Construction risk management: Hiring, training and the labor shortage

By Higginbotham on July 22 , 2015

iStock_Group of construction workers

There’s been a growing buzz in recent years about a labor shortage in the construction industry. According to the latest survey from Associated General Contractors of America, many construction firms are having a hard time finding qualified workers.

But many economists think the talk about a labor shortage is overblown. They claim if there was actually a shortage, the number of construction workers looking for, but unable to find work would be lower, and wages would be rising faster.

There’s no doubt the construction industry is booming since being hit hard by the recession. According to the latest numbers from the Bureau of Labor Statistics (BLS), construction employment has increased 3.9 percent in the past year, and the AGC survey shows that construction unemployment recently fell to its lowest level since 2001.

So is the construction labor shortage fact or fiction? It’s actually a little of both.

There’s plenty of anecdotal evidence and survey data suggesting that builders and contractors are having a tough time finding specific types of workers. According to the AGC survey, 83 percent of construction firms struggle to hire enough qualified craft workers, and 61 percent report difficulties finding qualified construction professionals. But those shortages aren’t severe enough to be a substantial drag on the wider U.S. construction market – at least not yet.

But long-term? That could be another story.

One thing almost everyone agrees on is that more and better training opportunities are needed to ensure a strong labor force in the future. The stripping of technical education programs from public schools has left a void that desperately needs filling, and for future construction projects, that could mean delays, major labor shortages, and other crises that could threaten the industry. According to the BLS, the construction industry could face a shortage of 1.6 million workers by 2022.

What are businesses doing to adjust?

The changing labor dynamics are forcing construction firms to change the way they operate, such as increasing their use of subcontractors and staffing firms; invsting more in labor saving equipment, tools and machinery; and increasing pay, benefits and overtime.

But labor shortage or not, your hiring and training practices have to be exceptional to attract the best talent.

With the national unemployment rate continuing to fall, growing opportunities in every sector of the economy are making it harder for builders and contractors to find experienced workers. But only about half of the construction jobs that went away when the housing bubble burst have been recovered, so there are still qualified candidates out there. Follow these hiring and training best practices to give yourself the best shot at snagging top talent:

  • Recruit far and wide. Ask your current employees for referrals, make use of staffing firms and industry niche job boards, and get the word out.
  • Develop effective job descriptions that are detailed, accurate and up-to-date.
  • Screen applicants thoroughly through background and reference checks, drug testing and pre-screening interviews.
  • Conduct engaging interviews that look beyond candidates’ credentials, experience and technical know-how to find out what makes them tick and assess their fit for your team.
  • Offer competitive pay and benefits packages tailored to your workers’ needs and lifestyles.
  • Make safety a top-down priority with thorough and ongoing training.
  • Provide regular feedback, recognition of achievements and opportunities for ongoing training and advancement.

To stay competitive in this changing labor environment, your hiring and training practices are more crucial than ever. And protecting your business with the right insurance is critical. That’s where the construction insurance experts at Higginbotham Insurance can help.

Tags: Risk Management