Builders Report Labor Shortages as Top Challenge in 2019

Filed in Economics, Labor, Safety and Health by on March 22, 2019 22 Comments

More than four out of five builders expect to face serious challenges regarding the cost and availability of labor in 2019, according to a recent survey of members that ran in the monthly NAHB/Wells Fargo Housing Market Index.

The questions asked builders about the problems they confronted in 2018 and expect to face in 2019. Topping the list is the cost and availability of labor, a significant issue for 82% of builders in 2018, which ranked as the No. 2 concern behind building material prices. An identical 82% expect labor shortages will be their No. 1 issue in 2019, while material prices fell to the second slot at 69%.

A chronic labor shortage in the housing industry is a problem that has been steadily gaining steam over the past few years. To put it into perspective, just 13% of builders cited labor issues as an important concern in 2011, with the rate steadily rising over the ensuing years and peaking at 82% in each of the last three years (2017-2019).

NAHB economist Ashok Chaluvadi provides more analysis on the labor shortages and the rest of the top 10 list in this recent Eye on Housing blog post.

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  1. Richard Good says:

    It seems to me in this Capitalist industry that you could figure this out. Supply and demand govern all other aspects of your profession. if you have a labor shortage then your demand is exceeding your supply so the wages need to go up.

    • Bill Varian says:

      wages are going up–the problem is the availability of skilled workers
      Our school systems are not training the workforce needed to keep up with attrition

      • So True ..the art of building the American Dream is not even a second thought in most of our schools.
        Our Associations are working hard to bring all the possibilities to students for their future job opportunities. Our FHBA has an amazing Future Builders of America program and our NEFBA (Jax Fl)
        Has the most amazing Apprentice ship program with 440 students this year. Our associate trades give their all to these young men and women who want future skilled occupations to bring them to their American dream!
        There are so many great mentors in our Industry and I am so proud for all they do to make America Great again. I, for one was given my future thru all my friends at NEFBA. God is good!!

        • This is amazing, i am so glad to hear that this is happening. are all schools made aware of this type of apprenticeship? so many people coming into the work force are not happy being in an office all day — they want to learn skills , fix things, create.

      • Thomas says:

        Young people are borrowing tens of thousands of dollars to get a college degree, many in fields will little to no demand, instead of pursuing a trade such as plumbing, HVAC or electric. The issue is not the amount of wages, it’s the availabilty of skilled workers.

    • The building Industy is different. You dont go into a field where for 7 years prior you cant earn a living. No consistency over time.

    • Sam says:

      Wages going up increases the cost of housing. Increased wages is not the problem. SKILLED labor is. Not UN-SKILLED labor. There are nearly two generations of adults who were told to go to college and get a degree in order to be successful while not being encouraged to consider the trades. The wages are fair. There just are not enough skilled workers.

    • Steve Norkus says:

      I live in a so-called custom home community
      (Large National builder)
      We have 7 homes under construction on my street and it is not uncommon to see the roofers, window guys and small concrete guys work into the night

      It may only be a coupe of these guys at a time but I have seen them working with portable lighting to try to catch up. Seeing someone calming windows
      In 40 degree weather or a roofer still putting up tiles when the sun is down, tells me sure there are labor issues but the demand these builders put on the Contracters with the timelines are an issue as well

      The builders aren’t slowing down trying to sell houses and that out paces the capabilities of some of these trades

      • QHP LLC says:

        The wages are not fair. I own the company and I feel the wages I can pay are not fair. I have been in business for 25 years. Insurance has increased, product has increased, dues have increased, housing has increased, everything except wages have increased. Profit is at an all time low for subcontractors. Many are simply throwing in the towel. I have not had a rate increase in 10 years. No man can start a family and live on the wages of construction anymore pure and simple.

        Those working into the night are not a labor issue. Those are a quanity issue. The homes with national construction builders you speak of pay so little it becomes an issue of getting as many in a week done as possible to make a decent living. The quality is most always look away from. Coming from a sub who could not afford to work for those type companies.

  2. brett godfrey says:

    I have been in this industry for 30 years as a spec and custom builder. I have seen a lot of issues come down the pike the pike that have negatively impacted my business. I can tell you this, at this point, labor is the least of our worries! Regulation is killing our industry.
    I am a proud member of my local HBA and a reluctant member of NAHB. Our local HBA fights tooth and nail to hold the line on regulations that indirectly/directly come from NAHB. You read correctly. NAHB is complicit in the spiraling costs of regulation in our industry. By the very nature of our membership, conflicts of interests arise that negatively impact the cost of housing. NAHB’s lifeblood is derived from from membership dues and revenues from the IBS participants who create the widgets and support the IRC and similar groups.
    Stop and think for a moment, do you think that NAHB is going to use its lobbing efforts to repeal codes that promote the sale of its largest stakeholders widgets? Follow the money.
    What good is having the labor when potential new home buyers are priced out of the market every time the new “codes” come out. Soon, the only ones that can afford a new home are the ones that produce the widgets.

  3. Gary Karge says:

    I believe the statement left by a previous person about the “Supply and Demand” is partially true. We have the supply of materials, and the demand of construction in our area. But we do not have the trained, or skilled Carpenters, Plumbers, Electricians, and Laborers to fill the positions available. I agree that if wages were higher that some of those positions would be filled. But this presents another problem…if wages go up too high then housing cost goes up, and sales go down….it’s a “catch 22”.
    I also believe that there is a need for “Vocational Training Classes” in our High Schools across the nation. I can get people to apply for positions at times, but I have to take the time to train them basic skills in carpentry to say the least. This takes time and money away from my jobs. If training in the basics started at the High School level this would be a plus for many contractors across the nation. We can accomplish this by communicating with our local Government officials……Get to know them, they’re willing to listen (Most of them are).

  4. Scott Smith says:

    Richard the problem is much deeper than your simplistic answer. Aside from the need to balance the demand on overall home sales with the cost of building a home, the reality is that the skilled labor does not exist at any wage. Whether it be the mechanical trades or skilled carpenters, the industry is not attracting nearly enough talent to replace the aging workforce who have these skills.

  5. Jj says:

    I think we all need to quit waiting for “someone” to solve the problem. There are many skilled craftsman near retirement, get together, START a trade school.

    • Scott Smith says:

      Starting a trade school does not solve this problem. That deals with the supply side and assuming these trade schools do not currently exist. The problem is demand. The younger generations just are not interested so build the trade school but you will not have any students. The industry somehow needs to educate and build interest in these trades among the younger generations to rekindle interest. By the way, this problem exists any many blue collar trades where there are plenty of trade schools.

      • Rick Garhart says:

        Scott,

        I disagree that many trade schools exist. They may exist in brick and mortar but the execution of training applicable skills falls considerably short. General Contractors are more logistically oriented than trade oriented. As an industry we fall short of creating incentives that apply to today’s work force. Even in the residential sector the drive is to be the GC which does not require any level of trade skill. Project Managers are also unskilled in both trade techniques as well a actual management. As a sub contractor myself the lack of ability by site management is laughable. We need to fight to bring back the trade departments of high schools to expose and attract the next generation. My high school operated off site trade schools we designed and built homes with each student being required to be involved in each trade and then being allowed to lead that trade their senior year. 18-24 in my class began their own businesses and are still running today.

  6. Bobby says:

    Maybe contractors should be more willing to train people instead of exclusively hiring skilled workers? Plenty of other industries train. Even those that require a college degree still train new hires for a considerable amount of time. You can’t expect someone else to create the workers you want. Care about employees more than the customer, receive loyalty and good work, make clients happy. Simple formula.

  7. the buying public moans about affordable housing, as do others. we builders would like to provide affordable houses. skilled labor is a continuing problem and will remain so until younger workers realize a college degree is not all its wrapped up to be.ie not being able to find a desirable job in addition to suffocating debt. tackle and pursue over regulation with all vigor and vigor and vogor.remember 26,000 of every 100,00.00 goes to over regulation. we all know this and trump can’t do it all by himself. deregulate!

  8. Randy Noel says:

    Dear Brett Godfrey,
    My name is Randy Noel. I am a Custom Builder in the New Orleans, LA metro area since 1985. We build 35 to 40 homes a year in the 275-650,000 price range. Every now and then we do a million dollar home but not many millionaires around New Orleans lately. I saw your webpage, nice stuff. Along with running my business I have served as local, state, and last year as national president/chairman. Currently I am NAHB’s immediate past chair. I have been active at all 3 levels for 24 years. After Katrina, you might remember the hurricane, I worked with my state association to adopt a uniform enforced building code throughout the state the chaired the state code council to make sure it got done right. This gave me the privilege of voting at ICC where I attended the meeting where 1000 firemen and sprinkler advocates showed up and put sprinklers in our codes. NAHB immediately began working with ICC’s board to give code officials who normally agree with us a chance to vote from home so a manufacturer such as sprinkler companies could not take over the voting again. Every year 10-20 builder members and staff meet and read every one of the 1500 to 2000 proposed changes and take positions on them and trust me they do not favor a manufacturer. NAHB’s success rate at stopping crazy code changes in ICC has been 85-98% successful. If NAHB and these members weren’t there it would be very much worse.
    NAHB’s staff arranged for me to sit across a desk and tell the Secretary of Commerce the tariff caused lumber costs to sky-rocket costing me $100,000 in lost revenue. He got it and began contacting the lumber manufacturer’s and told them if they did not expand their mill capacity and start producing they’d have a problem. My lumber bills had climbed 65% and since those meetings has fallen almost back to where they were in 2017. Nobody but NAHB was working on lumber prices. Because of their success, I had raised my prices and recovered all what I lost. Without them you and I would still be paying too much for lumber.
    Last year NAHB’s economist and lobbyist managed to lower my taxes by lowering my rate since I am a sub-s to 20% and made sure I got the lower rate by meeting with the Secretary of Treasury so we weren’t capped on our revenue for the 20%.
    NAHB also lobbied to have the Dodd Frank Act amended to remove reserve requirements for small community banks thus allowing them to begin lending again to us and other builder leaders and I meet regularly with the Federal Reserve and you may have heard Chairman Powell use our exact words when he said they weren’t going to raise rates for the foreseeable future.
    NAHB’s staff has been literally re-writing the Waters of the US definition thus lowering our costs for new developments and lots. I have spoken in front of Senate and House Commerce Committees as a small business man to urge them to stop the agencies from dumping, what I think are beyond the laws passed by Congress, regulations. This administration has also been working with NAHB to curb other regulations and this year the chairman of NAHB, who is also a single family builder in Connecticut, NAHB is going to start attacking local and state regulations that add costs to homes you and I build.
    245 employees who read 85000 pages of proposed regulations annually for you and me and fight to stop anything from raising our cost. How do they know what regulations do that? Because I am a Custom Builder and I tell them. Let me get you involved on the board or a committee and let you start telling them.
    And oh yea, all this for 55 cents a day.
    Finally Labor. For 3 generations our country has been telling students they are a failure if they do not go to a 4 year college and get a degree. They shut down shop class and all my subs are 50 years or older and their bodies are giving out. Who is going to replace them? NAHB is working hard to change the dialogue on working with your hands by telling young people craftsmanship is a noble and fulfilling as well as lucrative vocation. It is hard to reverse 3 generations of thought but NAHB understands the urgency and is at full court push. NAHB is also trying to pass a bill that will raise the number of VISAs for construction like the farmers have for immediate relief. This is an uphill push against the administration.
    So please feel free to email me or call me if you want to hear more or you have specific issues you want addressed. But one thing is abundantly clear, NAHB is our only ally at ICC and we have none at NFPA who dumped AFCIs and GFIs on refrigerators on us in the NEC. Do we take the manufacturer’s money for booth space then use it to fight them at codes? Absolutely! Why not?

  9. Bob Williams says:

    Much of what I’ve read above sounds like a grip session.
    The fact is that we as the elders of this industry have fallen down on the job of training our replacements.
    Not only do WE have to train the next generation and we have to tap those of us that have become of age to become mentors to stay and train them too. The trades are learned not only in the classroom but in the field. They are tactile we need people to touch, feel, taste, smell and see what they’re doing to be able learn to execute them well. Some of that can be done through trade schools. Other parts of it, we have to provide opportunities in the field for learning.

    Another part of getting people into the trade is offering a livable wage package. We have neglected our own skilled workers not offering decent pay with benefits such as paid vacation, paid holidays, retirement planning or even healthcare.
    It’s not just about dollar but benefits that help them see they have a future and we offer chances to advance in life and in our trades.

    That will only help us get dedicated worker with skills that can produce more in the same amount of time and at better quality, reducing replacement and rework cost. Does that increase the cost of housing? Maybe, but maybe better skilled workers produce it quicker cheaper and better so that it is not something that adds to the cost of a new home.
    By the way we used to build homes was around 24 x 30’ now it’s the gargantuan 6000 sqft monster that we build. Think about it that and the cost of a home. Maybe size is an issue? The guy that bought the land paid so much for it he’s building a big box in order to sustain a return on his investment maybe it’s not the trades that are the issue with price as the size we have to build.

    So for 20yrs mom & dad have told Johnny and Sally that they have to go to college to get a good job with good benefits and have a good life.

    So why would somebody look at our industry if they can’t get the benefits that they can get by working at McDonald’s? Maybe mom and dad are right.

    But of those that go to college 40% drop out after 2 years with no degree and a large debt. So think about how we can change that. Please!

    What to change that?
    Change the image of our industry.
    A better image of our industry starts with better performance from us like:
    • A Livable wage
    • Benefits comparable to other industries
    • Education and Training
    • Advancement opportunities
    • Employer/employee loyalty
    Are you doing your part or are you only complaining?

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