AGC of America

Civil Contractor Shortage Predicted as IIJA Kicks In

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

According to a survey released by Procore Technologies, Inc. and the Associated General Contractors of America, 78 percent of civil and infrastructure construction firms anticipate that their project backlog will increase or remain the same in 2024 as the Infrastructure Investment and Jobs Act funding ramps up.

The report, Top Civil & Infrastructure Trends: “Today’s Industry Challenges and Opportunities,” found that many firms are worried that labor shortages and productivity challenges could undermine their success with these projects.

“With increased backlogs prompted by once-in-a-generation government investment in the U.S. and Canada, civil and infrastructure organizations are on the precipice of historic projects across North America,” said Sandra Benson, VP of industry strategy at Procore. “To achieve these massive undertakings – while also navigating the ongoing labor shortage – companies will have to find innovative solutions, improve self-performance and leverage clean data to build better.”

The report surveyed nearly 500 general and specialty contractors.

Civil and infrastructure builders reported an average increase of 25 percent in their backlogs, meaning projects that they’re contracted to complete but have not yet started since the pandemic. A total of 78 percent of firms surveyed expect their backlog to grow or remain level over the coming 12 months. Many firms reported they’re investing in software and technology to help overcome these key challenges.

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AGC of America Rolls Out D&I Week Toolbox Talks

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By KERRY L. SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The Associated General Contractors of America have initiated a series of toolbox talks on the topic of diversity and inclusion on project sites across the nation.

The programs are part of Construction Inclusion Week. Shea De Lutis, a national office for the AGC of America, says the topic is among the organization’s top priorities.

“Our nation’s workforce is becoming increasingly diverse, and if we can’t find a way to become equally diverse, we won’t be able to keep pace with demand for construction,” De Lutis said.

Construction Inclusion Week began in 2020 as an industry-led initiative that has been promoted ever since by the AGC’s leadership and overall membership. “Thousands of our members are holding diversity and inclusion education sessions, toolbox talks and stand-downs over the coming week as part of this effort,” she added, noting that while women make up nearly half of the U.S. workforce, they comprise only 11 percent of the construction industry – and while blacks make up 13 percent of the total U.S. workforce, they comprise only 7 percent of the construction industry.

For more information about how the AGC of America continues to support Construction Inclusion Week, see https://www.constructioninclusionweek.com/.

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AGC Survey ID’s Skills Deficits, Failed Drug Tests as Factors in Applicant Shortages

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Few candidates have the basic skills needed to work in high-paying construction careers, forcing short-staffed contractors to find new ways to keep pace with demand, according to the results of a workforce survey conducted by the Associated General Contractors of America and Autodesk.

“Eight-five percent of companies surveyed – firms with under $50 million to more than $500 million in annual revenues – reported that they’ve got open positions they’re trying to fill,” said AGC Chief Economist Ken Simonson, “and 88 percent of these employers are having trouble filling at least some of these positions, particularly those associated with craft trades.”

The latest workforce survey, completed by 1,401 respondents, also captured a startling metric regarding illicit drug use among construction job applicants, according to Simonson.

“Fully one-third of candidates applying for construction industry positions cannot pass a drug test,” he said. “And 68 percent of firms surveyed said applicants lack basic, necessary reading and mathematics knowledge.”

In line with these sentiments, 41 percent of construction companies surveyed told the AGC they’re boosting spending on training and development.

Allison Scott, director of customer experience and industry advocacy at Autodesk, says the construction industry’s increasing adoption of artificial intelligence and robotics is manifesting greater career opportunities for new hires and existing employees.

“For potential hires, a career opportunity in construction should mean an opportunity to work with advanced technology and perform safe, meaningful work,” Scott said. “As firms adopt more digital technologies and create stronger classroom and training pathways, we’ll begin to see a new generation enter the industry equipped with the tools and skills needed to tackle construction’s largest challenges.”

For detailed survey materials including national, regional and state fact sheets, survey analysis and more, click here.

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Contractors Decry Amended Davis-Bacon Rule

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The U.S. Dept. of Labor’s final rule, issued August 8th, revamps its Davis-Bacon Act procedures for determining prevailing wage levels – in favor of workers – on federally funded construction projects.

Expected to go into effect in approximately 60 days, the rule is being hailed by construction unions yet criticized by contractors and their associations. The revised rule reverts to pre-1983 methodology for determining whether a wage rate is prevailing, also referred to as the “30 percent rule.” Under the 30 percent rule, contractors must use the wage rate paid to a majority of the workers; if no such majority rate exists, they must use the wage paid to the largest number of workers on the job, as long as it was paid to at least 30 percent of that workforce.

The wage rule solidifies as $1.2 trillion in Infrastructure Investment and Jobs Act funding is propelling the start of a deluge of federal construction projects as well as projects that are stemming from the Chips and Science and Inflation Reduction Acts.

AGC of America CEO Stephen Sandherr says the more than 800-page ruling lowers the threshold of reporting required from the Dept. of Labor.

“This final rule appears to make it easier on the Dept. of Labor itself to set prevailing wages with less of the data it already collects, or lack thereof,” says Sandherr.

The Associated Builders and Contractors says this regulatory notice will annually affect an estimated $217 billion in federal and federally assisted construction spending for about 1.2 million construction workers.

“Unfortunately, the DOL’s final rule disregards the feedback of ABC contractors, construction industry stakeholders and thousands of small businesses urging the withdrawal of this unnecessary, costly and burdensome regulation,” says ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “Instead, the DOL is moving forward with dramatic changes to prevailing wage regulations, reversing much-needed reforms that were established nearly 40 years ago, and unlawfully increasing the regulatory burden on small businesses, new industries and public works projects.”

For more information about the ruling, see www.dol.gov/agencies/whd/government-contracts/construction/rulemaking-davis-bacon.

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Industry Pay Premiums Rise Nearly 19 Percent As Firms Continuing Recruiting

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Construction firms nationwide provided a wage premium of nearly 19 percent compared to the average hourly earnings for all private-sector employees as contractors continue chasing bodies to staff the still-robust construction activity in many states.

The Associated General Contractors of America said June 2 that the industry is still struggling to hire and retain enough people.

“Demand for construction workers remains strong, outside of homebuilding,” said Ken Simonson, chief economist for the AGC of America. “Contractors continue to report their primary challenge is finding qualified workers, not finding projects or most materials.”

The unemployment rate among jobseekers with construction experience declined from 3.8 percent last May to 3.5 percent in May 2023, the second-lowest May rate in the 23-year history of the data. A separate government report released in late May reported that new hires in construction at the end of April totaled 460,000, growing 3 percent from one year earlier. The new hires figure, according to Simonson, does not account for the number of workers who left the industry during the same timeframe.

Average hourly earnings for production and nonsupervisory employees in construction – covering more onsite craft workers as well as many office workers – jumped by 6 percent over the year to $34.07 per hour.

Association officials say firms are boosting pay and taking other steps to recruit construction workers.

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Carpenters Messaging, Teaching, Recruiting Earlier than Ever Before

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By KERRY SMITH, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Organizations like the Mid-America Carpenters Regional Council are approaching students at younger and younger ages to introduce them to the possibility of pursuing a construction career.

Scott Byrne, St. Louis regional director of the Carpenters, says recruiting – and translating the trades to skills and experiences that ring true for elementary and middle school students – is what it’s all about.

“The days of standing behind a table at a high school jobs fair are long gone,” said Byrne. “Today we’re communicating with students beginning in second and third grade, teaching them how to build a birdhouse and a doghouse and showing them what building with their hands is all about.”

Another innovative entry the Carpenters has made is building relationships nationwide with high school career counselors and mathematics instructors. Byrne says the regional council is currently integrating real-world math skills building in 114 high schools across Missouri.

“Our international union, the United Brotherhood of Carpenters, created career connections, a component that offers math curriculum that’s very practical and useful in the field,” he said. “For example, rather than teaching theoretical geometry, we’re teaching students how to learn the Pythagorean Theorem so they can understand how to lay out a building very quickly. We’re working alongside talented mathematics teachers, showing them a real-world way to apply lessons in geometry, trigonometry and calculus through the context of construction practices.”

Brian Turmail, spokesman for the Associated General Contractors of America, says communicating regularly with high school guidance counselors is also critical. “Students and their parents need to hear that there is another real option out in front of them as an alternative to a four-year college education,” Turmail said. “It’s bonkers that many K-12 students still are not hearing about the pathway through a construction career track. When we speak with our members and their AGC chapters across the U.S., one of the subjects that comes up every time we discuss workforce development is reaching guidance counselors.”

Idaho passed legislation that requires guidance counselors to present vocational education as an option, he said.

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U.S. Construction Adds 25,000 Workers in January, Firms Raise Wages

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Construction firms across the country added a total of 25,000 employees in January and increased pay levels for hourly workers more than other sectors did last month, according to an analysis of government data by the Associated General Contractors of America.

Association officials reported that the industry has been benefitting from relatively strong demand for construction projects as firms struggle to fill available positions.

“Construction employment totaled a record 7.88 million people (seasonally adjusted) in January 2023, which equates to an increase of 294,000 employees or 3.9 percent from a year earlier,” said Ken Simonson, AGC of America chief economist. “In fact, most contractors would like to hire even more workers and are raising pay in an effort to attract them.”

Nonresidential firms – including commercial, industrial and heavy highway contractors, specialty contractors and heavy and civil engineering companies – added 19,300 workers in January and 179,200 employees or 4 percent over the past 12 months. Residential building and specialty trade contractors together added 5,500 employees last month and 114,600 employees or 3.6 percent over the year.

Pay levels in the U.S. construction industry continue to increase. In January, they rose at a faster pace than in the overall private sector. Average hourly earnings for production-specific nonsupervisory construction workers, mostly hourly craft workers, climbed by 6.2 percent – from $31.44 per hour in January 2022 to $33.38 hourly in January 2023. That year-over-year increase exceeded the 5.1 percent increase in average pay for all private sector production workers. Construction workers now earn an average of 18.1 percent more per hour than in the private sector as a whole.

“Construction firms are doing everything in their power to recruit even more people into the industry,” said Stephen Sandherr, the AGC of America’s chief executive officer. “Closing a federal funding gap that puts five dollars into college-track programs for every dollar spent on career and technical education will help expose many more workers to high-paying career opportunities in fields like construction.”

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Bid Prices Increase in October from Wages, Delivery Delays, Diesel Costs

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

October 2022 national data reflects a sharp rise in bid prices as contractors continue navigating ongoing supply chain challenges, labor costs and more.

The Associated General Contractors of America Chief Economist Ken Simonson says rising construction costs continue threatening to undermine demand for projects. He urges administration officials to remove remaining tariffs on construction materials and to boost investments in construction-focused education and training.

“Although some material costs have moderated, other costs are still climbing regularly while contractors are incurring added expenses from delays caused by supply chain disruptions, shortages of skilled labor and rising interest rates,” Simonson said. “Some owners may delay or cancel projects as the price to complete them continues to increase, threatening to undermine overall demand.”

A 3 percent jump in the producer price index for new commercial construction – the measure of what a fixed group of contractors estimate they’d charge to build a specific set of nonresidential projects – occurred from September 2022 through October 2022. Over the past 12 months, the PPI increased 11.2 percent and 20.2 percent over the 24-month span from October 2020 through October 2022.

Simonson added that the input price, however, does not capture contractors’ added costs from materials that are not delivered on schedule. It also doesn’t include rising wage rates and overtime pay, nor does it factor in the financial costs associated with delays.

Several material categories posted double-digit spikes in October as compared with 12 months earlier. The PPI for diesel fuel soared 9.8 percent for the month and 61.5 percent year over year. The index for cement, Simonson says, rose by 2.5 percent last month, bringing the year-over-year increase to 13.4 percent. And the index for architectural coatings – such as paint – surged 1.1 percent for the month and a whopping 27.5 percent over 12 months.

“Tariffs and regulations are making construction more expensive,” said AGC of America CEO Stephen Sandherr. “If left unchecked, they will undermine private-sector demand for projects and limit the impacts of new infrastructure investments.”

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Digital Skills Gap Amplified by Pandemic, AGC Survey Says

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

As construction industry workforce shortages have grown since the pandemic, so has the measurable gap in digital skills, according to a recent Associated General Contractors of America member survey.

The survey, conducted in July and August, polled 1,266 individuals associated with construction companies of all sizes from across the U.S. Survey findings revealed that 47 percent of firms are boosting internal spending on training and 25 percent are increasing their budget dedicated to online skills training. Companies are seeking to replace long-time workers who retired over the past two years as well as add positions to keep pace with increased project loads.

“More than one-half of all construction companies surveyed said they’re engaging with career-building programs offered by universities, training centers and other educators,” said Allison Scott, director of construction thought leadership and customer marketing at Autodesk, developer of design and make technology for architecture, engineering and construction firms. “A total of 16 percent reported that they’re using augmented reality and virtual reality to help train their workers.”

The industry’s increased demand for those experienced in using construction technology is putting the squeeze on already tight workforce supply. “Digital nomads,” defined by Scott as those who have not yet adopted construction technology, are recruiting hard to attract digital natives, those who’ve been using construction technology since its inception.

In addition to AR and VR, examples of sought-after construction technology skills include fluency in estimating software, building information modeling, mobile apps, construction management software and drone operation.

“Trying to stay ahead of the curve is extremely challenging for construction companies that haven’t consistently adopted industry technology as it has been introduced,” said Scott. “Future growth of their companies depends upon it.”

AGC of America Chief Economist Ken Simonson agrees.

“It will take time to see companies’ training initiative bear fruit,” he said. “Right now, too few people are prepared to work in this industry.”

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Industry Still Struggling to Find People, AGC Survey Says

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The Associated General Contractors of America’s latest workforce survey reveals that 77 percent of construction industry job candidates either lack the necessary skills or cannot pass a drug test.

A total of 1,266 individuals coast to coast representing all sizes of companies and all sectors weighed in on the survey during July and August.

According to AGC Chief Economist Ken Simonson, 93 percent of construction firms surveyed reported they have open positions they’re seeking to fill. Among those firms, 91 percent are having trouble filling at least some of those positions.

“Construction workforce shortages are severe and having a significant impact on construction firms of all types, all sizes and all labor arrangements,” Simonson said. “These workforce shortages are compounding the challenges firms are having with supply chain disruptions that are inflating the cost of construction materials and making delivery schedules and product availability uncertain.”

More than half (55 percent) of Missouri respondents indicated that their construction firm’s headcount has increased over the past year. Estimating personnel are the most needed salaried positions, according to Missouri firms, followed by project managers/supervisors and engineers.

Regarding the direst needs for craft workers, 91 percent of Missouri construction respondents identified concrete workers and carpenters as the most sought-after tradespeople, followed closely by cement masons and laborers.

Missouri’s surveyed response to the problem of filling available construction industry positions of all types tracked closely with the national statistic. Seventy-six percent of Show-Me State respondents identified job candidates’ lack of transferable job skills and inability to pass a drug test as the greatest barriers to hiring.

A total of 89 percent of those responding from Missouri companies of all sizes said their firm has increased base pay rates and/or benefits in the past 12 months. Eighty-two percent of those surveyed who work in Missouri reported schedule delays due to longer lead times, material shortages or both. More than half (54 percent) said upcoming projects have been canceled, postponed or scaled back due to increasing costs.

For more detail on the AGC’s latest construction industry workforce survey results, see https://www.agc.org/news/2022/08/31/construction-workforce-shortages-risk-undermining-infrastructure-projects-most-contractors-struggle.

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