Labor Issues in Construction a Crisis for Housing

By Jesse Williams

Among the many mitigating issues that have left the housing industry woefully short on inventory, labor remains “a key limiting factor,” according to a report from the Home Builders Institute (HBI), which warns that skilled labor shortages are both dire and nowhere near a long-term solution.

“The construction worker shortage has reached crisis level,” said HBI CEO Ed Brady in a statement. “The situation will become more challenging in the coming year when other industries rebound and offer competitive wages and benefits to prospective employees.”

As demand for homes has exceeded supply by terrific margins over the last 12 months or so, builders have been unable to put up new houses, hampered by supply chain bottlenecks and rising land costs. The industry would need to add 740,000 workers per year to keep up with demand at the current pace, according to the report.

“The construction industry needs more than 61,000 new hires every month if we are to keep up with both industry growth and the loss of workers either through retirement or simply leaving the sector for good,” said Brady. “From 2022 through 2024, this total represents a need for an additional 2.2 million new hires for construction. That’s a staggering number.”

The labor issue threatens to persist even if these other obstacles can be overcome, the report warns. With between 300,000 and 400,000 open construction jobs even as wages in the sector outpace the median of other industries, there does not appear to be a short-term fix for the labor problem.

Within the construction labor force, the HBI identified other potentially worrisome trends—many of which preceded the pandemic and ongoing housing crunch. Workers are less likely to be self-employed in 2021 than a decade ago, with that number dropping 4%. They are also more likely to be either older or younger, with the share of workers between the ages of 25 and 54 also dropping.

Brady says the only long-term solution is to begin investing in education, nurturing new workers from an early age and encouraging more interest in these trades.

“We need to build the next generation of skilled tradespeople in construction,” he added. “One of our most important tasks as an industry is to work with parents, educators and students, as early as the middle school years, to demonstrate that young people can have the promise of great jobs and careers in the trades.”

A six-point plan presented by HBI to address the labor issues includes focusing on secondary school supports, working toward “sensible immigration policies” (immigrants make up 30% of the construction workforce), attracting more women into the trades and increasing education and skills for military veterans. RE

“The construction industry needs more than 61,000 new hires every month if we are to keep up with both industry growth and the loss of workers.”

-ED BRADY CEO, Home Builders Institute

Jesse Williams is RISMedia’s associate online editor. Email him your real estate news ideas to jwilliams@rismedia.com.