July 8, 2016 – Washington, DC – This month the Bureau of Labor Statistics reported that 7.8 million Americans are unemployed, while at the same time 5.8 million jobs remain unfilled in America. This crisis exists because employers demand "job ready" employees and prospective employees are simply not able to bridge the skills gap without appropriate education and training.
With summer construction projects underway across the country, Career Education Colleges and Universities’ latest look at the shortage of skills in America turns to the construction sector. From January to April of this year, construction spending in the US amounted to $334.8 billion, 8.7% above the $307.9 billion for the same period in 2015, according to data released by the US Census Bureau. But the sector’s growth is shedding light on an increasingly worrying problem – a shortage of skilled construction workers.
Although spot labor shortages in the construction sector began in 2012, as the industry began to recover from the real estate crash in the 2000s, the shortages have intensified as the demand for new projects increases. However, employment is failing to keep pace with increased spending. The result is real impact on both business and future homeowners. Projects are delayed and with that home prices increase.
“The thing we’re seeing and we’re hearing in the field is there’s just not enough qualified people at all,” Jay McCanless, a homebuilding analyst with Sterne Agee CRT in Nashville, Tennessee, told Bloomberg. In fact, industry officials previously said that the construction industry “would be sizzling if not for a critical shortage of workers.”
The problem is expected to worsen in the coming years as demand rises. BLS projects a 13% growth in the construction sector between 2014 and 2024 – far above the average 7% growth rate – resulting in 180,100 new jobs. If one assumes a conservative 20% replacement rate for retiring baby boomers, the total new demand in the decade ahead is 457,380 added professionals in the construction trades.
Over the next 10 to 15 years, the weak growth rate of labor productivity and the retirement of baby boomers are expected to further exacerbate the issue. A recent study by Conference Board analyzing 457 occupations ranked construction workers ninth in its labor shortages index, and found that the occupation faces a higher risk of labor shortage than 91.4% of all others examined. Skilled trades, such as electricians and welders, are at an especially high risk of experiencing a scarcity of labor.
Moreover, Census Bureau economists have noted the limited number of new entrants in the sector. “The percent of hires accounted for by the 19-25 age group declined from approximately 18% at its peak before 2006 to 13% in 2012-13,” Hubert Janicki and Erika McEntarfer told The Wall Street Journal.
Ensuring young workers are prepared to replace retiring baby boomers will be a crucial component of limiting the effects of the construction worker shortage on the American economy. Career colleges and universities can help fill this need. As the Conference Board pointed out in its recent study, businesses will have to be proactive in finding a solution to the shortage of skilled trade labor, either “on their own or in partnerships with training and education institutions.”
“Our Electrician, Electronic Systems Technician and Heating, Ventilation, Air Conditioning and Refrigeration programs help train the next generation of skilled workers who will build safe and reliable construction projects that adhere to relevant building codes and are environmentally friendly,” said Jim Bologa, President and Chief Executive Officer of Porter and Chester Institute/YTI Career Institute. “Our students in the Computer Aided Drafting and Design program are laying the foundation for employment by learning industry specific software like SolidWorks to design 3-D models of today’s complex building projects, making them attractive candidates for entry level positions in the construction industry.”
“Career colleges and universities equip students with the skills they need to find construction industry jobs, and their emphasis on career-oriented education also helps employers find qualified candidates. Career education will play an essential role in helping American businesses confront the looming labor shortage in the construction sector and ensure that the American economy continues to build and grow,” said Steve Gunderson, president and CEO of CECU.
About Shortage of Skills
Each month CECU will profile America's "Shortage of Skills" (SoS) in one key industry. We will examine industries that are critical to America's economic advancement and explain how a well-educated and well-trained workforce can address these issues.
About Career Education Colleges and Universities (CECU)
Career Education Colleges and Universities (CECU) is a membership organization of accredited institutions of higher education that provide postsecondary education with a career focus. CECU's work supports thousands of campuses that educate millions of students.
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