Many trades are underpaying their labor, with the education and qualifications that they have while some trades are overpaying their employees who have little to no education. This is causing numbers to flex within the Bureau of Labor Statistics. Companies are now taking precautions when it comes to keeping their employees and not losing them to their competitors. Do you think a construction hourly wages increase will keep employees from leaving their current job?
According to the Associated General Contractors of America, construction firms have increased their hourly wages in hopes of getting applications from highly skilled and trained workers, as the labor pool continues to decrease. Over the past year, construction wages have increased by 3.2% equaling $30.73 per hour. The private sector isn’t even at this height, with an average of $27.90.
With many workers being under-educated and not trained properly, the AGC has increased their budget for training along with the increased hourly pay. This is looked at as a good thing, because under educated trade workers can result in OSHA violations, unwanted injuries, and jobs that are not done properly. Although, it has a big impact on the cash flow of these companies.
Over 146,700 jobs were added which resulted in job growth just within the nonresidential sector. Residential contractors stayed the same, holding steady 78,000 jobs during this time according to Federal data.
The Tight Labor Market of Construction
This is “one of the tightest labor markets” stated the CEO of AGC Stephen E Sandherr.
This statement was made regarding the scarcity of trained labor in the construction industry. As a result of the increase in wages, the labor market is on a tight leash per se. According to the Bureau of Labor Statistics, the number of unemployed jobs took a sharp decline as construction employment increased by 3.2 percent over the past year. The number of job openings during May has been the highest it’s ever been totaling 360,000- the highest seen in the history of 19 years.
The CEO of AGC, Sandherr, is considering that much of this lack of growth is resulting from the minimal amount of technical training throughout the United States. He called on the federal government in hopes that they would boost funding for these programs amongst the schools.
He stated, “The nation’s education system continues to produce too many overqualified baristas and not enough qualified bricklayers and other craft construction professionals.” As a result of this, citizens are struggling to pay off their student debt working jobs that underpay while the construction industry is lacking labor.
As of 2018, the construction manager’s median income came in at $44.26 with electricians at $25.75, carpenters at $22.51 and the rest of workers ranging around $24.21. These hourly wages are incredible compared to some of the wages that educated college graduates are making these days.
When it comes to a construction executive who is trying to keep their employees around long term, their number one priority is keeping everyone happy (translation: bumping wages). It is extremely time-consuming and expensive to replace a worker who has resigned. Jay Badame, the President of AECOMS Building Construction division, stated “ I can’t afford to lose one person. If I do, history has shown that it costs me $250,000 to replace that person in terms of recruitment and training. I have to make sure my competitors aren’t stealing my people.”
There have been many strategies implemented by companies to keep their employees. Everything from rom profit sharing, training opportunities, tuition reimbursement and assistance, stocks, and investment opportunities. Many companies will offer raises and extra benefits with accomplishments and quotas that are met.
What do You Think of the Construction Hourly Wages Increase?
Our question to you is, do you think the increase in wages will bring in more labor? The construction industry, while it pays very well, is a very high intensity and exhausting job, especially in states with hot climates. Many construction workers endure long, tiring days and often experience a lot of wear and tear on their bodies. The money may be good enough for a little bit, but eventually, workers may become burnt out and unmotivated. As stated by AGC CEO, this is “one of the tightest labor markets” and we will have to wait to see what happens.