January 18, 2020

Worker Shortages Continue to Challenge Construction Companies

The construction industry is still looking for ways to solve the worker shortage puzzle, an issue plaguing the industry. The problem started when the recession hit the industry hard resulting in large scale layoffs leaving qualified workers with no future job prospects. When the economy changed when the demand for new residential, commercial and other projects increased there were far fewer workers available. This has left many looking for new ways to fill the gap through more aggressive compensation and recruiting, as well as, the introduction of enhanced technology. According to ACG’s 2020 Construction Outlook Survey, 73% identified worker shortages as a top concern for 2020. While not surprising, the shortage of labor is having a cascading effect on safety, project costs and even insurance premiums. To help clients, prospects and others understand the impact, below is a summary of key survey findings.

Construction Survey Insights

• Top Concerns for 2020 – The state of the industry can often be understood through an accounting of top concerns. According to the survey, 73% identified worker shortages as a top concern, 69% subcontractor availability or quality, 62% worker quality, 35% material costs, 31% inadequate worker training, 31% safety, 19% other costs (i.e. machinery, vehicles, and insurance), and 19% increased state and local regulations. Although increased costs and government regulations are a concern, the overwhelming majority are focused on worker shortages and the related impact.
• Changes in Headcount – To assess the changes in headcount, the survey asked questions about worker demand changes. According to the survey, 63% expect a numerical staff increase of one to ten, 7% an increase of eleven to twenty-five, 11% an increase of greater than 25 and 15% expect no change. In terms of percentage changes, 63% expect an increase of 10 percent or less, 11% an increase of eleven to twenty-five percent, 7% more than twenty-five percent and 15% expect no change. The demand for qualified workers is expected to continue to grow over the coming year.
• Recruiting Difficulty – Given the obvious need for many companies to attract workers from a limited labor pool, the survey inquired about the difficulty experienced in filling positions. According to the survey, 85% are having a difficult time filling positions, 7% are not having any difficulties and the balance does not have openings. When asked about the expected availability of salaried craft professionals, 44% expect continued hiring difficulties, 22% believe it will be more, 30% expect no change and 4% expect it to be easier to hire. Most companies are expecting the challenges to persist throughout the year.
• Benefits/Compensation Changes – To attract workers it’s important to review compensation and benefit offerings to make the company more attractive. According to the survey, 69% increased based pay rates in 2019, 15% maintained pay rates and increases, 31% offered new bonus and incentive programs, 8% increased benefits and 19% made no changes.
• Impact of Worker Shortage – The shortage has an effect that extends across the company. According to the survey, 46% have experienced higher costs, 35% have increased project prices, 27% have needed more time to complete projects and 19% have added longer project delivery timelines.
• Training and Education Investments – One-way companies are coping with the shortage is to find new ways to leverage the existing workforce. According to the survey, 36% have changed recruitment strategies to attract workers with diverse skills, 36% have increased funding for technical training and re-education, 24% have changed training for new recruits and 20% have made no changes.
• Labor Saving Strategies – To help position the company, it’s important to assess technology and other opportunities to increase efficiencies. According to the survey, 35% use labor-saving technology (i.e. drones, 3-d printers, and GPS guided equipment), 31% use technology to reduce onsite worktime (i.e. lean construction, virtual construction, and offsite fabrication), 23% are adding specialists while 46% have made no changes.

Contact Us

Worker shortages continue to challenge Atlanta and Georgia based construction companies. The insights provided by the survey illustrate how many are using innovative strategies to remedy the issue. If you have questions about the survey results or need assistance with a construction tax or audit issue, Wilson Lewis can help. For additional information please call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.