How the coronavirus is undermining demand for construction but also making it harder to find workers to hire. By Stephen E. Sandherr
Each year, our association partners with Autodesk to conduct an industry survey of the state of the construction labor market. We do this so we can understand whether our member firms are able to find qualified workers to hire, the impacts of any labor shortages on the broader industry and what those shortages mean for the overall economy.
This year things appear to be quite different. Since the start of the pandemic, the construction industry has shed more than 400,000 jobs as demand for projects has stalled in many parts of the country. So, we recrafted our workforce survey to measure the impacts of the coronavirus on the construction workforce and the overall industry. We also wanted to get a sense of how firms were adapting to the new realities and what kinds of relief measures could help the industry.
What the responses to this year’s survey made clear is that the coronavirus is delivering a one-two punch to the construction industry. On one hand, the pandemic is undermining demand for construction, prompting project delays and cancellations, layoffs and furloughs. Yet at the same time, it is contributing to conditions that make it difficult for a majority of firms to find craft workers to hire.
Sixty percent of responding firms report having at least one future project postponed or canceled because of the coronavirus, while 33 percent report having projects that were already underway halted because of the pandemic. The share of firms reporting canceled projects has nearly doubled since we conducted our last coronavirus survey in mid-June, when 32 percent of respondents reported cancellations.
The coronavirus has also negatively affected many firms’ confidence in future demand for projects. Only 42 percent of firms report their volume of business has returned to year-ago levels or is expected to do so in the next six months, compared to 52 percent who held this view in AGC’s June survey. Another 37 percent expect returning to normal levels of business will take more than six months, while the remainder don’t know.
It is important to note that while the pandemic has led to project delays and cancellations nationwide, contractor expectations of recovery do vary by region. Forty-five percent of respondents in the Northeast expect it will take more than six months for their firm’s volume of business to return to normal, compared to only 34 percent of respondents in the West, 35 percent in the South, and 41 percent in the Midwest.
Ironically, even as the pandemic undermines demand for construction services, it is reinforcing conditions that have historically made it hard for many firms to find qualified craft workers to hire.
Roughly a third of responding firms furloughed or terminated employees as a result of the pandemic and shutdowns ordered by government officials or project owners. Most of those firms have asked at least some laid-off workers to return to work. But 44 percent of firms that recalled employees report that some have refused to return, citing a preference for unemployment benefits, virus concerns, or family responsibilities, among other reasons.
The pandemic has also made it difficult for many firms to fill open positions, especially for hourly craft jobs. A majority – 52 percent – of respondents report having a hard time filling some or all hourly craft positions, especially openings for laborers, carpenters and equipment operators. Sixty percent of firms had at least one unfilled hourly craft position as of June 30. In addition, 28 percent of respondents report difficulty filling salaried positions—in particular, project managers and supervisors.
The coronavirus has also undermined the sector’s productivity levels as firms across the country change the way they operate to protect workers and the public from the disease. Forty-four percent of responding firms report that it has taken longer to complete projects and 32 percent say it has cost more to complete ongoing projects because of the coronavirus. As a result, 40 percent report they have adopted new hardware or software to alleviate labor shortages they have experienced.
There is clearly a lot that Washington officials can do to help boost demand for construction projects and get more people back to work rebuilding the economy. That is why we are pushing Congress and the administration to enact new recovery measures. These include urging Congress to pass liability reforms to protect firms that are taking steps to protect workers from the coronavirus from needless lawsuits.
We are also pushing for new investments in infrastructure, including for the nation’s transportation network. Washington needs to also help state and local governments cope with declining revenues that is undermining their ability to invest in infrastructure.
The challenge is that the coronavirus has put many contractors in the position of looking for work and workers at the same time.
And that is why we are preparing a new nationwide effort to encourage more people to pursue high-paying careers in construction to ease hiring challenges and find a way to attract recently unemployed people into the construction industry. Among other steps, we will be launching a new ‘Construction is Essential’ campaign to highlight the many benefits of construction careers.
It has been 100 years since the industry has gone through something like the coronavirus. But while the challenges are severe, they are not insurmountable. With a responsible amount of support from Washington, we can turn the current challenges into an opportunity to rebuild our economy and attract a new generation into good-paying construction careers.
Stephen Sandherr is the chief executive officer of the Associated General Contractors of America. The Associated General Contractors of America works to ensure the continued success of the commercial construction industry by advocating for federal, state and local measures that support the industry; providing opportunities for firms to learn about ways to become more accomplished; and connecting them with the resources and individuals they need to be successful businesses and corporate citizens. Over 27,000 firms, including more than 7000 of America’s leading general contractors, nearly 9000 specialty-contracting firms and almost 11,000 service providers and suppliers belong to the association through its nationwide network of chapters.