• Kevin Murphy

USA: Critical Lack of Skilled Labour in the Housing Market

Home construction in America continues to rebound but the lack of skilled labour for tradesman is hampering the home building industry. With the building boom in parts of the country continuing a survey released a few years ago by Associated General Contractors of America indicated at the time that nationally 80% of construction businesses were having difficulty in finding and hiring skilled labour. A report in Bloomberg Business had one construction analyst say “We could be growing faster if the labor shortage issue wasn’t present.” In 2019 the problem continues to increase throughout the nation.

A report in Tradesman International states that from 2006 to 2011 the construction industry lost 2.3 million jobs and that in the past two years Bureau of Labor Statistics and National Association of Home Builders (NAHB) indicated that there were nationally 143,000 unfilled construction positions. The NAHB revealed that '69 percent of its members were experiencing delays in completing projects on time due to a shortage of qualified workers, while other jobs were lost altogether.'

One problem analysts cite for the shortage were that many skilled labourers dropped out of the industry when the recession hit and that todays younger generation no longer consider learning a skill in the construction industry as lucrative as going and receiving a college diploma.

Tom Dunn, president of the Arizona Builders Alliance told the Arizona Star:

“Students have been pushed to college only.”

“We’ve even discouraged them from getting into the trades by saying, ‘You don’t need those skills, you can hire someone to do that for you.’”

The alliance does try to coordinate its efforts for recruiting new skilled labour candidates with local schools and colleges to encourage young people to consider a career in the construction industry.

One other reason for the shortage is that many in the construction industry were from outside the United States mainly in central American countries and went home during the recession which brought construction nearly to a halt and record foreclosures.

David Freshwater, chairman of Tucson-based Watermark Retirement Communities addressed this issue in the Arizona Star:

“It’s one of the fallouts of isolationism and nationalism."

“We need dry wallers, we need roofers, we need electricians and a lot of those had traditionally been filled by immigrants."

“This is not a political perspective, but an economic perspective. We need that workforce to keep up with demand.”

Facts and Figures

A review on immigrant workers in the construction labour force by National Association of Home Builders (NAHB) in January 2018 showed that 30% of immigrants worked in the construction trade.

The NAHB stated:

"Concentration of immigrants is particularly high in some of the trades needed to build a home, like carpenters, painters, drywall/ceiling tile installers, brick masons, and construction laborers – trades that require less formal education but consistently register some of the highest labor shortages in the NAHB/Wells Fargo Housing Market Index (HMI) surveys and NAHB Remodeling Market Index (RMI).

And nationally:

"Immigrants comprise close to 42% of the construction workforce in California and close to 41% in Texas. In New York and Nevada, 37% of the construction labor force is foreign-born and in Florida, 35% of construction industry workers come from abroad."

From the following countries:

"The majority, close to 53%, come from Mexico. An additional 32% come from other countries in the Americas. Even though the share of Mexican workers declined slightly since 2004, the increase in the share of immigrants from the rest of Americas more than offset the declining share of Mexico-born immigrants.Together, they account for almost 85% of the immigrant construction labor force. Europeans make up 7.3%, and an additional 6.5% come from Asia."

According to the U.S. Bureau of Labor Statistics (BLS), jobs available in construction-related fields, including electrical work, carpentry, elevator installation, painting, masonry, and others, are growing faster than average job growth. That growth is expected to be eleven percent between 2016 and 2026 and to include nearly 750,000 new jobs across the country, much more than in most other industries.

Nakoma Sky

Over the past two years one American state that has become popular for new homeowners is Arizona. It is not uncommon to see automobile plates from expensive states parked outside new homes with most flocking in from California who have become weary of their previous home states taxes and cost of living.

In the city of Tucson the lack of skilled construction labour forced the the construction of a new 77-acre $100 million continuing care retirement community called Nakoma Sky in Oro Valley to cease. The plans for the project were for than 200 independent and assisted living care units.

On 30 May 2018 future residents began receiving word that the project was cancelled.

Letter to the those who had planned to live in the units in the community were told:

“We were informed last week that our project is no longer feasible to construct under today’s conditions,”

“These conditions include severe workforce shortages, rapidly increasing costs of construction materials and supply shortages.”

The problem that due to the uncertainty of and lack of skilled labour they could not guarantee what the cost for their services would be.

As a result of not having a guaranteed price Joni Condit, Nakoma Sky’s senior vice president and chief operating officer, told the Star:

“It was too much risk."

“We didn’t want to get into a situation where we had to go back to our customers and ask them to pay a lot more. That’s not the way we do business.”

“There’s not enough labor for them to cover the projects that are out there and the tariffs on steel are definitely a problem.”

“We have contractors in Phoenix telling us the same thing. They’re seeing delayed jobs because both factors are important if you’re going to predict costs."

“It was a wonderful vision. We certainly didn’t anticipate this.”

Local residents Ron and Elsa Peterson became aware of the Nokoma Sky project paid a deposit of $50,000 for a unit only to receive an email and was shocked to get the news.

Mr. Peterson commented to the Star:

“If one spouse develops a problem, they can transition to memory care or assisted living and the other spouse could stay in the original unit.”

“I was thinking ahead to future needs we might have.”

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