Like most sectors of our economy, the construction industry is suffering from a shortage of workers. The U.S. Department of Labor reports that there are over 350,000 unfilled construction positions at present, and since the unemployment rate for construction workers has been below four percent for well over a year, it is difficult to see where these workers will come from. In fact, a recent Associated General Contractors-Autodesk survey of construction companies found that 85 percent of firms had open positions for hourly craft workers. Of those firms with openings, 88 percent report having a hard time filling them.

In the near term, an economic slowdown should ease the situation. We’ve already seen a downturn in the residential sector, with housing starts off about 25 percent from their recent high in the spring of 2022. While nonresidential construction has been unexpectedly strong this year, most forecasters predict a significant easing of growth in 2024, particularly for the commercial sector.

However, this predicted pause will only temporarily take the pressure off the core problem facing the construction sector: where will the future workforce come from? There are three potential strategies to deal with these needs — increase the number of foreign- born workers in the industry, attract more women to construction, and increase the technological support to make the current workforce more productive. To ease future worker shortages, there likely will need to be progress on all three.

About 30 percent of workers in the construction trades are foreign-born. This compares to about an 18 percent share in the national labor force. After dropping significantly at the start of the pandemic, the number of foreign-born workers has risen to its highest level in 25 years. If the current pace of immigration continues to increase — a big if given the extent to which immigration has become politicized — this will help offset the need for workers in the construction trades.

Secondly, construction has long been an unpopular career path for women. Only about 14 percent of payroll positions in construction are held by women according to the Institute for Women’s Policy Research even though women currently account for 47 percent for the overall civilian labor force.
More telling, though, is that women account for only just over four percent of construction trades positions. In spite of the disappointing numbers, the Institute for Women’s Policy Research points to a few signs of progress. Women are much better represented in the building inspector and painter and paperhanger categories where they account for over 10 percent of the labor force, as opposed to plumbers and electricians, where women account for only about two percent. Also, women have made better inroads as construction managers, where they account for almost 9 percent of payroll positions.

Finally, for construction, as well as most of the rest of the economy, future labor force shortfalls will need to be at least partially offset by productivity gains. Construction has long had a reputation as an industry with low productivity growth. A recent academic paper concluded that while worker productivity in the U.S. economy has more than doubled since 1950, in construction it has remained flat at best.

However, the construction industry may be entering a period of technological breakthroughs. A recent national survey of architects conducted by The American Institute of Architects reports that there are several technological enhancements that are expected to be more fully incorporated into the construction process over the next five years. These include increased offsite construction (76 percent of respondents felt that this was very likely to occur); drones (61 percent); enhanced construction materials (57 percent); and geospatial technologies (49 percent). 3-D printing, robotics and artificial intelligence also scored fairly high in terms of the likelihood of being incorporated into construction processes over this period. Between these three strategies, construction hopefully will be able to better meet future labor needs.

Kermit Baker is the chief economist at the American Institute of Architects. He can be reached by email at [email protected].