Builders Complain Of Record Labor Shortages: Up To 75% Of Employers Can't Find Workers

Late last month we reported the remarkable anecdote of an Ohio factory owner who has numerous blue-collar jobs available at her company, but has one major problem: she is struggling to fill positions because so many candidates fail drug tests. Regina Mitchell, co-owner of Warren Fabricating & Machining in Hubbard, Ohio, told The New York Times this week that four out of 10 applicants otherwise qualified to be welders, machinists and crane operators will fail a routine drug test. While not quite as bad as the adverse hit rate hinted at by the Beige Book, this is a stunning number, and one which indicates of major structural changes to the US labor force where addiction and drugs are keeping millions out of gainful (or any, for that matter) employment.

Mitchell said that her requirements for prospective workers were simple: “I need employees who are engaged in their work while here, of sound mind and doing the best possible job that they can, keeping their fellow co-workers safe at all times." And yet, almost nobody could satisfy these very simple requirements.

Whether it was due to pervasive drug abuse, or for some other reason, but fast forward two weeks when in response to a special question in the July NAHB/Wells Fargo Housing Market Index (HMI) survey, US homebuilders said that labor and subcontractor shortages have become even more widespread in July of 2017 than they were in June of 2016.

This is a concern as the inventory of for-sale homes recently struck a 20-year low. And while economists and the public cry for more inventory, many builders are pressed to meet demand. A labor and subcontractor shortage in the building industry has worsened over the past year, according to the National Association of Home Builders/Wells Fargo Housing Market Index survey of single-family builders.

The July 2017 HMI survey asked builders about shortages in 15 specific occupations that were either recommended by Home Builders Institute (NAHB’s workforce development arm) or that NAHB found to be particularly significant when tabulating Bureau of Labor Statistics data for a recent article on Young Adults & the Construction Trades.  Shortages (either serious or some) were at least fairly widespread for each of the 15 occupations, ranging from a low of 43 percent for building maintenance managers to a high of around 75 percent for the three categories of carpenters (rough, finished and framing).

In addition to workers employed by single-family builders, the HMI survey asked about shortages of subcontractors, which have become even more widespread lately.  In the July 2017 survey, the incidence of shortages was higher for subcontractors than for labor directly employed by builders in each of the 15 occupations. At the top of the chart, for example, 85% of builders reported a shortage of framing subcontractors, compared to “only” 77% who reported a shortage of framers directly employed.

According to the NAHB, historically, this has not always been the case: an average shortage calculated across the 9 trades that NAHB has covered in a consistent way since 1996 shows that labor and subcontractor shortages used to track each other fairly closely.  Since 2013, however, a persistent gap has opened, with the 9-trade shortage for subcontractors running 5 to 7 percentage points higher.

One possible reason for the shortages proposed by the NAHB, is that some workers who were laid off and started their own trade contracting businesses during the housing downturn have returned to working for larger companies. This would improve the availability of workers directly employed by builders slightly, while shrinking the pool of firms available for subcontracting.

The 9-trade average shortage for labor has increased from a low of 21 percent in 2012 to 56 percent in 2016, and now 63 percent in 2017.  And this trend has been very consistent.  For each of the construction occupations covered in both years, the shortage percentage, whether for labor directly employed or subcontractors, increased between 2016 and 2017—with the sole exception of excavator subcontractors, for which the percentage remained roughly the same.

In an ominous coincidence, the 9-trade average labor shortage is now at its highest since 2000 (which marked the end of an extended period of strong GDP growth that tightened many labor markets and drove the overall unemployment rate down to 4.0 percent).  The current labor shortage seems especially severe relative to housing starts, which have only partially recovered from their post-2006 decline.

NAHB's conclusion: "the historical pattern has been quite consistent across construction occupations.  Shortages for most of the occupations are more widespread now than at any time since 2000.  The exceptions are shortages that are at their all-time worst since NAHB first started asking the questions in 1996.  For directly employed labor, the shortage of painters is now at its worst ever.  For subcontractors, in addition to painters, shortages of framing crews and electricians are also at their all-time worst.  For excavator subcontractors, the 2016 and 2017 shortages are essentially tied for worst all time.

But what is most troubling is that despite such "record" labor shortages, wages across both the construction sector, and certainly across the entire labor market, just refuse to rise. If a historic lack of qualified workers fails to boost wages.... what will?

Comments

clymer max2205 Sun, 08/20/2017 - 21:47 Permalink

i'm struggling with the whole "framing crews" vs "rough carpenter" thing. I was a framer from age 16 through 25, and I always heard them used interchangeably.This strikes me a one of the old clinton-esque arguments for unfettered illegal immigration.Guess what? High-school kids, currently dropping out and shooting horse, can now learn a trade? Imagine them apples.Fuck you, Tyler, for falling into this trap(and then self-employed roofer from 32 -39)

In reply to by max2205

PT PT Sun, 08/20/2017 - 22:56 Permalink

When I have all the work I want, I MIGHT start entertaining the idea that there are labour shortages elsewhere.  Till then, I know damn well there is a huge job shortage.Disclaimer:  I don't live in the US, and definitely not in your neck of the woods.  But I have good reason to suspect my experience is not an outlier.

In reply to by PT

TahoeBilly2012 Wilcox1 Sun, 08/20/2017 - 20:02 Permalink

I pay a 23 year old from Idaho who worked 8 years with his Dad $30 an hour. He just took off for the ecplise in Idaho, leaving me somewhat stranded. They work when they feel like it. Everything is "sell weed" this and "take a trip here that", geez don't let me impede on your lifetsyle or anything.I stopped working amigos 25 years ago, nice guys good workers, got tired of watching the population double, triple ect. No easy way out. 

In reply to by Wilcox1

johngaltfla Advoc8tr Sun, 08/20/2017 - 21:03 Permalink

As someone involved in the industry, trust me, it's not a lack of available workers; it's a lack of workers willing to work 40-50 hours per week, much less 6-8 hours per day.The pay is good again, not at stupid levels, but still above the past yet the younger generation shows up on site expecting foreman or management pay when their only experience is saying "would you like to super size that."America is not fucked due to a lack of jobs.America is fucked due to a lack of work ethic.

In reply to by Advoc8tr

83_vf_1100_c johngaltfla Sun, 08/20/2017 - 21:45 Permalink

  I agree. I tried to train my boys into the family biz. Teens getting $3o an hour cash doing disassy work in a chair. They half ass it, I'll do it tonight (don't), break shit, don't follow the simple system.  Fired them a couple times and tried them again. Permanently fired now. I'd rather judt do it myself and pocket the cash. They are interndt addicts. Sit on their asses all day long texting, video games, watching stupid youtube vids.  Yes, framing houses out in the weather all dsy sucks. You do it a couple years and really learn everything there is to know. Take some night classes in business.  Save some money, start your own crew and make bigger bucks.  But that is so much work! Fucking lazy asses generation.  You can make a good living in the trades. No motivation? Mom's basement as an adult. I don't play that. Up and out at 18 if you are not in school and you best be pulling good grades. Maybe we've had it good too long.

In reply to by johngaltfla

TahoeBilly2012 83_vf_1100_c Sun, 08/20/2017 - 23:59 Permalink

My Idaho kid actually got his own Painting License just a few weeks back in Nevada, my license is in CA. So he is somewhat motivated for a 23 year old, and decently skilled as a painter. When he is switched on, he can produce pretty well, but he will literally leave tools laying in the driveway when he leaves. He always leaves in a big rush. He shows up about 9 to 10 am, he heads for lunch at 11am sometimes. I rarely complain as he gets me through the job and he does work alone many times without me.What drives me nuts is his lack of interest in my products and system which makes me often about $150-$200 an hour. He is literally being handed a gold mine in training as I am a unique master in the wood restoration side of painting and have my own product line (envirolast.com).It's not all bad, but it isn't like 3 amigos showing up at 7am with lunch in bags ready to rip.

In reply to by 83_vf_1100_c

Offthebeach TahoeBilly2012 Sun, 08/20/2017 - 20:48 Permalink

1099, sub contractor?  $ 30 doesn't cove Fed, State, SS, Obamacare.  Anybody would be better off at Ace Hardware. Wanted.  Skilled labor.   Must have tools, truck, OSHA, and contractor license.   Work is weather dependent.   Blistering hot, freezing cold, intermittent rain or snow on margional days.  Constant minor injuries, punctures, cuts.  No medical, dental, retirement.  Must work well and handhold and double work other bums I hire.  Cheapest, fall apart junk made in China will be provided and Gold Coast Martha Stuart finish expected. Loan, pickup, drop off fellow workers without driver license.  Climbing, ladders, staging.  Must be able to carry 70-90 lbs  up or down 30' ladder, on to staging, up on to roof staging,  with belt, 20 times a day.Industry experience fiat fed collapse leaving you broke, truck repo, credit ruined.  Co workers half have serious alcohol, drug abuse.$30/hr as Sub, pre taxes, SS, Obamacare, insurance, workman's comp....Expect zombie like fatigue upon home arrival.Also hands like a 1870's fishermans such that no woman will touch you.  

In reply to by TahoeBilly2012

PT CNONC Sun, 08/20/2017 - 23:01 Permalink

A long time since I hit the wrong button.  You used to be able to change your vote just by hitting the other one.  Does that not work any more?  (But you can't change it back to no vote.  You can only change between red and green.)EDIT:  Just tested it.  It still works.

In reply to by CNONC

Bubba Rum Das shovelhead Mon, 08/21/2017 - 01:36 Permalink

"Hard to beat. Easy work. Minimal inputs and huge returns."Bullshit. W/ a statement like that, I can tell you have never done industrial scale growing.It takes A LOT of input (infrastructure investment & labor) for decent returns.In addition to that, there is generally a legal risk involved; which includes not just growing, but marketing as well.

In reply to by shovelhead

Normalcy Bias gimme soma dat Sun, 08/20/2017 - 20:24 Permalink

They drove the majority of Americans out of the construction business, and now the chickens are coming home to roost. Who wants to compete with a guy who'll live with 15 other guys in a one bedroom apartment, has no insurance, will take unlimited shit from their employer, and often doesn't pay any taxes?The same exact 'shortage' is happening within the trucking industry. They pay drivers less than they did 30 years ago, treat them like shit, and yet wonder why so few suckers... I meant new drivers are coming into the industry.What?! Americans don't want to work jobs for the same money they paid 35 years ago? Those lazy bastards! Eliminate the borders so we'll have more slaves... I meant, 'hardworking' (desperate) immigrant laborers.

In reply to by gimme soma dat

takeaction gimme soma dat Sun, 08/20/2017 - 20:41 Permalink

That is NOT TRUE my friend.  Most business owners can not find good people no matter what the salary.What I need.....NOTE: These things can not be asked on an application, but they tell a story from my 35 years of employing people. When you talk to someone for about 15 minutes, you can get a glimpse of how they run their life, and how they would be as a representitive for your store.Self MotivatedNon SmokingNo Tatoos on your FaceNo Gauges in your earsNo facial piercings.Show up for work on timeWill not use cell phone while at workBring your lunchDoes not show up hung overHas a good car.No debtGood CreditDrug test and Credit check usually weeds out 70% of most....Why do we do a credit check?  I have found that credit shows how you run your life....it is a crystal ball telling you who you are.  That is why rental agencies use it...Insurance Companies use it...it tells a story real fast... You have bad credit....well, you don't make good decisions....and I can't have that.  That is it.....is this too hard?  For myself and many other business owners....what I just listed is nearly impossible to find.  And for pay...we will start somebody at $20 to $30 an hour for little experience.  If you come from our industry....and you are good...we will start you at $70,000 to $100,000.  Electronic Sales and Installation.  I could open many more stores if I had the people...They don't exist....many times people from around the world will try and call us out...saying "Bullshit"...then we fax over some W-2's from our other employees and then we don't here from them again...so weird?On a side note.....I had a guy agree to work on my cabinets at my house.  He said...$45 an hour.  I said...let's get started tomorrow.  Never saw him again...

In reply to by gimme soma dat

Duc888 takeaction Sun, 08/20/2017 - 21:20 Permalink

  "Why do we do a credit check? I have found that credit shows how you run your life....it is a crystal ball telling you who you are. That is why rental agencies use it...Insurance Companies use it...it tells a story real fast... You have bad credit....well, you don't make good decisions....and I can't have that. "   That's bullshit. So living within my means and having NO debt is not a good decision?I have a low credit score because I have not taken a loan out for anything in over 20 years, no mortgage, no car loans, one secured credit card (that does not even show up on the three credit reports because it is NOT revolving credit). I have ZERO fucking debt, yet have a low credit score.

In reply to by takeaction

83_vf_1100_c Duc888 Sun, 08/20/2017 - 23:03 Permalink

  Its the system and you gotta play the game. Use your card for a purchase every few months. Pay it in full when the bill comes in. I have no debt. Mortgage paid off, cash for vehicles. Bought a $4800 lawnmower at 0 down, 0% and put the cash in the safe just in case. Set up billpay for 2x the pymt and boosted my score. It may not make sense, it may not be fair, it is reality. You can game the system and still stay debt free.

In reply to by Duc888