How Workforce Shortages are Impacting the Construction Industry, and What We are Doing to Help

The Associated General Contractors of America and Autodesk each year partner to measure the state of construction workforce shortages. The results of this year’s Workforce Survey show that construction labor shortages remain severe. Ninety-one percent of firms report they are having trouble filling at least some of those positions, particularly among the craft workforce that performs the bulk of the on-site construction work.

One of the main reasons labor shortages are so severe in the construction industry is that most job candidates are not qualified to work in the industry. The most common explanation for difficulty in filling positions, cited by 77% of firms, is that available candidates lack the skills needed to work in construction or cannot pass a drug test.

These shortages are exacerbating the impacts of widespread supply chain disruptions that have made it difficult for firms to get materials delivered on time and that are driving up the cost of those materials. Eighty-two percent of firms report projects they work in have been delayed because of supply chain challenges and two-thirds – 66% – have projects that have been delayed because of labor shortages.

Supply chain problems and labor shortages are making construction more expensive. Eighty-six percent of firms have raised base pay rates for their workers while 70% have passed along rising materials costs to project owners during the last year. Fifty-eight percent of respondents report owners canceled, postponed or scaled back projects due to increasing costs.

In short, labor shortages and supply chain problems are making it more expensive and more time-consuming to build projects today. These increased costs and delayed schedules are undermining demand for construction, as a significant percentage of owners seek to delay, downscale, and cancel projects in the face of rising costs and slower schedules.

The main culprit for these workforce shortages is that too few people are being prepared with the skills needed to work in the industry.

Many construction firms are working aggressively to cope with and/or overcome workforce shortages. In addition to raising base pay rates, 45% are providing incentives and bonuses and a quarter of firms have also improved their benefits packages.

Beyond improving compensation, they are also getting more involved in preparing future workers for careers in construction. Fifty-one percent of survey respondents – up from 37% in the 2021 survey – report they have engaged with career-building programs such as high school, college, or technical school construction programs.

The Associated General Contractors of America and chapters like the AGC of New York State are supporting the industry with a broad range of workforce development initiatives. This includes the national association’s Construction is Essential targeted digital recruiting campaign and its Culture of Care workplace retention program.

We are also calling on federal, state and local leaders must invest in the kind of career and technical education programs that will expose more existing and future workers to the many career opportunities that exist in construction. These programs also provide the kind of essential skills employers are seeking.

Public officials must also continue working to untangle supply chains. These supply chain problems have a similar potential to undermine new infrastructure and manufacturing investments as do labor shortages.

Addressing labor shortages and supply chain problems will ensure that the construction industry can upgrade America’s infrastructure, modernize our manufacturing sector and help deliver a more reliable and cleaner energy grid.