New analysis from the Associated General Contractors of America backs up what many in the industry already know: Construction firms are having to pay higher wages to attract skilled workers from a shrinking labor pool. Average hourly earnings in construction — a measure of all wages and salaries —increased 3.2% over the year to $30.73, 10% higher than the private-sector average of $27.90, the association said.
In addition to raising pay and benefits, many firms have told the AGC that they have increased investments in training as they recruit workers with little to no prior experience in construction.
Most of the construction job growth during the past year came from the nonresidential construction sector, which added 146,700 jobs during the past year, according to federal data. Meanwhile, residential contractors added 78,000 jobs in the same time period.
A dearth of skilled labor has caused U.S. companies to continue to increase pay as they work to attract new hires in what AGC CEO Stephen E. Sandherr said in a statement is “one of the tightest labor markets” that contractors have ever experienced. Construction employment increased by 3.2 percent over the past 12 months, while the number of unemployed job seekers with construction experience fell, according to the Bureau of Labor Statistics.
Another government series showed that the number of job openings in construction, last reported for May, totaled 360,000, the highest May total in the 19-year history of the series.
Sandherr pinned at least some of the problem on the lack of technical training in U.S. schools and called on the federal government to boost funding for training programs for students.
“The nation’s education system continues to produce too many overqualified baristas and not enough qualified bricklayers and other craft construction professionals” he said. “As a result of these educational imbalances, too many young adults are struggling to pay off college debts while too many construction firms are struggling to fill job positions that pay well and don’t require costly degrees.”
Government data shows that construction salaries vary by job type. The latest BLS statistics indicate that in 2018 construction managers had the highest hourly median salary, at $44.26. This was followed by electricians at $25.75, operating engineers and other construction equipment operators at $24.21 and carpenters at $22.51.
With the unemployment rate at historic lows in most areas of the country, keeping workers and subs happy is job No. 1 for most construction executives.
“I can’t afford to lose one person,” said Jay Badame, president and COO of AECOM’s Building Construction division, in a recent webinar. “If I do, history has shown that it costs me $250,000 to replace that person in terms of recruitment and training. I have to make sure my competitors aren’t stealing my people.”
Industry firms are using creative tactics to keep employees happy, such as profit sharing and training opportunities. For instance, workers at STO Building Group receive shares in the company as rewards for special accomplishments and can receive additional education, CEO Bob Mullen said in the same webinar.