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Economist discusses the dynamics disrupting the labor force

By |  October 21, 2021
Photo: Ken Simonson

Simonson

The pandemic continues to impact construction projects and cause issues within the supply chain. A joint survey completed this summer by the Associated General Contractors of America (AGC) and Autodesk offered a number of interesting insights on these areas. Ken Simonson, chief economist at AGC, paid P&Q an exclusive visit to elaborate on key findings.

Story No. 1 at Pit & Quarry this year has been the supply chain. What can you tell us about the supply chain right now, because when it comes to lead times, pricing and inflation, it seems everything is coming together to create a perfect storm for all things construction?

This is really a unique year. We’ve had this survey for nine years now. Usually, we see either so much work that companies are scrambling to find workers, or, unfortunately, there have been periods when [companies] haven’t had enough projects and had to let people go. But this year, we’re seeing a mix of those things.

Some companies say their headcount is down but, nevertheless, they’re hard up to find workers. In the broader economy, it’s kind of the same situation. The unemployment rate is still a good deal higher than before the pandemic, and yet companies in just about every industry – including yours – are having a hard time getting enough workers.

What exactly are the key reasons we’re seeing contractors and construction firms having a hard time bringing people in?

Coronavirus is a tremendously disruptive force for the entire economy – and construction is no exception.

We did ask firms if they were having a hard time attracting workers what the reasons were. The No. 1 reason they said was the available candidates are not qualified to work in the industry. People have come forward, [but] they might not have the right skillset or they may not have passed a drug test. They might have a criminal background. Seventy-two percent of respondents said that the lack of qualification or mismatch of skills was a reason they weren’t getting enough workers.

Photo: iStock.com/wawritto

Says AGC chief economist Ken Simonson: “The unemployment rate is still a good deal higher than before the pandemic, and yet companies in just about every industry – including yours – are having a hard time getting enough workers.” Photo: iStock.com/wawritto

The No. 2 reason: Over 50 percent said they thought workers were preferring to get unemployment benefits. Now, those have run out – the survey was done in July and early August – so that picture may be changing. We’ll see if that makes a difference.

In terms of minor percentages, 15 percent each said potential workers had transportation issues or that they needed to stay home to care for a loved one – or, perhaps, they themselves were sick. I think the delta variant of the coronavirus has certainly added to those concerns.

Based on your survey, it’s clear some standards are changing in terms of how firms go about bringing people in. Can you share what it is firms are doing this year to have some hiring success?

We asked several questions related to what firms are doing to try to attract more workers and retain workers. This year, 73 percent of respondents said they increased base pay rates. That was double what we found a year ago.

Similarly, 34 percent said they provided incentives or bonuses. That was also double what we saw last time.

More firms increased their portion of benefit contributions or introduced new benefits. Then, in terms of looking for workers, over one-third of firms said they were engaged with career-building programs at the high school, college or career and technical education level.


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