Two in, 10 out.
That’s no riddle. It’s a scorecard for a construction labor force in free-fall. For homebuilders, this count-on-your-fingers arithmetic could spoil what may be a heroic role they believe they’re destined to play: Economic knights on white horses. The math of residential construction’s skilled human workforce—especially when building new homes stands as one of the few true beacons of economic clout in a pandemic market dangling on the brink—looms as a showstopper.
Added up, it’s like this. No influx of new talent into the ranks of the building trades, no housing-and residential investment-led recovery from an almost sure return into recession in 2021.
The tally cuts at both ends of the skilled labor continuum: a scant few come in, and even fewer stick to it; lots of older workers exit. For every new entrant into one of 25 or so construction fields essential to building America’s shelter, five site-tested, skilled, and reliable tradesmen and women “age-out” or are injured out of the field. Two of every five workers in the building trades is on pace to retire by 2031. So, whereas housing activity itself may be projected to expand actual job openings by as much as 10% in the next eight years, the size and capacity of the workforce is barreling in the inverse direction.
At its alarming rate of attrition, three counter-trends kick into algorithmic play. One, is a sheer hollowing-out of the technically skilled human force in absolute numbers, where job openings outnumber hires, and where job quits outnumber new job seekers. Another, more hidden bleed impacts the work that does get done by a depleted universe of laborers. If older, more skilled, more proven workers retire at the rates they are doing, it means that both the efficiency and quality go down, and mistakes—and costly call-backs and fixes—go up. A third, even more masked but powerful factor, is the disappearance of building trade contractor firms themselves, given that no second or third generation posterity plans to follow in their dad’s or their mom’s footsteps in the field.
Together, the trajectories—each exponential—add up to a sopping wet blanket at a critical juncture. Call it construction’s pre-existing condition. From 2007–2013, the construction industry lost more than 2,300,000 jobs and more than 150,000 companies. As the industry began to recover and demand for housing grew, however, workers did not come back, leading to a severe shortage of labor. As of late September, construction already recovered 64% of the 1.1 million jobs lost in March and April, and has more than 260,000 open positions, according to the Bureau of Labor Statistics. Four out of five construction firms report they’re having a hard time filling open positions.
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For builders, this time-released diminishment of human capacity bodes ill not just for individual firms, but for all, given that they all draw from the same mostly local and regional contractor pools. They need an inflection, effectively to reverse the negative outflow of human skills, tipping it back to an inflow.
What they typically do when one or more of the essential resources they need to develop and build more homes gets scarce—like land, capital, materials, and, in this case, labor—is wait. That’s right, do nothing. Time passes, cyclical forces play out, and, normally, workers become plentiful at cheap, predictable rates. This time, not so much. This time, in fact, things are that bad, and the opportunity just ahead—for housing to work as an engine of the next economic rebound—is that good, for a call to action. Even more than that, a call to work together.
A Call To Action
“We’ve recognized we had a skilled labor shortage problem for the better part of a decade, and we’ve been talking about it for at least that long,” says Sheryl Palmer, chair, CEO, and president of Taylor Morrison, a top-five ranked home building enterprise by volume and revenue. Palmer also heads a new, multi-million-dollar, cooperative investment initiative among 20 national firms who call themselves the Leading Builders of America, the Building Talent Foundation. The role of the BTF, with no time to lose to try to reverse the hemorrhaging trend as the economy creaks and grinds into a likely first quarter recession, is to turn the talk into action, and the action into a collective resolve, and the resolve into results: a “cavalry of 100,000 new individuals” making the building trades their source of livelihood in the next decade.
“We have to do a better job as an industry,” Palmer says. “This issue hit each competing firm differently over the years. Now, it’s everywhere, across the board, and intensifying. No single company can solve it. It’s going to take a village, and it’s going to take training, powerful recruitment marketing, support for those newcomers to the field, and new matching data and technology platforms to amplify our messages of opportunity precisely where people most need it right now.”
Builders—especially ones whose operations serve Sunbelt markets with the highest new home activity levels and have dealt with acute labor capacity constraint for years—have put in effort, in their own way, to do something about the problem of a shrinking skilled workforce.
“We tried pushing our own initiatives,” says Mike Humphrey, who for 33 years has been strategic sourcing and supply chain executive at Houston-based David Weekley Homes. “We hit roadblock after roadblock, because we didn’t have a clue about all the different moving parts that needed to be coordinated to make our efforts work.”
Doubling-Down On Building Talent
Enter Branka Minic, a force-of-nature star-aligner. Her focus is on the mechanical moving parts and tedious details of construction labor’s supply and demand curve. Minic, after 16 years at Manpower Inc. and her own human resources and placement consultancies, stood as a revered expert in creating linkages where there had been none between employers in technology and IT and elusive talent pools. In industries where mismatches defined a wedge between need and opportunity, she designed the ecosystem of influencers, trainers, recruiters, placement specialists, on-the-job mentors, and—all important—untapped universes, often hiding in plain sight, of capable, hungry individuals.
Work on connecting the intricate linkages that would connect builders, contractors, manufacturers, distributors, training centers, public agency funding sources, and, ultimately, the future building tradespeople at the school level, the pandemic-displaced worker level, the returning armed services veteran level, etc., got off the ground almost 10 months ago.
“She’s done things to kickstart this that we never would have, nor could have gotten done,” Humphrey says. “She’s a very independent, driven person, and she truly makes this her purpose, caring about both the young job seekers and the people hiring them.”