Labor scarcity poses headwind for construction companies

Kim Moore
Construction workers on a building site, downtown Portland

We look at labor challenges in the construction sector as part of a new series on the impacts of Oregon’s tight jobs market.

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The ubiquitous cranes and building sites all over Portland and the rest of the state are evidence of the construction boom in Oregon.

But the building activity masks a serious underlying problem for the sector:A dearth of construction trade workers is leaving contractors scrambling to fill positions.

“Looking for qualified folks continues to be a struggle,” says Greg Holloran, operations manager for Turner Construction. Holloran has had trouble filling positions for the past two to three years. “It takes time to build crews. It is very challenging.”

Oregon’s labor market is tight. Very tight. The unemployment rate, which fell to 3.9% in July, is the lowest since comparable records began in 1976, according to the Oregon Employment Department.

The construction sector added the most jobs of any industry over the past year. It has expanded 11.2% since July 2017 with 11,000 new jobs created.

The Oregon Employment Department estimates construction job openings will be much larger than for most occupations in Oregon over the next decade, with employment projected to grow 16.5% between 2017 and 2027.

Despite the rosy prospects, the labor shortage is so severe that builders feel they will not be able to keep up with demand.

“If the size of our workforce doesn’t grow, then the number of open but unfilled jobs will continue to increase and hold back growth possibilities of several industries, particularly residential construction,” says Jodi Hack, CEO of the Oregon Home Builders Association.

Much of the reason for the labor shortage goes back to the economic downturn of 2008, when the housing market tanked and a large number of construction tradespeople left the industry.

Halloran says the downturn lasted long enough that many construction workers retrained and pursued other careers. When the construction industry rebounded, those skilled workers did not return.

“The labor shortage and increased need to add jobs are top business challenges for builders,” says Hack.

Employment in construction in 2017 was much larger than most occupations across the state – Oregon Employment Department

Like other blue-collar professions,  construction is an unpopular sector for young people to enter. Many young adults choose to pursue college degrees instead.

“The combination of fewer vocational or career technical education classes in high schools and the increased focus on attending four year universities are likely acting as supply side constraints in terms of young adults knowing about and/or considering entering these professions,” wrote state economist Josh Lehner in a recent blog post on the issue of finding workers for the trades.

The labor shortage is forcing construction companies to increase salaries to attract applicants. Holloran says he is paying “over scale” for workers. Openings that are hardest to fill are for carpenters, glaziers and electricians, he says.

Workforce training and educating youngsters about the career opportunities of working in the building sector is now a staple of construction companies hiring strategies. Certain building professions pay above average for jobs that do not require a college degree.

Carpenters with a high school diploma or equivalent earn an average of $45,170, according to the Bureau of Labor Statistics. Electricians earn $54,110 on average, and glaziers earn an average of $42,580.

UnknownConstruction on a city office building on Fourth Street and Madison, Portland

“We spend a lot of time teaching folks about the wonderful careers you can have in construction,” says Holloran.

Turner Construction tries to tap underrepresented groups in the labor market, such as women and racial minorities.

Holloran says charter schools are also doing a good job of teaching high school students about engineering and architecture. He says he would like to see more education about career paths in these professions.

“We would like to see and be part of a sustainable growing workforce in the construction trades,” he says.

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