Despite Challenges, Construction Labor Market Shows Promise In 2022

Many children grow up dreaming of what they will be later in life and how they are going to impact the world. Sometimes, a four-year-old’s dream becomes reality. Many times, that path changes dramatically.

Recently, I was on LinkedIn and connected to Beau Janes, who serves as the general manager at Alpine Lumber, in Denver. He writes on his profile:

“When I was a kid, I used to dream about selling lumber. I used to drive my imaginary forklift around the basement of my parents’ home, stacking imaginary lumber and deliver it to the imaginary builder. I had so many sleepless nights dreaming of those builders using the products that I supplied to build someone’s dream home. Hours and hours of my childhood we’re spent agonizing over lumber futures, sales pitches, and driving that imaginary diesel truck to get the lumber to a happy home builder.

Okay, this isn’t true. I wanted to be a pro athlete or astronaut like every other kid. But when I graduated college in 2010, I realized my 15-inch vertical jump wasn’t going to translate to the NBA. After a couple years in oil and gas industry, I stumbled upon Alpine Lumber. When I say stumbled, I literally tripped over their booth at a job fair in 2012. After a conversation with the HR director and an interview a week later, my wife and I found ourselves packing up to move to Steamboat Springs, Colorado.”

Since Janes moved to Colorado, he has had a very fulfilling career, developing leadership and sales skills, moving through a variety of positions in the company. He now sees Alpine Lumber as more than just a job.

He’s a shining example of exactly what the construction industry wants and needs – an inspired, motivated employee who is an ambassador for trade work because right now the construction industry faces some unique labor challenges. While it wasn’t impacted as much as other industries, there is now a “new” labor market that the industry is trying to navigate.

In research done by Grant Farnsworth, president at the industry research firm The Farnsworth Group, 45% of residential contractors reported labor shortages in October 2021. Typically, construction firms see higher rates of labor shortages in the fourth quarter, but this year is exceptionally high.

Across the board, the industry anticipates higher labor costs during the next 12 months than they have seen in the last five years, with every trade anticipating a big jump from third to fourth quarter. The trades that require the most expertise and licensing are the ones that have been the hardest to fill in the most recent months.

Finally, Farnsworth shows that labor participation, a measure of the percent of people actively employed or seeking employment, is a major factor for labor shortages in the construction industry and the economy as a whole. In 2021, the country has experienced a consistent 61% labor participation, which is down from an average of about 63% since 2013.

“The real problem sits at the top of the talent pipeline,” said Chris Brenchley, co-founder and CEO at the job matching platform Surehand, and founder of the workforce development initiative called Rock the Trades an initiative started to remove friction from how workers find work. “There just aren’t enough entrants into the labor market. The median age of skilled trades is in the mid-40s, but in software, it’s 27. Trades have a stigma in the US. They are a second choice, not on the menu as a first-choice option. It is a perception issue more than anything, there are so many false narratives out there. But, if you look at the data, there are a lot of positives like relative earnings potential and low barriers to entry.”

Steve Turner, founder of Bring Back the Trades, a nonprofit organization supporting students with the knowledge of trade professions, agrees that there is a perception issue and that the industry is only getting worse. In South Carolina, he says that for every five that leave the industry, only one is entering.

“I started the association to educate the children, but the children aren’t the issue,” he said. “It’s the teachers, the adults. The goal is to reach kids who don’t have a career path and who don’t want to go to college, but teachers feel like they are there to teach kids to go to college, not to go into the trades.”

The other problem that Turner sees is that trade schools usually hire retired trade professionals as teachers; however, since there is a shortage of workers in the trade, they stay in the trade and don’t move on to teach, so now there is a shortage of teachers in the trade schools.

Finding Solutions

Janes talks about how Alpine Lumber has been impacted by a labor shortage and is preparing for a future of more of the same.

“To minimize impact, we focus on our own processes and procedures to make sure we’re not overcommitting and overpromising,” he said. “Also, when everyone from our customers to our suppliers is struggling with labor, communication is paramount. Everyone understands each other’s situation, so it becomes about working together to find the best solutions.” 

Mary-Allyson Chauvin serves as the human resource manager at regional construction firm Langston Construction Co. of Piedmont, LLC, and also is a founding member and chair of the Skilled Trades Alliance. She has doubled down on efforts to attract and retain employees because work in the construction trade actually increased during COVID.

“We went from 85 employees to 105,” said Chauvin. “There was an inconsistency in the candidates that we were attracting. About half were never in construction before but had lost their job because of shutdowns. We had trouble attracting talent with experience. Langston has a philosophy, we feel that it is not only our responsibility, but it’s a good opportunity, to bring on individuals who don’t have experience in the trades that are making it a second career. If they have a good attitude, and are motivated to work and learn, then we can teach them the skills that they need.”

To get this new talent up to speed, Langston created a craft development program that empowered employees to learn and to teach and to mentor each other, which was also a big boost to retention.

“We have seen our turnover reduced to its all-time low at 5%,” she said. “Historically in the industry, retention averages around 20 to 22%.”

Langston also developed programs to drive innovation and to attract millennials. The company started a per project innovation competition that allows employees to vote on awards for new smart, more efficient or safer processes.

To attract millennials and empower their growth in the industry, Langston launched a two-to-three-year program where new employees can transition through job rotations. The rotations include different scopes and styles in roles such as project manager, estimating, and safety. Once an employee completes all rotations, they are elevated to the level of superintendent.

Don Neff, the president and CEO at construction consulting company LJP Construction Services, shares in the focus on training.

“Once you identify the candidate and bring them in, training, training, training is so important,” he said. “It’s see it, hear it, learn it. A new hire needs that hands-on lab experience to absorb the technical nuances of what we do. We have workshops, provide technical expertise, and cross training.”

His company reviews and evaluates the effectiveness of what they are doing as well with employee surveys. Some of its recent new hires report that they want and need several more touch points on how to do their jobs in the field.

Heather Breidenthal is the chief human resources officer at Tri Pointe Homes, one of the largest public home builders in the US, and has seen a 50% increase in open positions in internal positions mainly because of growth.

She agrees that development is the new compensation and there is increasing desire for training. Tri Pointe offers an online platform with robust opportunities to upskill employees and has invested heavily in the ongoing development of the platform.

Even though training might be considered attractive, compensation is still on the rise. Some of the positions have more competition than others, like customer care, land and field construction managers, and are driving up pay roll because of the competition. Breidenthal points out that these salary demands mean more pay to bring in new hires, but also require another look at the current team to be sure compensation remains fair.

“In addition to the intangibles that keep employees satisfied in their roles, the capitalization of your organization is also important for recruitment and retention,” she said. “Savvy candidates will research and analyze the ownership structure to determine the primary source of revenue, the structure of new transactions, amount of corporate-level and property-level debt and other related factors. Stability and opportunity for future growth both matter.”

On top of that, culture remains important, but Breidenthal finds that contrary to what many believe, there is no generational lens on having the right culture.

The company surveyed all 1,350 team members this year and got an 89% response rate. With the respondent’s average age hitting around 46-years-old, the desire to have work-life balance spanned equally across all generations. All employees got the same series of questions that were sliced by generation and age, but the way that they thought and felt didn’t change from one generation to another.

“I think it’s up to each of us to look internally at our culture and decide if we’re providing an environment where people feel valued and like they are making a difference,” Janes said. “We want our work to matter, and I think our work in this industry does matter. Yes, we’re a building material supplier, but we have the opportunity to impact many people from our customers to our community. So, I think it’s about culture and the story we’re creating day in and day out. Find the people who want to be a part of it and let them utilize their respective strengths in a position that helps them and the company succeed.”

Promoting the Trades

The Skilled Trades Alliance, Rock the Trades and Bring Back the Trades are several organizations that are dedicating focus on promoting and advancing the trades and coming up with some winning processes to do so.

Turner has been involved in many events to promote trade work and has learned not to rely on industry veterans to promote the trades. 

“Before the average age for presenters on trades was 55 to 60 years old,” he said. “But presentations from someone who has been in the trade for 34 years seems daunting. Now, we use someone to present who has been an apprentice for three years and who brings energy. These younger presenters bring true answers that come from someone of their own generation. They also get to share their success and the money they are making.”

Both agree that it’s time to get rid of the stigma associated with trade work. It’s now a very different world. The trades of yesterday are not the trades of today. Today there are many more options, and some include post-secondary education because so much of the work is computer-based.

Brenchley also uses Rock the Trades as a social impact brand that relies on industry influencers, called rockers, who have built successful, rewarding careers in the trades. The group has built tools that enable new candidates to connect with industry professionals for support and perspective, coaching and mentoring, including a free jobs matching app.

He sees a lot of momentum behind the initiative from organizations and individuals who want to galvanize behind this issue.