Currently Reading

Is The Labor Shortage Less Dire Than We Thought?

Advertisement

Is The Labor Shortage Less Dire Than We Thought?

The labor shortage isn’t a myth, but it may no longer be as big a factor in low production levels as it once was 


April 19, 2016
construction workers framing house during labor shortage

For some time now, the labor shortage has been held responsible for being the biggest factor holding back the residential construction industry and keeping production levels low. And, according to Diana Olick of CNBC, that rationale may no longer be viable.

As CNBC reports, construction employment growth has led all other sectors at 5 percent but the hourly earnings for construction workers gained only 2.2 percent over the past year, right in line with the national average. If labor shortages existed, “the upward pressure on wages would be more pronounced and payroll growth would be anemic,” according to a Goldman Sachs report. What this suggests, then, is the industry-level employment and wage data for the construction sector does not support the existence of labor shortages.

What is the issue then? Delays in permit issuing and land scarcity seem like much more likely culprits. For example, in a survey conducted by John Burns Real Estate Consulting they asked 100 builders about costs that didn’t exist a decade ago and found it wasn’t just labor, but cost overruns directly related to new regulations for house erosion control, energy codes, fire sprinklers, and more. Builders also pointed the finger at permit offices and utility company delays.

As homes have become more expensive to build, they are also becoming more expensive to purchase, meaning the already short supply of entry-level homes is going to become even tighter as these entry-level needs will be more and more reliant on the resale market.

The other issue is that builders are having an increasingly difficult time trying to find lots to build on. With urban centers becoming hot spots for real estate, the lots closest to these centers are often very expensive, making it harder for builders to see a profit from them.

That isn’t to say the labor shortage doesn’t exist. Many areas feel it, especially in the West where a large number of the construction workers who left during the recession have not returned. Additionally, the average age of construction workers is much higher today than it was during the housing boom, suggesting an influx of new, younger workers have not yet taken the torch from older workers.

Read more

Related Stories

Business Management

Home Building's Response to the Changing Times

As the way we live has changed due to the coronavirus pandemic, home builders are adapting and rethinking their businesses, from operations to sales to business management

Home Builder Success and the Fragility of Good Things

All successful builders are alike. Each unsuccessful builder fails in its own way

Will GFCI Revisions for Manufacturers Confuse Trades?

The back and forth on changes for ground-fault circuit interrupters and revisions to UL 943 has the potential to affect not just the reputations of home builders, electricians, and manufacturers, but the safety of homeowners and consumers as well 

Advertisement

More in Category




Advertisement

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.


Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Subscribe
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.