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Construction worker shortage weighs on hot U.S. housing market

Construction worker shortage weighs on hot U.S. housing market

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Eight years after the housing bust drove an estimated 30 percent of construction workers into new fields, homebuilders across the country are struggling to find workers at all levels of experience.

That’s according to the National Association of Homebuilders, which estimates that there are approximately 200,000 unfilled construction jobs in the U.S. — a jump of 81 percent in the last two years.

The ratio of construction job openings to hiring, as measured by the Department of Labor, is at its highest level since 2007.

“The labor shortage is getting worse as demand is getting stronger,” said John Courson, chief executive of the Home Builders Institute, a national nonprofit that trains workers in the construction field.

The impact is twofold. Without enough workers, residential construction is trailing demand for homes, dampening the overall economy.

And with labor costs rising, homebuilders are building more expensive homes to maintain their margins, which means they are abandoning the starter home market. That has left entry-level homes in tight supply, shutting out many would-be buyers at a time when mortgage rates are near historic lows.

Nationwide, there are 17 percent fewer people working in construction than at the market peak, with some states — including Missouri — seeing declines of 20 percent or more, according to data from the Associated General Contractors of America.

Len Toenjes, president of the AGC of Missouri, said construction company executives mention the worker shortage whenever he asks them about business.

“The most common reaction I get is, ‘I’m doing everything I can to hang on to the good people I have,’” he said.

Difficulties in recruiting and retaining workers are the main obstacles to growing construction industry employment.

Many people consider construction work unappealing, Toenjes said. He said talk during this year’s presidential primaries of a free four-year college education frustrated him because free four-year construction industry apprenticeships already are available. Such apprenticeships are not like college, Toenjes acknowledged.

“The difference is that you’re out on a job site and you get up early,” he said. “It’s not like you’re going to sit and listen to a professor all day, but (an apprenticeship) is available.”

Too often, schools inadequately educate students in the technical skills construction requires, Toenjes said.

Computer-aided design and sophisticated surveying are now integral to construction work. Toenjes cited as an example the BJC HealthCare expansion in the Central West End, where pre-fabricated building components are delivered at night and hoisted into place in tight construction sites.

“You’re not carrying pieces of pipe up the stairs anymore,” he said. “There aren’t a lot of shovel-and-broom jobs left.”

Construction employment in the St. Louis area is rising — up 2.5 percent in the last year — but remains far behind the market peak in 2008.

Higher costs

The nationwide labor shortage is raising builders’ costs — and workers’ wages — and slowing down construction.

The average construction cost of building a single-family home is 13.7 percent higher now than in 2007, even as the total costs of building and selling a house — a figure that includes such items as land costs, financing and marketing — are up just 2.9 percent over the same period, according to a survey by the National Association of Homebuilders.

The problem is accentuated by strong demand for newly constructed homes, with sales reaching a nine-year high in July.

Private companies say that they are having a hard time attracting workers, and they are often forced to give employees on-the-spot raises to prevent them from going to competitors. Carpenters and electricians are often listed as the most in-demand specialties.

Tony Rader, the vice president of Schwob Building Company, a general contractor in the Dallas area, said his company has started handing out fliers at sporting events, churches and schools in hopes of luring more people into the field.

“The biggest problem I face every day is where are we going to find the people to do the work,” he said, adding that it’s becoming increasingly common for his company and others to turn down projects.

Dallas contractors are fighting over the limited supply of workers as three major mixed-use projects are going up right next to each other on the so-called “$5 billion mile” in Frisco, a northern suburb. Meanwhile, the metropolitan area is adding about 30,000 newly built homes annually.

With fewer workers, contractors are becoming wary of signing new work contracts, especially as many of them include fines for not completing a job by a designated date.

“I’ve got two lawsuits right now where it may cost us mid-six-figures because there’s not enough labor out there to get it done,” said one contractor in the North Dallas area who declined to be identified.

Lawyers in hot residential markets say that it is becoming increasingly common for construction companies to try to negotiate for more time.

“Subcontractors are having a hard time staffing up,” said Edward Allen, a Denver attorney who said he has seen more lawsuits over project delays in the past two years.

Guaranteed work,

few takers

Homebuilders are increasingly desperate to bring back in fully skilled laborers such as Greg Lewis, 43, a journeyman carpenter in St. Louis. After struggling to find work in 2010, Lewis started making leather goods at home and selling bags, belts and wallets online. He now operates his business full time under the name Made Supply Co.

Even though he’s making less than he did in construction, Lewis is not tempted to go back into a field that is marked by job insecurity, he said. His former co-workers have gone on to work in warehouses or a local General Motors plant, and most are choosing not to return to their old jobs even as contractors offer higher wages.

“Guys couldn’t wait around for their next job, and now they don’t want to go back to a field that could turn on them,” he said. “It’s either hot or cold, and you just can’t trust it.”

Jeff Aboussie, executive secretary-treasurer of the St. Louis Building and Construction Trades Council, said Friday that many workers who found employment in other industries or took construction jobs in other parts of the country have not returned to the St. Louis area. But he said plenty of construction work is available for those who remain.

“We have work out ahead of us for five or 10 years,” he said. “All the indicators are that we are on the uptick and doing very well.”

Aboussie said many schools no longer offer the technical training young workers need when they enter trades and construction apprenticeships. Technical training “is the backbone” of union construction work, said Aboussie, adding that a good tradesman earns from $75,000 to $100,000 annually.

“That’s not shabby,” he added.

Tim Bryant of the Post-Dispatch and Reuters contributed to this report.

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