector, saying skilled blue-collar roles with six-figure salaries attached were sitting empty.

“We’re losing more than we’re bringing into the industry. So this problem is going to be accentuated even before it is improved,” Brady told Fox Business. “We need to educate our young people. We need to educate parents, educators and legislators that these are six-figure jobs. These people that are coming out of high school making $30 an hour have [the] opportunity to own their own business.”

With skilled labor harder to come by, wage growth in these sectors is also growing ahead of other industries. A New York Fed wage inflation report published earlier this year found that most, but not all, industries have seen a synchronized decline in wage growth since October 2022, with the notable exceptions of public administration, mining, and construction.

The pay premium the sector now demands has caught the attention of policymakers. Chicago Federal Reserve President Austan Goolsbee told Fortune in September that he is watching construction roles in particular for signs of overheating and causing inflation in the rest of the economy.

“I would characterize the expansion of the data centers as very hot, but largely shoving other parts of the economy down,” he explained. “The rise has been stepping on others—they’re competing for the resources. When I’m touring around the Seventh District, people [are] saying: ‘We’re having to scale back our plans because getting construction workers is too expensive, you can’t get HVAC,’ etc.

“That implies a sector rebalance, that is different from an aggregate overheating, [but] that said, we’re not far from that turning into aggregate overheating.”

The worker sentiment element

Dr. Nela Richardson, chief economist at ADP, told Fortune that she wasn’t seeing enough evidence of wage overheating in the data to be alarmed about the wider macroeconomy, but said she was “watchful.”

Responding to a question from Fortune during a press call yesterday, Dr. Richardson explained: “This is very different than in the recovery from the pandemic, where all the price pressure almost was coming from consumer-facing industries because it took so much to get those workers back in the door. That’s where you saw the price pressure. 

“What we’re seeing now is more structural. This is not just AI, this is demographics. This is the need and the demand for skilled labor for quote unquote blue-collar jobs, but blue-collar jobs that are highly skilled, and that’s where we’re seeing the demand strong and the supply short, so whether this is enough to tilt the balance of the labor market into a wage spiral, I do not think so.” 

Dr. Richardson also highlighted a factor that is difficult to quantify: The sacrifices potential employees would be willing to make to enter these skilled, labor-intensive trades.

She said: “Manufacturing jobs are not like white-collar jobs for many reasons, but one is the prevalence of shift work: First, second, third shift. Like steel manufacturers that operate 24 hours a day. So the struggle here is not just finding workers, it’s finding the workers who will work the second or third shift.”

“For manufacturers, that is a big part of the hiring equation that we don’t always incorporate in our macro sense, so some of this is coming from work sentiment: ‘I don’t want to work second shift, or I can’t because I have a family or other kinds of pressures.’ So it’s a manufacturing hiring spree that is limited by worker sentiment and preferences about timing of work, not just working in those fields as well.”