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Assessing the Impact of Labor Shortages in the Construction Industry

Assessing the Impact of Labor Shortages in the Construction Industry

The construction industry is facing a significant challenge when it comes to hiring workers. One recent report found that in addition to the industry's normal pace of hiring, contractors will need to find an estimated 546,000 new workers in 2023 to meet demand.

This is a daunting task, given that the industry averaged over 390,000 job openings per month in 2022, the highest level on record. The industry's unemployment rate was also low at 4.6% in 2022, indicating that there are few construction workers seeking jobs. To compound the problem, the demand for labor is expected to increase by 3,620 new jobs for every $1 billion in new construction spending, on top of the current above-average job openings.

The shortage of labor is not just about numbers – there’s also a skill shortage. The struggle to hire and retain workers is especially dire as the workforce increasingly reaches retirement age. Nearly one in four construction workers is older than 55, and many of these workers are also the most productive, having refined their skills over time. Entry-level construction laborers account for roughly four out of every ten new construction workers since 2012, but fewer younger workers are joining the workforce. At the same time, the number of workers with licensed skills has grown at a much slower pace than in previous decades, or, in some cases, has even declined.

The demand and funding for megaprojects like chip manufacturing plants, clean energy facilities, and infrastructure will continue to exacerbate the problem. Although construction is seeing money pouring into these projects, it means more workers will need to be hired to build them.

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