Can the labor shortage be fixed with supply and demand?

There was a new article in ENR, that came out the week of Oct. 2, 2019, “3Q Cost Report: Labor Shortage Continues, Most Companies Report” by Bruce Buckley. In this article there was a different approach discussed not by one but two different industry professionals.

Here are the specific quotes: Ken Simonson, chief economist at AGC, says that construction pay increases “are pretty much in line with the rest of the economy. Maybe contractors have decided that they aren’t going to bring in more workers by offering a higher pay rate, so they have to try other things.” Mark Breslin, CEO of United Contractors, which represents about 450 union contractors in California, says the state faces a significant labor shortage, but increased compensation is not the answer. “Capacity won’t be solved with compensation,” he says. “Contractors are compelled to do whatever they can to keep people, but you can’t accelerate the development of a craftworker with money.”

Given this angle what is the alternative? This is what the article did not address. With a labor shortage in any industry how does it not just come down to basic supply and demand. Case and point, in this article, “Here are the most in-demand jobs for 2019”, by Sarah O’Brien, “The U.S. unemployment rate is below 4 percent, leaving many employers struggling to fill positions. In fact, last year there were more openings than there were people looking for jobs. If you start thinking about pursuing one of these in-demand positions, you might want to also look into whether the employer has similar openings it’s having a hard time filling. If so, you could consider asking for higher pay or more in benefits.”

Part of the construction industry’s issue has been a stigma about these types of jobs not being one where parents encourage their kids to do and it’s considered a “dirty” job; not one that is promoted by teachers or counselors. If the industry has this kind of negative aura and on top of that you are not increasing wages; how then does one entice new entrants into the market? They are not and doesn’t help address our construction labor shortage.

Whatever costs the contractors are faced to bear this ultimately are costs they are going to have to factor into their costs of doing business. Which ultimately will trickle down to developers and owners; then consumers. Fighting or ignoring only prolongs the inevitable outcome. When the industry has an influx of supply; i.e., when the industry can ditch the negative stigma, then wages won’t be part of a solution. Construction employers coupled with a constant supply of future construction workers can together address the labor shortage one city at a time.