When you think of the world’s largest industry, perhaps agriculture or energy come to mind—but it turns out they’re not the biggest.
No, the largest industry in the world today is construction, generating about 13 percent of the entire world’s GDP. And while it operates on a truly massive scale, construction also has a notoriously difficult time achieving maximum profitability because of the constant struggle to keep the industry fully staffed.
For years, the construction industry has seen a shrinking pool of labour that includes everyone from people in trades to company leadership. In turn, this takes a toll on those working on construction projects, with 75 percent of construction workers expressing concerns about fatigue, Forbes magazine reports.
For some stark context, in the United States, the application rate of young people looking for work in fields like plumbing and electrical dropped by a whopping 49 percent in 2022 compared to 2020, according to data from the online recruiting platform Handshake. This contrasts with the growing demand for these technical jobs being spurred on by infrastructure needs, especially green construction projects.
Add to these woes the fact that more than 20 percent of those working in the industry will soon be older than 55, and it becomes clear that the industry needs to find more ways to attract younger people to the ranks.
“Many Gen Zs don’t know the skilled trades utilize the latest technologies with engineering, design, estimating and management, and programming of various systems to work properly,” says Blake Howe, a recruiter and skilled trades advocate in L.A.
“In addition, you can learn a skilled trade and go to college as well. I work with many HVAC, electrical, and plumbing professionals who are in the field earning a great living and go on to get four-year degrees in construction management or mechanical and electrical engineering,” he says. “It takes a proactive approach from the parents, education system, and community leaders to promote the skilled trades to the future generations as a viable option. The skilled trades labour shortage is at a critical stage. We must change the narrative.”
Ironically, at the same time these labour shortage problems plague construction companies, young people graduating from college are struggling more and more to find adequately paying traditional white-collar work, plus being burdened by ballooning debt that graduates in the past did not experience.
How bad is the debt situation? Right now, according to the U.S. Department of Education, 45 million people across the country are in debt to the tune of nearly $1.3 trillion (that’s 1.3 with eleven zeroes!).
But this may also be a potential motivator for younger people to look at construction and related trades for employment. The average salary for carpenters in 2021 was $48,000 a year and $59,000 a year for plumbers, pipefitters, and steamfitters, according to U.S. Bureau of Labor Statistics. This, combined with the fact that the education costs for these jobs are significantly lower than typical college degree programs, can make the idea of better job prospects with less upfront costs more appealing.
Beyond recruitment, when companies do land new employees, it doesn’t necessarily mean that the employees will stay for the long run. But all is not lost; there are several important categories that companies can invest in if they want an edge in the merciless contest for talent.
Now is the time to start taking some serious stock of what younger employees are looking for in a construction career—what is needed to adapt to the changing demands of the workforce and change the narrative.
A clearly defined compensation program is an important piece of the recruitment and retention puzzle. Going into a project or joining a company that spells out what employees will be rewarded for can boost the appeal for potential workers. Most programs are either direct—including salary, hourly pay and bonus pay—or indirect, which includes various benefits. While direct is by far the most common approach, there are elements of indirect compensation that can be used to set a company apart in the market. These can include health and dental benefits and retirement plans.
Beyond compensation, companies also need to be willing to embrace technology. This is especially important for younger employees who will form the workforce for many years to come. For instance, Generation Z (those born between 1997 and 2012) have only known wireless technology and social media, while older generations have had to adapt to these technologies.
This means Gen Z employees have a much different set of expectations when it comes to technology. If companies are slow to adopt innovations or still use aged processes like timecards and paper spreadsheets, young employees will easily be turned off.
Mike Vorster, professor emeritus at Virginia Tech, and the author of Construction Equipment Economics, puts this point simply for the For Construction Pros trade journal: “To attract the best students from engineering and construction management schools, a company’s technology must be current.”
The industry itself may need a bit of an update to encourage more young people to join. Trade programs in schools are, of course, crucial to providing young people with more information about construction earlier in their educational journey and formative years. But school is not necessarily the primary source of information for most young people. That means getting on social media channels and using video, video, video to get their attention.
Then there’s the topic of apprenticeships. With the cost of living the highest it’s been in years, and with many young people struggling to get a foothold in white-collar jobs, apprenticeships can offer an easier bridge to a career. Apprenticeships can also provide construction companies with that much-needed early connection to potential employees. The United Kingdom has an appealing apprenticeship model that’s common practice for both large firms and small contractors. Young people can learn trades while they are still in school, and the results are positive for construction companies as well.
While some employers, especially smaller ones, may not be excited about paying for apprenticeships, up to 25 percent of the costs of these apprenticeships are usually recovered by the company through the revenue and profits enabled by taking on more projects. The other significant advantage of these programs is the pipeline of potential employees, which helps to avoid time-consuming and costly recruiting.
Sam O’Neill, a former plumbing apprentice, talks about the benefits that come from this model in For Construction Pros: “I knew I could never afford a four-year college, so an apprenticeship program was my ideal choice. I loved learning on the job while going to trade school, and I’m still working for the same housebuilder. I recently bought a house of my own. Many of my counterparts who went to university can’t afford to leave their parents’ home.”
A lot of this is made possible through the government in the form of either direct funding or by way of reimbursement. In the U.S., training for trades is also becoming more of a focal point as the recently signed bipartisan bill Strengthening Career and Technical Education for the 21st Century Act is supporting apprenticeships as well as trade schools.
Another (fairly obvious) way to alleviate construction labour challenges is hiring more women, who remain stubbornly underrepresented in the sector. Women currently make up a small fraction, just under 10 percent, of construction workers.
This disparity has also created spin-off barriers to women entering the industry, like a lack of suitable protective equipment, most of which is designed for men, and the outdated but persistent perception that construction work is a job for men. There is also the lack of flexible work scheduling for childcare, which leads many women to more amenable work and careers.
“Childcare is clearly a growing concern and has great potential as a talent attraction,” says Herb Brownett, a construction financial management consultant in Pennsylvania, in For Construction Pros. “Several companies are using new and creative childcare solutions to differentiate themselves in the eyes of both current employees and potential new hires,” he writes.
“One converted a training room into an area where office employees can bring children to work with them on occasion. Others were experimenting with flexibility options to make it easier to care for children. One of my clients investigated starting a company daycare centre but found the licensing and liability issues to be daunting.”
Not addressing these issues for women means the industry loses out on building a fully staffed workforce and so loses out on its bottom line. A survey conducted by Deloitte focusing on women in manufacturing revealed that companies that made a point of employing more women reported increased returns on investment and higher valuation.
Not only is this a challenging time to recruit and keep employees in construction, but it also feels like the industry is on the cusp of more change.
One of the biggest is the shift in what it means to work for a company. The growing gig economy emphasizes contracts that provide more flexibility to people who want to work for different builders in different parts of the country. That also means that they may not even be looking for long-term employment with any company.
At the same time, advances in AI, robotics, and automation are wowing people around the world and the question that’s on many people’s minds is just how much these advances will deliver. Will companies be able to do more with fewer employees and close the gap in the shortage numbers? And if that is a solution, what are the implications going forward? Construction companies may also have to rethink what their workforce will look like and what skills will be most important in the years to come.
