Builders are busy, boomers are aging, and Gen Z’ers are entering the workforce. These dynamics are shaping the present and future of the construction industry’s labor force.
My house in a major Colorado ski town has been undergoing a major remodel. For the past few weeks, I have had a framing crew hammering away mere feet from my home office.
Day after day, they moved along proficiently from the walls to the roof. Sawdust flying, they pieced together LVL’s (engineered lumber) for roof joists, installed mountain-sized picture windows, poured concrete footers, and managed the hoisting of steel beams. They bantered, cursed and talked shop, all while keeping an eye on their dogs and the impending storm clouds.
Their work is highly skilled, requiring decisions on the fly. Only someone with decades of experience can assess every situation in relation to the building codes, architect’s drawings, engineer’s requirements and homeowner’s preferences.
The company owner is currently 52; the other framers—53 and 42.
Our valley has exploded with new housing development, and there is still more to come. I asked the owner one day what will happen when he retires. “I don’t know,” he said, “There are only a few of us in the valley who know how to do this work.”
And, it’s hard work: climbing scaffolding, using power tools at odd angles, baking in the sun on roofs, pouring concrete in wet crawl spaces, and dealing with pressure both to get the work done and to not get hurt.
Framers, like many tradespeople, can only do this work for so long.
It’s Those Darn Baby Boomers
The construction workforce is aging. The younger generations, due to a lack of interest, knowledge, guidance or training, or all of the above, are not filling in the gap.
“This change in age composition of the construction labor force is largely because the last elements of the Baby Boomer generation are entering the 55+ age group” reports the National Association of Home Builders (NAHB). (Baby Boomers were born between 1946.) When compared to the national labor force, the construction workforce has more older workers and lacks younger workers. (See graph below.)
“With nearly 1 in 4 construction workers older than 55, retirements will continue to whittle away at the construction workforce,” said Anirban Basu, Chief Economist of the Associated Builders and Contractors (ABC).
“Many of these older construction workers are also the most productive, refining their skills over time. The number of construction laborers, the most entry-level occupational title, has accounted for nearly 4 out of every 10 new construction workers since 2012. Meanwhile, the number of skilled workers has grown at a much slower pace or, in the case of certain occupations like carpenter, declined.”
Median Age of Construction Workforce is Location and Job Dependent
The median age of construction workers is 42, one year older than the national median age for all industries. This number varies widely by state. Maine, Vermont, New Hampshire, Rhode Island, Alaska, Hawaii and New York have the oldest median ages (43-47 years). South Dakota, Minnesota, Wyoming, Utah, and Texas are among the youngest (38-40 years).
The median age also varies by job type. After inspectors, managers and supervisors, the median age of tradespersons, (listed from oldest to the youngest) are:
- Brick and stone masons
- Equipment operators
- Plasterers and stucco masons
- Painters
- Sheet metal workers
- Carpet, floor and tile installers
- Plumbers, pipefitters and steamfitters
- Structural iron and steel workers
- Drywall installers
- Ceiling tile installers, and tapers
- Electrician
- Glaziers
- Cement masons
- Concrete finishers and terrazzo workers
- Construction laborers
- Insulation workers
- Roofers
- Pipelayers
- Solar photovoltaic installers.
Additional Construction Labor Demographics
-There are over 767,992 construction workers currently employed in the United States.
-6.2% of all construction workers are women, while 93.8% are men.
-The average age of an employed construction worker is 38 years old.
-2% of all construction workers are LGBT.
-Construction workers are 89% more likely to work at private companies in comparison to public companies.
-The most common ethnicity of construction workers is:
- White (52.9%)
- Hispanic or Latino (27.7%)
- Black or African American (11.1%)
- Unknown (4%)
Builders + Construction Labor Shortage = Higher Home Costs
The Housing Market Index (HMI), published by the Economics & Housing Policy group, which reports on the problems builders face, lists the cost and availability of labor as one of builder’s most challenging issues.
The January 2023 HMI reports 85% of builders saw labor as a significant problem in 2022. Although builders expected this to ease somewhat in 2023, 73% still expected it to be a major factor this year.
This is also a major issue for the rest of us. The labor shortage combines with high material prices and high interest rates to make houses more expensive. This limits buyer’s housing options. “A lack of skilled construction labor is a key limiting factor for improving housing inventory and housing affordability,” states the Home Builders Institute (HBI) Spring 2023 Construction Labor Market report.
Although the number of homes currently under construction have dropped, reducing demand for workers, it notes, “… this impact is only a short-run cyclical factor. As the housing industry approaches a turning and return to expanding construction volumes, labor demand will grow. Consequently, the nation will require additional construction workers to reduce the existing housing deficit of approximately one and a half million homes, per [National Association of Home Builders] NAHB estimates.”
2023: Short A Half a Million Construction Labor Workers
“Despite sharp increases in interest rates over the past year, the shortage of construction workers will not disappear in the near future,“ says ABC Chief Economist Basu. “First, while single-family home building activities has moderated, many contractors continue to experience substantial demand from a growing number of mega-projects associated with chip manufacturing plants, clean energy facilities and infrastructure. Second, too few younger workers are entering the skilled trades, meaning this is not only a construction shortage but also a skills shortage.”
According to a recent Associated Builders and Contractors (ABC) report , “The construction industry will need to attract an estimated 546,000 additional workers on top of the normal pace of hiring in 2023 to meet the demand for labor” In 2024, it estimates, “the industry will need to bring in more than 342,000 new workers on top of normal hiring to meet industry demand, and that’s presuming that construction spending growth slows significantly next year.”
Construction Labor Wages for Tradespeople are Higher … But So Is Inflation
Wages for tradespeople has steadily increased (see chart below). However, wages in the construction industry are generally still not keeping up with inflation.
In April 2023, according to Construction Coverage, an analysis and research website, median earnings for full-time construction and extraction occupations reached $982 per week—a record high. This was up from 7.6% from 2022, (although the numbers need to take into account a 4.9% inflation rate over the same period).
Their website notes, however, that, “When looking at the five-year period ending in 2022—the latest year for which more granular occupation-specific data is available—wages in the construction industry failed to keep pace with inflation. At the national level, across all construction and extraction occupations, mean wages actually fell by 2% after accounting for rising living costs.”
Highest-Paid Construction Labor Jobs
According to Zip Recruiter, some of the highest paid non-management construction jobs are (in order of hourly wage): boilermaker, pipe fitter, carpenter foreman, electrician, plumber, steamfitter, HVAC installer and technician, brickmason, and solar installer.
Wages also vary widely depending on location. High wage states include Illinois, Massachusetts, Alaska and Hawaii. The three lowest wage states are Florida, Arkansas, and South Carolina.
Fastest Growing Construction Labor Wages
The fastest growing construction job wages, according to Construction Coverage, (based on U.S. Bureau of Labor Statistics, which ranks occupations by their five-year percentage change, from 2015 to 2022, adjusted for inflation) include: roofer helpers (+15.2%), terrazzo workers and finishers (+13.5%), stonemasons (+10.9%), and mason, tile and marble setters (+5.8%). Others, like floor sanders and finishers, and painters have seen wage increases of some 25% over that same time but, with inflation added in, there was no significant increase in their actual wage.
Location also plays a big role in how fast construction wages are growing. New Mexico, Nevada, Idaho, Utah and Montana were all in the top 10 states with wage growth of 19% to 26%. Notes Construction Coverage, “The recent population growth in Mountain West stages has likely contributed to increased demand for construction workers to build the housing and infrastructure needed to accommodate the increase in residents.”
Average Trade Wages vs. White Collar Wages
How do average trade wages stack up with white-collar jobs? Here are some average salary comparisons for 2023 in Colorado:
- Fireman: $33,150-$47,094
- High school Teacher: $42K – $70,625K
- Stone Mason: $46,800 – $56,550
- Journeyman carpenter: $48,750 – $59,436
- Plumber: $51,321 – $85,066
- Police Officer: $69,117 – $94,540
- Real estate agent: $75K – $125K
- Veterinarian: $80K – $142K
- Architect: $112,310 – $174,989
- Systems Engineer: $93,755 to $154,658
- Family Practice Doctor: $195K – $240,250
However, as tradespeople move into management and ownership, that income is more promising. For some entrepreneurs who start their own companies, salaries can far surpass many white-collar professions.
- Construction Project Manager: $64K – $140K
- Senior Project Manager: $90 – $150K and higher
- Construction Company Owner: National average $98,679 – and higher ($1M+)
How Young People See the Construction Trades
What is keeping young people from entering the trades? For insight, I asked my 16-year-old son, who has had first-hand exposure to the talented tradespeople at our house and has been chipping in on our remodel.
He answered, “I think most kids see themselves in white-collar jobs—business, real estate, and banking—more than in blue-collar jobs. Maybe some kids who have parents who do that kind of business would get into it, but I think most kids think they will go to college and do something else.” Would he consider entering the trades? He says, “I like doing it, but I don’t want to do it all day … every day.”
My son hits on one big reason kids don’t see themselves with a future in the trades: for many years, the goal most families had for their kids was for them to go to college. But now, with so many college graduates saddled with large debt (Gen Z is considered the generation with the highest debt due to students loans) and possibly not getting the high-paying jobs they expected, those attitudes are shifting, putting trade jobs on the table as a way for young people to make a consistent, steady income.
The Intersection of Gen Z and Construction Labor’s Future
However, money is not the only consideration for the next generation coming into the trades. The construction industry will rely on getting its newest recruits from Generation Z, born between 1997 (currently 26 years old) and 2012 (currently 11 years old). It notes, “With over 60 million members in the United States alone, Gen Z is well on their way to becoming the most influential group in the workplace.” A ThoughtExchange research project, Gen Z at Work, asked Gen Z’ers born between 1997 and 2000, what they were looking for in their jobs.
Gen Z’s vision of their future employment:
- 96%: it’s important they feel valued, included, and empowered at work.
- 80%: prefer a job that allows them to explore and grow various skill sets, rather than a job that is focused on a particular set of skills.
- 79%: value a manager that cares about their personal development as much as their professional development.
- 71%: of those working remotely or hybrid would not return to a fully in-person workplace.
- 39%: look for work from home flexibility.
- 85%: say work-life balance is important in their decision making. Respondents ranked “flexible hours” above “competitive pay” when asked what they look for in an employer.
- 71%: look for company diversity.
- 92%: say it’s important that their company holds values that align with their own.
- 85%: value working at a company with a mission that makes their work feel important.
Advice and Feedback
Dave MacLeod, ThoughtExchange’s CEO and founder, offered this advice for employers in a recent Forbes article. “Leaders: Get going on purpose and inclusion. With 85% of respondents conveying they want to work for a company with a mission and 89% saying they will leave a company that doesn’t include them, the future is clear … Leaders who fail to rapidly shift their organizations into a force for good or include their people in figuring out just how to do that will end up becoming the Blockbusters of the business world.”
But, many employers are already struggling with the Gen Z vision. In a ResumeBuilder.com survey of 1,344 employers:
- 74% believe Gen Z is the most difficult generation to work with
- 49% say it’s difficult to work with Gen Z all or most of the time
- The primary reasons they give for Gen Z being difficult to work with is “their lack of technological skills, effort, and motivation,” and “being too easily offended.”
At the same time, they do offer qualities that could work well in a changing industry. One employer found Gen Z to “be highly innovative, and adaptable … not afraid to challenge the status quo and bring new ideas to the table … value authenticity and transparency.” “
The Way Forward for Builders and the Construction Industry
The recent passage of programs like the Infrastructure Investment and Jobs Act and the CHIPS and Science Act makes efforts to address the construction labor shortage more timely. Fortunately, some very large organizations, including the federal government, are working on the issue.
Immigration
Comprehensive immigration reform has been discussed as a potential solution to the construction labor shortage. According to the Committee for Economic Development’s April, 2022 Solution Brief, (a series focused on nonpartisan, reasoned solutions), “It is estimated that increasing annual immigration levels to allow more than 2 million new immigrants to come to the US each year could help reverse unfavorable demographic and economic trends and has the potential to increase US GDP from $23 trillion in 2021 to $47 trillion (in today’s dollars), or by over 100 percent, by 2050.”
In May, the Associated Builders and Contractors (ABC) supported the Essential Workers for Economic Advancement Act. Introduced by Rep. Lloyd Smucker, the Act sponsors 65,000 temporary H-2C visas for industries like construction and hospitality.
Immigration law changes are complex and controversial, and their impact on the construction industry is often varied. (Some states have recently passed laws to limit undocumented workers: See our previous article on Florida’s SB 1718 law for a detailed discussion on this topic).
See this detailed Bisnow article for a good discussion of immigration laws as they relate to the construction industry.
Construction Industry Apprenticeships
ABC is one organization working to recruit, educate and upskill the construction workforce. They have apprenticeship, craft, safety, and management education programs across 20 different construction occupations. They offer apprenticeship programs with the U.S. Department of Labor Office of Apprenticeship, allowing apprentices to complete programs as journeymen, and receive their apprenticeship certificate. ABC members invested $1.6 billion in 2021 to educate 1.3 million course attendees.
For example, New Mexico offers construction apprenticeships in carpentry, electrical, HVAC, sheet metal, and plumbing. Apprentices earn competitive wages and benefits while on the job.
The ABCNM Plumbing Apprenticeship Training Program requires a minimum of four years and 8,000 hours of on-the-job training, and apprentices go to school two nights a week, two semesters a year, for four years. It’s a commitment. States the website, “Because of the length of the program, commitment to the classroom, and on-the-job performance requirements, one should be passionate about, and dedicated, to their chosen trade. When making selection decisions, ABCNM looks for candidates who want to become career plumbers.”
*ABC provides this helpful Apprenticeship Program Locator tool for people to find these types of apprenticeship programs.
Construction Workforce Development
NAHB has a “workforce development champion” program, which encourages construction industry leaders to help solve the labor shortage by creating on-the-job shadowing opportunities, participating in career day events, guest lecturing at local schools and donating equipment to shop classes.
High School Construction Industry Vocational Programs
Reports Colorado Builder Magazine, “Over the last couple of decades, vocational education programs in high schools have suffered a heavy blow, due to budget cuts and curriculum shifts meant to prepare students for a four-year college instead of a career in the trades.”
But, some of these programs are coming back. For example, Colorado’s Careers in Construction program partners with the Associated General Contractors of Colorado (AGC-C), the Housing and Building Association of Colorado Springs (CSHBA) and the Home Builder’s Association (HBI) of Metro Denver to train high school students for skilled trades job and careers, earning them HBI certificates. The program also offers training for adults looking for a career change.
The program aims to inform young people of opportunities available in the trades—including high-paid management and entrepreneurial positions, in hopes of changing the perception of what the industry can offer.
Untapped Markets: Returning Citizens, Veterans and Women
“When workers are scarce, there are only so many levers a company can press to find more,” writes the Associated General Contractors of America, (AGC), in their 2022 National Construction Industry Workforce Summit report. The report suggests employers consider hiring, training and providing job placement for “veterans, or justice-involved people needing to transition to civilian life … It makes good sense to look for talent in new and different places …”
It is also notable how few women are in the construction labor force outside of office positions. Says NAHB, “While construction and maintenance occupations account for the largest number of employees in construction and is where additional workers are most needed, women comprised only 4% of such occupations. Additional steps should be taken to attract female workers into these high demand occupations.”
Innovation
Technology may be helpful in finding ways for builders who are short on labor options to build more efficiently. Technical colleges, like Emily Griffith Technical College, is preparing to launch a new Virtual Design Construction Academy to teach students 3D modeling, robotics, and other technological aids for the future of the industry.
Who Will Build A House For Your Kids?
As the Baby Boomers retire into their mountain cabins, swimming pools and sunsets, the labor shortage in the construction industry continues to grow.
It takes time to replace the expertise and craftsmanship of experienced workers (like my house framers). Efforts like reviewing immigration reforms, supporting apprenticeship and workforce development programs, revitalizing high school vocational training, and tapping into untapped labor markets, including veterans, returning citizens and women are essential .
Addressing issues like work-life balance, competitive wages, and higher-end career opportunities, and moving forward with innovation and technology, will help attract younger workers.
Said Michael Bellaman, ABC president and CEO, “The construction industry must recruit hundreds of thousands of qualified, skilled construction professionals each year to build the places where we live, work, play, worship, learn and heal. As the demand for construction services remains high, filling these roles with skilled craft professionals is vital to America’s economy and infrastructure rebuilding initiatives.”
In the end, although it’s wonderful if my son decides to go to college to be an engineer, at the same time, I am wondering … when he gets older, who will build his house?
The answer to that question is “maybe no one,” without action, education, and encouragement for entering the trades, on the part of the federal government, industry organizations, schools and parents.