Labor Market USA

Labor Market USA

Over the last number of years, the fact that the construction industry is facing a global skills shortage and a dwindling trade labor force has been well documented. In 2008, almost all jobs were affected by the economic downturn and many left their chosen field to find employment elsewhere. Typically as the job market and employment rates begin to rise, so too does the work force. However, those who performed skilled trades seemed to move on and not return, thus leaving a shortage. This is also exacerbated by two fundamental issues that stem from over ten years ago and have had a ripple affect into today’s market – the youth of today are not interested in the work and those performing it are getting ready to retire.

Nowadays, if you ask anyone under the age of thirty about taking home economics, small engine repair, mechanical drawing, electrical shop etc., they will probably tilt their head sideways in confusion. This is because these classes and so many others have been phased out. According to the Forbes article, ‘The Death of Shop Class and America’s Skilled Workforce’, California has been eliminating shop classes since 2012 and LA had eradicated it from the Los Angeles Unified School District (LAUSD) by 2013. Moreover, according to surveys by RIDGID, American high schools are now preparing students for four-year colleges and focusing on skills geared towards white collar careers. With our education system focusing on removing vocational curriculums and reappropriating students’ future concentrations, it is no wonder that tomorrow’s labor force is becoming less diversified. 

On the opposite end of the spectrum, a considerable proportion of those who have stayed in the industry are getting ready to retire. In 2013, Forbes referenced the EMSI report which identified that 53% of skilled trade workers in the US were 45 years and older, and 18.6% were between the ages of 55 and 64.

That’s almost three quarters of the trade-labor population, and that was seven years ago. What makes this more striking is that the Bureau of Labor Statistics has projected standard growth of 7-10% for major trades such as carpenters, plumbers, electricians, sheet metal workers, masons etc. However, as of next year, 16% of the trade workforce is projected to retire, 22% projected by 2023, by 2028 a 28% figure is expected, and by 2033, 47% are expected to have retired. Mathematically, this means that even with a projected standard growth, more individuals will be leaving the industry with a lackluster number backfilling the jobs.

The shortage of labor is now widely felt. The McKinsey Global Institute’s 2017 Analysis anticipated an increase in real estate and infrastructure investment, leading to a higher demand for construction laborers and skilled trades. Unsurprisingly, the prediction was correct and all trends now point to an uplift in construction demand, while Staffing Industry Analysts (SIA) are clearly identifying that skilled trades are listed as the toughest to recruit as of January 2019. 

What does this mean for the industry as a whole and its future? With an estimated US$700 billion-dollar commercial spend estimated for this year in the US, it stands to reason that if the labor isn’t there then labor prices will continue to rise, and delays in projects and ultimately in national growth will start to manifest. Business owners will feel the pinch, potentially leading to outsourcing, building less, or getting innovative (solutions such as Artificial Intelligence) to handle the estimated workloads.

Ironically, we have seen this coming. In 2017, California spent upwards of US$206 million on a campaign to revive the reputation of the vocational education. But this does beg the question – would this have been needed if they didn’t drop ‘shop class’ in the first instance? Those of us in the industry certainly can benefit from the amount of work coming today. But when the last of the baby boomers turn 65 in 2029, we will have to hope that initiatives and innovations are in place to compensate for the loss of skills that developed America as we know it today.

Next Insight

Labour Market USA

View all insights