One of the hottest topics in the industry press prior to March of this year was the ongoing and growing shortage of skilled construction labor. The coverage reflected the perceptions of home builders across the country as they faced this daunting issue and its effects on their businesses. Over the past few weeks, however, with builder confidence about future sales dropping sharply in response to COVID-19, we felt it was time for us to re-assess the labor environment as a builder priority.
Home Innovation Research Labs fielded a new Omnibus Survey of Builders in April 2020. Builders were asked to give us their viewpoints on the labor market prior to COVID-19 — what they were doing in response to the skilled labor shortage, and what their opinions were about who could best remedy it. Over 450 builders and remodelers completed the survey. Respondents were also asked the following open-ended question:
An analysis of the first 200 responses revealed the majority believe COVID-19 will not impact the skilled labor shortage — neither making it better, nor worse, and believing that at the end of the health crisis the industry will pick up about where it left off with too few skilled workers in some trades. About a quarter of respondents (27%) think COVID-19 will have a positive impact — believing construction companies will mainly benefit by having a larger recruitment pool due to layoffs in other industries, such as food service, or that the slowed construction pace may now make the limited supply of skilled labor sufficient. Another quarter of respondents (25%) believe COVID-19 will have a negative impact on the skilled labor shortage for a wide variety of reasons that I’ll discuss below. Only about 5% had no opinion, and 3% had a mixed (positive and negative) view.
Source: Home Innovation Research Labs' April 2020 Omnibus Survey of Builders & Remodelers
We spent some time analyzing the first 200 write-in responses to gain insight into the specific factors driving builders’ and remodelers’ opinions, which undoubtedly reflect their specific business needs and the impact COVID-19 is having on their local construction industry and economy.
There were some surprises among the 40% who believed COVID-19 would have very little, or no, impact on the skilled labor shortage. Most in this group seem to think COVID-19 will result in a temporary slowdown in their markets, but as restrictions are lifted, things will return quickly to the old “normal” — too few skilled laborers in some markets, just barely enough in others. Some agree that unemployed workers from other fields may enter construction, but they will add to the unskilled pools, still needing training and experience to qualify as “skilled labor.” Others stated the influx of the unemployed workers from other occupations will be balanced out by immigrants who, due to current border restrictions, may be flowing out of the construction workforce.
There were a few surprises in builder and contractor thinking among this group. Most believe COVID-19 will have a negative impact on construction — at least temporarily — which will lessen demand for skilled trade services and allow them to work down some of their current backlog of projects to something more manageable for their current workforce. Others believe a strong construction market rebound will follow a construction slowdown from COVID-19, but the economic rebound might take longer in other sectors of the economy — such as the food service and hospitality industries — from which laid-off workers can be recruited. New workers may also include former construction workers who are now furloughed from “non-essential” jobs, able to return with existing skills in a construction trade, or at least readily trainable.
The “positive” group believed, in the long-term, and particularly among younger workers, construction will now be seen as a more stable career field — and perhaps a “safer,” more pathogen-free option than working in an office. Some said that recent high school graduates may delay college to enter the workforce sooner — to be earning rather than spending money on education in these economically uncertain times. Some further postulated that they would see a decline in contract (1099) workers in the industry, while stronger, more stable companies increase their hiring of full-time (W-2) employees.
Some of the most surprising, and most insightful comments came from this group of respondents. Some believe the current crisis, and resulting poor labor market, may convince their most seasoned workers to retire. Others noted that with trade and vocational schools closed, there will be a big delay in newly-trained workers entering the construction trades. Others believe that the current slowdown in construction due to a variety of restrictions — complete shutdowns, supply chain disruptions, limits to the number of workers allowed at the jobsite — will result in many experienced workers looking for work in occupations that are booming due to the coronavirus; similar to the “brain drain” they said they saw as a result of the 2008 industry meltdown. One respondent stated that their hiring has come to a halt because they can no longer hold in-person interviews. Many mentioned that worker attitudes are changing — they are now requiring more safety equipment and not as willing to work in teams, which makes the existing workforce less productive. One of the most common laments was that because they’ve had to temporarily lay off people due to restrictions or a slowdown in work, and workers have found good unemployment benefits, there may be a disincentive to put much effort into getting back into the workforce. Some believe that the tightening of borders due to coronavirus dissuades immigrant workers from returning to the United States to resume work. Some believe that, when COVID-19 restrictions are lifted, the housing industry will heat up too quickly and make the skilled labor shortage worse than before virus. Some construction companies have already lost workers who are staying home to care for children while they are out of school. A few believe that workers may be slow to come out of isolation in order to protect their families from the virus.
Most in these categories explained that their views are still forming, or changing frequently, based on how short- or long-term closures, social distancing, and isolation measures will be in place. One respondent stated they believe the labor environment in construction will improve as soon as unemployment benefits start running out.
In the coming week, I’ll be looking the remaining builder and contractor responses to expand into topics not covered in the first 200 responses. Stay tuned for updates as this study analysis continues.
If your building product or service company is seeking to formulate a strategic responses to this ever-changing industry environment, and you need quick feedback from the buyers and end-users of your building product or service, contact us to discuss how we can help.
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