Contractors Plan to Expand, Expect Labor Shortages

National – Seventy-nine percent of construction firms plan to expand their payrolls in 2019 but an almost equal percentage are worried about their ability to locate and hire qualified workers, according to survey results released by the Associated General Contractors of America and Sage Construction and Real Estate.

The findings are detailed in “Contractors Remain Confident About Demand, Worried About Labor Supply: The 2019 Construction Hiring and Business Outlook Report.”

The percentage of respondents who expect a market segment to expand exceeds the percentage who expect it to contract for all 13 categories of projects included in the survey. For every segment, between 23 and 32% of respondents expect the dollar volume of projects they compete for to increase.

For all but one segment, between 11 and 16% of respondents foresee less work available in 2019. The difference between the positive and negative responses – the net reading – was between 10 and 17% for every category except multifamily.

Public building construction scored the highest net positive reading of 17%. Three other segments had a 16% net positive: highway, K-12 school, and hospital construction. Projects for federal government agencies and retail/warehouse/lodging both had a net positive reading of 15%t. Water & sewer and transportation facility construction had a net positive reading of 14%.

Labor shortages are having an impact on construction costs and project schedules, association officials noted. One-third of respondents report that staffing challenges drove costs higher than anticipated. In reaction, 37% of firms are putting higher prices into new bids and contracts. Similarly, 34%  report projects have taken longer than they anticipated.

Firms continue to raise pay and provide bonuses and benefits in response to labor shortages. Fifty-nine % report they increased base pay rates. Twenty-nine percent provided incentives and/or bonuses. Twenty-four percent of firms increased contributions or improved employee benefits to cope with workforce shortages.

The outlook was based on survey results from over 1,300 firms from 49 states and the District of Columbia.