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Contractors Struggle to Find Workers, Autodesk-AGC Survey Finds, Despite Fall in Employment

Sept. 5, 2021
Construction firms are struggling to find enough qualified workers to hire even as they continue to be impacted by pandemic-induced project delays and supply chain disruptions, according to results from the 2021 Autodesk-AGC of America Workforce Survey.
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Construction firms are struggling to find enough qualified workers to hire even as they continue to be impacted by pandemic-induced project delays and supply chain disruptions, according to results from the 2021 Autodesk-AGC of America Workforce Survey, posted this week. Of the 2,136 responses received between July 7 and August 13, 40 percent of firms had added employees in the past 12 months, vs. 34 percent that had reduced headcount. Ninety percent of respondents have open hourly craft positions; of those, 89 percent report having a hard time filling some or all positions. For salaried positions, 62 percent of firms have openings and 86 percent of those report having difficulty filling them. The most common reason for difficulty, cited by 72 percent, was “available candidates are not qualified,” followed by “unemployment insurance supplements are keeping workers away,” cited by 58 percent. In the past 12 months, 73 percent of firms raised base pay rates, compared to 38 percent in the August 2020 survey and 66 percent in the August 2019 survey.

Most firms reported delays in completing projects due to: longer lead times or shortages of materials (75 percent of respondents), shortages of workers (their own or subcontractors’, 61 percent), or delivery delays (57 percent.) Rising materials costs have affected 9 3 percent of respondents, including 36 percent who reported absorbing all additional costs. Three out of five reported that upcoming or expected projects have been canceled, postponed, or scaled back due to: cost increases (51 percent of respondents), lengthening or uncertain completion times (26 percent), or changes in demand/need (22 percent). More positively, 28 percent reported there are more projects to bid on or projects have been expanded in scope. For 46 percent of firms, the volume of business already matches or exceeds the year-ago level, but 9 percent expect that will require one to six months more, and 26 percent expect a delay of more than six months. Only 6 percent expect to furlough or terminate employees in the next 12 months, vs. 74 percent who expect to add or recall employees. Results are broken out by region and 31 states, three revenue size ranges, four project types, and union vs. open-shop firms.

Construction employment, seasonally adjusted, totaled 7,416,000 in August, a decrease of 3,000 from July, according to AGC’s analysis of Bureau of Labor Statistics data posted today. The August total was 232,000 (-3.0 percent) below the pre-pandemic peak in February 2020. The gap widened between residential and nonresidential employment. Residential construction employment, comprising residential building and specialty trade contractors, increased by 17,400 in August, putting the total 77,900 (2.6 percent) higher than in February 2020. Nonresidential construction employment—building, specialty trades, and heavy and civil engineering construction—declined for the fifth-straight month in August, by 20,300, putting the total 310,000 (-6.6 percent) below the February 2020 level. The heavy and civil engineering segment has regained only 29 percent of the jobs it lost between February and April 2020, compared to 56 percent for each of the other two nonresidential segments and 117 percent for residential construction.

A total of 448,000 former construction workers were unemployed in August, a 41 percent drop year over year from August 2020. The industry’s unemployment rate in August was 4.6 percent, not seasonally adjusted, compared to 7.6 percent in August 2020 and the third-lowest August rate in the 22-year history of the series. (The only lower August rates were in 2018, 3.4 percent, and 2019, 3.6 percent.) The figures are consistent with the AGC survey findings that there are relatively few unemployed construction workers available to hire despite the decline in nonresidential employment. Average hourly earnings in construction totaled $33.07 in August, seasonally adjusted, an increase of 3.9 percent year over year and a premium of 7.6 percent over the average for the nonfarm private sector ($30.76, up 4.4 percent year over year). In August 2018, the construction premium was 10.3 percent. The premium has declined as historically low-wage employers such as restaurants and warehouses raise starting pay.

Construction spending in July increased 0.3 percent from June 2021 and 9.0 percent year over year from July 2020 to a seasonally adjusted annual rate of $1.57 trillion, the Census Bureau reported on Wednesday. Nonresidential activity was mixed—an improvement from more widespread declines in recent months. Public construction spending rose 0.7 percent for the month but slumped 5.1 percent year over year. The largest public segment, public education construction, declined 0.5 percent and 6.4 percent, respectively. Highway and street construction increased 1.9 percent for the month but inched down 0.1 percent year over year. Public transportation construction rose 0.3 percent from June but decreased 4.2 percent year over year.

Private nonresidential construction spending slipped 0.2 percent for the month and 3.6 percent year over year. The largest private nonresidential segment (ranked by year-to-date spending) — power — declined 0.7 percent and 0.9 percent, respectively (including electric power, -1.6 percent year over year, and oil and gas field structures and pipelines, 1.8 percent year over year), followed by commercial, unchanged for the month and up 4.6 percent year over year (including warehouse, 14 percent year over year, and retail, -7.6 percent year over year); manufacturing, flat for the month and up 1.8 percent year over year; and office - 0.1 percent and -6.1 percent, respectively. Lodging had the largest year over year decrease, -30 percent. (Census includes data centers in office construction and does not break them out. Nonresidential combines renovation and new construction.) Private residential construction spending climbed 0.5 percent for the month and 27 percent year over year (single-family, 47 percent year over year; multifamily, 15 percent; and owner-occupied improvements, 7.7 percent).

Some steel prices rose again this week without advance notice. Steel Dynamics Sales North America, Inc. announced on August 31 that effective with orders received after 8 p.m. Eastern time on August 30, it “will be increasing published prices [$50/ton] on most parallel flange, structural merchants and bar products.” Nucor announced a similar increase.

“Most actively traded copper futures on the New York Mercantile Exchange rose 0.6 percent to $4.30 a pound on Thursday and are still up more than 20 percent for the year,” the Wall Street Journal reported today. However, “copper prices are about 10 percent below a record [set in May] as supply constraints ease and traders worry that the delta variant of the coronavirus will soften demand.”