The Workforce Shortage Report

Results of AGC of America's national survey indicate many construction firms are having difficulty finding workers.

For decades, the industry’s image suffered as college became the go-to goal for career success. Now, as the products of the information age struggle to find work, construction firms battle to find qualified labor. The tipping point, many believe, has finally arrived.

BY AMY DREW THOMPSON

“It’s almost too much good news,” says Ken Simonson, chief economist for AGC of America. He’s talking about the latest number from the Bureau of Labor Statistics.

“Construction employment is up 3.9 percent from a year ago; 231,000 more workers.”

Indeed the number of unemployed construction workers actively looking for work has shrunk to the lowest level in eight years. The national unemployment rate continues to fall, as well; down to 5.8 percent at the time of this writing.

“And what that says to me is the industry is going to have more and more trouble finding workers,” says Simonson. Indeed, the latest stats from AGC’s national survey indicate some 83 percent of firms are reporting difficulties in finding qualified employees – particularly in the craft trades. It’s a nationwide issue, affecting chapters from coast to coast.

What caused it? Most agree it’s an amalgam, a potent tea that began with the steady stripping of technical education programs from public schools and steeped in the way our society – parents and educators – perceived how career paths are best determined.

What’s helping? Contractors with the foresight to get in front of the shortage are the companies faring best amid the dearth, but party latecomers are catching on. They serve as examples of what other firms can do in their communities to become industry’s marrow, local cells creating new blood that will power the industry as the economy continues to strengthen.

Results of AGC of America's national survey indicate many construction firms are having difficulty finding workers.

Results of AGC of America’s national survey indicate many construction firms are having difficulty finding workers.

YOUNG BLOOD
According to recent numbers from the National Center for Education Statistics, in fact, only about 59 percent of students enrolled in a four-year program graduate within six years. And the higher an institution’s acceptance rate, the lower its graduation rate. These are numbers that only bolster construction industry professionals who wonder, quite audibly, why we seem to want to send everyone to college.

“Whether we’ve meant to or not, we’ve created a system that trains 100 percent of its students for college when only a percentage of these kids will graduate,” says AGC Colorado President Michael Gifford. “A tremendous number of students are not being served by the system.” And, he notes, there are few options to serve as effective off-ramps to valuable alternative career paths.

Back in the 1970s, says Tony Varamo, “we had three viable options when we finished high school. One was college. One was the military. The other was entering the workforce.” And for the son of a union carpenter, construction was a doable decision. These days, Varamo is the workforce development manager for MetroPower, Inc., an Albany, Ga.-based electrical contractor and an AGC Georgia member.

“But now we’ve become more of an information technology society,” he says. “The kids no longer have parents who taught them how to use a hammer, a screwdriver, an electrical switch … they spend more time inside playing video games, using devices. Most don’t perceive construction as a viable option.”

And about 15 years ago, MetroPower’s leaders saw the wells drying up – and decided to make a huge investment not only in their company’s future, but the industry’s as a whole.

“We entered into a co-op with South Georgia Technical College, which does similar programs with companies like Caterpillar and John Deere,” Varamo explains. “We bring in our students, our apprentices and they’re in school for eight weeks, then out in the field for eight weeks.” It’s a classroom-to-hands-on pattern that repeats for roughly two years until each receives his or her Industrial Electrical Technology Diploma. MetroPower picks up the check to the tune of up to $15,000.

“We feed them, lodge them, and while we’ve had a couple who have walked across the stage, thanked us, and then gone into the Marines or to work for an uncle’s company, we don’t cry about it. It’s an investment for our future as well as theirs. And for the most part, they stay.”

Varamo spends the bulk of his time in local schools throughout Georgia, giving presentations, allowing middle- and high schoolers the chance to lay hands on equipment and talking to the educators.

“Every chapter needs a dozen Tonys running around helping them create these partnerships,” says Mike Kenig, vice chairman of Atlanta’s Holder Construction, an AGC Georgia member. “People who are on the ground, in the schools, in their states, making it happen. It’s scalable. It’s repeatable.”

Kenig touts Georgia’s many regional alliances for the formidable in-roads that have been made. He and a colleague recently hosted a reception for the Georgia Association for Career and Technical Education conference and heartily recommends AGC affiliates in other states connect with their locals, as well.

“We’ve got to start treating these educators like family. They’re a part of our industry. We have to blow wind in their sails and support them.”

Across the nation, says Oregon-Columbia Chapter President Steve Malany, CTE classes have been steadily stripped from the public schools over the past three decades. “The emphasis,” he says, echoing Varamo and Kenig, “has been on going to college.”

His own company, P&C Construction, along with others, has been helping the state’s largest district reintegrate the curriculum. During the past year, Portland Public Schools have embraced CTE, substantially increasing programs via their counseling and course requirements.

“This shifting of the focus back to hands-on learning experiences for the students is going to help create more exposure to the construction industry and many other technically
oriented careers.”

AGC members are eyeing other prizes up the food chain. “We’re working with the governor and Legislature to change the funding mechanism for districts and schools that support the CTE programs … it could be a game-changer for both high school graduation rates and in finding the next generation of construction workers.”

Not all students learn best by reading from text books, Malany notes. “Many of our own top employees excelled via hands-on projects with practical applications.” As such, when the opportunity arose to take part in the creation of a charter school in the Portland area, the Oregon-Columbia Chapter jumped at the chance – and provided $275,000 in seed money.

ACE Academy is supported by four separate school districts that Malany says understood the need for a different avenue of learning. Students spend half the day in their zoned high school, the other half at ACE, where they can choose among several paths of study – architecture, construction, engineering.

“The strength of the academy is the transfer of standard math, writing and reading subjects into hands-on projects that allow students to get real-world experiences and applications.” It has resulted in a 98 percent graduation rate.


PREPARING THE NEXT GENERATION OF SKILLED CONSTRUCTION WORKERS:
A WORKFORCE DEVELOPMENT PLAN FOR THE 21st CENTURY

As the construction industry emerges from a severe downturn that began more than seven years ago, many firms report having a hard time finding enough skilled workers to fill key positions. These workforce shortages may at first seem counter intuitive for an industry that was forced to lay off more than 2 million workers since 2006. However, these shortages are the consequence of a series of policy, education, demographic and economic factors that have decimated the once-robust education pipeline for training new construction workers.

In 2014, AGC of America released a workforce development plan, “Preparing the Next Generation of Skilled Construction Workers: A Workforce Development Plan for the 21st Century,” which outlines a series of measures that federal, state and local officials should adopt to expand secondary-school career and technical education and post-secondary training opportunities so more people can enter into a growing number of high-paying jobs.

The plan’s highlights:
Reform and reinvigorate the Perkins Act;
Encourage private funding for craft training programs;
Improve the Workforce Investment Act;
Make it easier for veterans to get training and to be hired;
Encourage partnerships between registered apprenticeship programs and community colleges;
Expand federal apprenticeship resources and collect more comprehensive data on all apprenticeship programs;
Enact immigration reform;
Offer community college career and technical programs to high school students for free;
Make it easier to establish public schools focused on career and technical education.

 


 

TRANSFUSION
Interestingly, students – that is, at the middle- or high school level – aren’t the only infusions available to construction firms.

In Denver, where Gifford says the market has grown from 104,000 workers to 135,000 in the past four years, building is booming so big that contractors are, quite literally, stealing carpenters from competitors.

“Somebody will sidle up to a site, find out what they’re getting paid and offer them more per hour if they drop their tools and leave,” he says. “The effect is that a contractor will schedule a job and have his crew disappear in the middle of the week.”

He cites the needs of member company Gallegos, which was short 40 masonry workers for its current project at press time. “And if he had another 40 on top of that he could bid more work.” Companies have had no choice but to raise wages to attract employees, which in turn raises the prices on its projects, which sends owners back to investors with their hands out.

“It’s a complicated calculus,” says Gifford. And with Millennials flocking to Denver’s attractive metro area, the need for hospitals, schools, residential options is staggering. Its workforce shortage is acute. Early education may be important, but it’s a longer term solution.

“We’ve identified a target market that includes people about to graduate high school and goes all the way up to college grads who are either unemployed or under-employed,” Gifford explains. “Maybe they planned on doing something else and it’s not working out. They’d still like to have a career, to make more money.”

And so BuildColorado.org went live in September.

“We focused on jobs that are available now,” he says. “We list all the trades, what the wage rates are and asked our members to commit to posting at least 500 jobs.” Not surprisingly, that goal was well exceeded.

While there has been a learning curve involved, the shortage is dire enough to move even the oldest dogs into the technological realm. “Companies are used to doing the hiring their own way and the site has required a shift. There have been communication challenges – they’re often too busy panicking about where to find people to take the time to find people,” Gifford laughs. But he says they’re getting it.

“We quickly raised some initial funding and launched an ad campaign – traditional and tech-based.” Though too new to gauge properly, Gifford and colleagues have reason to be optimistic. With very little in the way of marketing thus far, they’ve had thousands of registered visits. “The average click-through was nine pages, which tells us that people are really reading through the material, researching the trades.”

Down in Texas, companies like the Houston-based Webber, an AGC of Texas, Heavy, Utilities and Industrial Branch member, have tapped into not only early education systems, but retired members of the military eager to transfer into viable second careers.

“We actively support the Wounded Warrior Project, which has a pool of more than 50,000 veterans throughout the United States and nearly 2,100 in our region alone,” says Jared Branch, the company’s corporate recruiter. “Webber has attended the Houston region career fair and works to hire veterans. We have also met with City Council members to share ideas about what can be done to enhance the skill set of disadvantaged Houstonians.”

Branch says the dearth of skilled trade workers – carpenters, concrete finishers, surveyors and more – grows as the Boomer generation approaches retirement. “As a result, more overtime is required, which diminishes profits, impacts the ability to gain new projects and challenges managers to maintain schedules.”

Quality often suffers, as well, as even the best of the best grow tired after a 50-hour work week.

In San Antonio, they’re doing something about it.

“We strongly support the Construction Careers Academy at a local high school, as well as the annual construction job fair sponsored by Build Your Future,” says Doug McMurray, executive vice president of the city’s AGC chapter. “And at the state level, we helped pass House Bill 5 during the most recent legislative session.“

The new law allows for more flexibility with career and technical education in the K-12 curriculum. “Now, even more high school students are learning construction skills as they pursue a diploma.”

In the post-recession economy, says McMurray, good, sustainable programs – many of which were dismantled over the past few decades – are poised to make a comeback.

“Concern over drastic increases in student debt and renewed efforts by trade associations are creating some nostalgia for high-paying craft positions. All across the country, AGC chapters are engaged as never before.”

And even the smallest of firms, says Kenig, can have a substantial impact.

“It doesn’t take a lot of time,” he notes. “Just find out what programs already exist in your own community. Make a connection. At a minimum, offer your folks to guest-speak in classes so these students can see role models for the kinds of careers that are out there. Offer tours of your jobsites.”

It’s a large national problem, he acknowledges. “But it’s going to be solved at the local level.”


KNOW BEFORE YOU GO

“Not only do we tell kids ‘it’s okay to go to college and have no idea what you want to do,’” says an incredulous Mike Kenig, “we tell them it’s a good thing! And that’s wrong.”
The secret sauce for success, says Kenig, vice chairman for Atlanta’s Holder Construction, is awareness.

It’s a recipe that our European counterparts have long since recognized, a model that Kenig believes could be a cornerstone in turning the workforce shortage into a steady stream of skilled labor. And it involves an early start that Kenig wholeheartedly supports.
“The European model introduces the idea of a career preparatory at what we’d call the freshman year of high school, about 15 years old,” he explains. “In Europe, at this time, students choose to go down a career- or college-preparatory path, working toward learning a skill, a career, basically a pre-apprenticeship program while still in the equivalent of high school.”
In essence, students graduate with a marketable certification already in-hand, whether they choose to go to college or not. Dual enrollment, already in-play in the states, is a similar tack.
“More and more states are offering this option to high schoolers,” says Kenig. “They can begin taking classes in a community or technical college while earning their diplomas.”
He believes it’s a better fix than getting vocational classes back in the high schools. “Collaboration between the high schools makes sense and gives students a portable, nationally recognized credential.”
SALT loans (Student Access Loan – Technical) are another means for construction-focused students to achieve their end-goals.
“They’re low-interest,” says Kenig. Once approved, students can attend a Georgia technical college with a 1 percent interest rate. “And if they maintain a certain grade-point average while studying, the loan will be forgiven. They won’t even have to pay it back. Essentially, they will go to school for free.”






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