Has the Labor Shortage Reached ‘Crisis’ Status?

Filed in Business Management, Economics by on November 1, 2017 5 Comments

It’s been more than 10 years since there were this many unfilled construction jobs. And as NAHB Chief Economist Robert Dietz noted in a recent Eye On Housing article, the labor situation is likely to worsen in the months ahead.

Builders all across the country are struggling to find enough skilled laborers to keep up with housing demand. And nowhere is this more concerning than in the regions of Texas and Florida impacted by hurricanes Harvey and Irma, where the recovery efforts have only just begun.

Even the surrounding areas that sustained minimal storm damage are seeing the effects, as labor continues to be drawn to the storm-affected areas. But the labor shortage had been a primary concern long before this summer’s hurricanes made landfall.

“Everyone in our area is having trouble finding hands that want to work,” said Michael Grassi, project manager of Classic Builders in Wichita Falls, Texas, and president of the North Texas HBA. “Whether it’s bricklayers, framers, you name it — I’m having to [hire] guys from as far away as Oklahoma City to come [to Wichita Falls] and work. And most of them are happy to do it cause they’re getting paid more here where there’s even less competition.”

Grassi says he’s amazed by how much the cost per square foot of a home has increased recently. He’s gradually had to raise the sales prices of his homes as a result of rising costs, but Grassi says he and many builders just like him aren’t seeing an increase in profit margin.

“Prices for everything have increased significantly, and I’m scared for what’s to come over the next few years,” Grassi said. “A lot of our skilled trades aren’t far from retirement. And of the limited number of new guys I see coming in, many of them have a ways to go to refine their skills and work ethic.

“With everything from the cost of materials, to lots, to a dwindling pool of skilled workers — we have a crisis on our hands.”

The issue isn’t exclusive to less-densely populated areas. Not far away in the Dallas-Fort Worth area, builders are facing similar situations.

“The shortage of labor in our market has been going on for more than a year now,” said Justin Webb, president of Altura Homes. “We use 100% subcontractors, and many of them are stretched thin with more work than they can handle.”

Webb says his subs often times split their crews, enabling them to start multiple jobs simultaneously. But as could be expected, this typically results in extending the overall time to complete the home.

“[The scarcity and rising cost of labor] is our No. 1 challenge at the moment. That, and the dramatic cost increases of materials, have greatly contributed to the appreciation of house prices,” Webb said. “We’re concerned that as house prices rise to offset these higher costs, the broader issue of housing affordability will become even more problematic.”

For more analysis, visit Eye On Housing.

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Comments (5)

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  1. We are having the same problem in Oregon. We are a drywall and insulation contractor, and to retain our employees we have had to give out multiple raises. Our workers are making anywhere from 20% to 50% more than they did two years ago. We expect it to go up from here.

  2. Don Fore says:

    We are a Mechanical HVAC Contractor here in NC. We are licensed in NC, VA and SC. We are experiencing the same problem in all 3 states. I have been in this industry for over 45 years, as time went on, the older experience people retired out, no one was trained to take their place.

    Something else, our government ” Hand Outs” , has really caused a problem with getting people on board to teach them a trade.

  3. Ted Cobia says:

    Think we need serious look at visas for illegal immigrants, this is a work resource that could be utilized in all the construction industry. … 30 years and nothing done….give then temp visa, no citizenship… let them go back home periodically and reapply…..employers send in monthly reports….time we gaced the fact, we don’t want our kids to swing hammers, shovel dirt, makeup beds, we want them to “go to college”, where they can amass huge debt and not have a job when they get out….

  4. John says:

    I see this article is from a few years ago. What’s your thoughts on the situation currently? Without steady work coming in I’m afraid that trades won’t be able to hold onto the workers they do have let alone hire more when everything goes back to normal.

    • NAHB Now says:

      The labor shortage continues to be a top concern of builders and is a key priority for NAHB as we continue to address workforce development issues.

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