Two in, 10 out.
That’s no riddle. It’s a scorecard for a construction labor force in free-fall. For homebuilders, this count-on-your-fingers arithmetic could spoil what may be a heroic role they believe they’re destined to play: Economic knights on white horses. The math of residential construction’s skilled human workforce—especially when building new homes stands as one of the few true beacons of economic clout in a pandemic market dangling on the brink—looms as a showstopper.
Added up, it’s like this. No influx of new talent into the ranks of the building trades, no housing-and residential investment-led recovery from an almost sure return into recession in 2021.
The tally cuts at both ends of the skilled labor continuum: a scant few come in, and even fewer stick to it; lots of older workers exit. For every new entrant into one of 25 or so construction fields essential to building America’s shelter, five site-tested, skilled, and reliable tradesmen and women “age-out” or are injured out of the field. Two of every five workers in the building trades is on pace to retire by 2031. So, whereas housing activity itself may be projected to expand actual job openings by as much as 10% in the next eight years, the size and capacity of the workforce is barreling in the inverse direction.
At its alarming rate of attrition, three counter-trends kick into algorithmic play. One, is a sheer hollowing-out of the technically skilled human force in absolute numbers, where job openings outnumber hires, and where job quits outnumber new job seekers. Another, more hidden bleed impacts the work that does get done by a depleted universe of laborers. If older, more skilled, more proven workers retire at the rates they are doing, it means that both the efficiency and quality go down, and mistakes—and costly call-backs and fixes—go up. A third, even more masked but powerful factor, is the disappearance of building trade contractor firms themselves, given that no second or third generation posterity plans to follow in their dad’s or their mom’s footsteps in the field.
Together, the trajectories—each exponential—add up to a sopping wet blanket at a critical juncture. Call it construction’s pre-existing condition. From 2007–2013, the construction industry lost more than 2,300,000 jobs and more than 150,000 companies. As the industry began to recover and demand for housing grew, however, workers did not come back, leading to a severe shortage of labor. As of late September, construction already recovered 64% of the 1.1 million jobs lost in March and April, and has more than 260,000 open positions, according to the Bureau of Labor Statistics. Four out of five construction firms report they’re having a hard time filling open positions.
For builders, this time-released diminishment of human capacity bodes ill not just for individual firms, but for all, given that they all draw from the same mostly local and regional contractor pools. They need an inflection, effectively to reverse the negative outflow of human skills, tipping it back to an inflow.
What they typically do when one or more of the essential resources they need to develop and build more homes gets scarce—like land, capital, materials, and, in this case, labor—is wait. That’s right, do nothing. Time passes, cyclical forces play out, and, normally, workers become plentiful at cheap, predictable rates. This time, not so much. This time, in fact, things are that bad, and the opportunity just ahead—for housing to work as an engine of the next economic rebound—is that good, for a call to action. Even more than that, a call to work together.
A Call To Action
“We’ve recognized we had a skilled labor shortage problem for the better part of a decade, and we’ve been talking about it for at least that long,” says Sheryl Palmer, chair, CEO, and president of Taylor Morrison, a top-five ranked home building enterprise by volume and revenue. Palmer also heads a new, multi-million-dollar, cooperative investment initiative among 20 national firms who call themselves the Leading Builders of America, the Building Talent Foundation. The role of the BTF, with no time to lose to try to reverse the hemorrhaging trend as the economy creaks and grinds into a likely first quarter recession, is to turn the talk into action, and the action into a collective resolve, and the resolve into results: a “cavalry of 100,000 new individuals” making the building trades their source of livelihood in the next decade.
“We have to do a better job as an industry,” Palmer says. “This issue hit each competing firm differently over the years. Now, it’s everywhere, across the board, and intensifying. No single company can solve it. It’s going to take a village, and it’s going to take training, powerful recruitment marketing, support for those newcomers to the field, and new matching data and technology platforms to amplify our messages of opportunity precisely where people most need it right now.”
Builders—especially ones whose operations serve Sunbelt markets with the highest new home activity levels and have dealt with acute labor capacity constraint for years—have put in effort, in their own way, to do something about the problem of a shrinking skilled workforce.
“We tried pushing our own initiatives,” says Mike Humphrey, who for 33 years has been strategic sourcing and supply chain executive at Houston-based David Weekley Homes. “We hit roadblock after roadblock, because we didn’t have a clue about all the different moving parts that needed to be coordinated to make our efforts work.”
Doubling-Down On Building Talent
Enter Branka Minic, a force-of-nature star-aligner. Her focus is on the mechanical moving parts and tedious details of construction labor’s supply and demand curve. Minic, after 16 years at Manpower Inc. and her own human resources and placement consultancies, stood as a revered expert in creating linkages where there had been none between employers in technology and IT and elusive talent pools. In industries where mismatches defined a wedge between need and opportunity, she designed the ecosystem of influencers, trainers, recruiters, placement specialists, on-the-job mentors, and—all important—untapped universes, often hiding in plain sight, of capable, hungry individuals.
Work on connecting the intricate linkages that would connect builders, contractors, manufacturers, distributors, training centers, public agency funding sources, and, ultimately, the future building tradespeople at the school level, the pandemic-displaced worker level, the returning armed services veteran level, etc., got off the ground almost 10 months ago.
“She’s done things to kickstart this that we never would have, nor could have gotten done,” Humphrey says. “She’s a very independent, driven person, and she truly makes this her purpose, caring about both the young job seekers and the people hiring them.”
As CEO of the leading builders group BTF, Minic’s job is simple to frame out, but hard to do. The goals focus on three core areas:
- building a talent pipeline— engaging with young people, in schools and in communities to encourage their interest and exploration of careers in construction;
- building talent connections—supporting and strengthening education partnerships where job seekers are, and the training programs, tools and platforms where employers seek new talent; and
- building talent engagement— leveraging innovative talent management technology and advancing workplace practices for recruiting, hiring, developing, engaging, and retaining workers in construction.
In addition to the mechanics of private and public linkages that center on young people in need of a skill and a job, and connect up the food chain to contractors and homebuilders, with product manufacturers and installers in the mix, BTF is also spooling up a big data play. Raleigh, N.C.-based Futures Inc., a tech company with platforms that connect jobseekers to employees is developing specific market-based approaches to create robust matches where currently they’re but a trickle. “We want to customize their data platform to make it construction sector specific, national in scope, but regional in the ways it can zero, for instance, into economically more vulnerable areas, where we can spark new opportunities for training, work, and careers.”
The BTF Pilots In Action
After months of laying the groundwork with local builders, suppliers, and trades, and with high schools, community colleges and nonprofit training providers, BTF launched early this fall in five pilot initiatives in Arizona, Florida and Texas. The proof-of-concept programs also aligned with workforce initiatives spearheaded by homebuilders associations, and engaged with government programs that support reskilling and on-the-job training of unemployed people for high-demand jobs.
One of the three pilot programs, at Orlando-area Valencia College’s community college carpentry training program, which has paired up with local government public sector funding from CareerSource Central Florida, and with the spark from BTF, placed its first graduates with TopBuild-owned Advantage Glass, an installation services firm.
“I’m confident that launching now allows us to be a catalyst that can drive more talent into construction’s current growth as part of an overall economic recovery,” Minic said. The five proof-case programs—which themselves could place several hundred newly recruited, trained, and supported young tradespeople into jobs deemed as “essential businesses,” irrespective of any local lockdown measures that COVID-19 may necessitate by early 2021.
The stakes could hardly be higher. As the economy teeters once again, likely to dip back into negative growth territory under the weight of the coronavirus’ third—most devastating yet—wave of spread, hospitalizations, and deaths, homebuilding stands tall as a claw-back strategy.
For each $1 invested, residential construction contributes $3.08 to GDP, supports 21.66 jobs, and generates new personal earnings of $1.08. These multipliers are among the highest across major industry sectors, making homebuilding critical to growth and vitality of the US economy.
Picture 21-year-old Jason Verticier, at it in a flood-lit, low-slung warehouse on the Osceola, Fla.-campus of Valencia College, just outside downtown Orlando, measuring out the dimensions of his dreams. First among them, from rough-framing, to mechanicals, to rough finishes, he pieces together a 432-square foot tiny house. With his own hands, over a three-axle trailer, from nothing, it comes into being. Fast-forward a few years, and you can surely get why he foresees his growing skill as a carpenter, his experience, his book of client business, and, mostly, his drive to become the Jason Verticier of his dreams shaping into something bigger. In that mid-term future path of ambition, his very own company, perhaps a side-business to his parents’ air conditioning outfit in his home town of Boca Raton, FL, or perhaps, even, a parent company to his mom and dad’s firm.
“From as early as 12 years old, my dad took me to different jobs sites where I learned how to use my first set of tools,” Verticier says. “The job sites ranged from houses, small businesses, and active construction sites. I performed a variety of tasks such as transporting units from the warehouse to different job sites, servicing, repairing, and installing air conditioning units for [his parents’ company] J&D Air Conditioning Multi-services. I left home after graduating from West Boca Raton High School and I moved to Orlando to build myself in my desired career path, Carpentry, which will also benefit my family’s business in the future.”
Verticier carries the mantle of raised hopes for an industry straightjacketed by its skilled-workforce constraint since the Great Recession. But he’s not the only one.
The tiny house phenomenon’s spell also worked its seductive magic on 32-year-old Samantha Snyder, a class-mate in the same construction training boot-camp at Valencia as Jason. This time last year, Snyder pored over reems of social behavioral data as a doctoral candidate in gender and occupational psychology in Western Massachusetts. Now, driven by the pandemic back to Florida, closer to her family in the Orlando-area, she reset her dreams on a much more practical, real-world, physical path. developing tiny house communities to battle housing’s affordability crisis, and of launching workshops for young adult women that would train and motivate them to make successful careers in home construction.
“A few years ago, I never would have imagined myself going into construction,” Snyder says. “If it hadn’t been for the pandemic and its bringing me back to my family and forcing me out of work, I may never have stumbled into training for what I’m doing now. I’m a very petite person, so it’s important for girls and women to see that—despite the physical barriers—we can meet the physical requirements, and make careers in construction.”
Owing to the Valencia College program, Jason and Samantha have got enviable skill-sets in one of the K-shaped pandemic economy’s rare truly solid, multiplier-effect business and industry arenas, new residential construction. Verticier, in his way, and Snyder in hers, radiate case-history success as poster-children, newly minted out of a new muscularly road-mapped recruitment, training, and retention blitz that for the first time in decades has started to mine American society’s diverse pools of young people for those who’d choose construction as their vocation.
“It felt amazing once I started work on that tiny house, and began really putting everything I learned at Valencia, the carpentry, the plumbing, the electrical all together on that project,” said Verticier. “The training helped me begin to learn for myself so that I could make my own way, and one-day run my own building company.”
“A True Partnership”
These two young people—and several hundred more who are currently or about to funnel into a five-market proof-case pilot program get to literally “live the dream” amidst what homebuilders view as their worst nightmare—a tsunami of demand for new homes and not enough skilled workers to build them.
“A true partnership is where everybody in it has to work at it, and then it becomes a really solid relationship,” said Linda Leto Head, Senior Associate Vice Chancellor for External and Employer Relations, at LoneStar College, whose BTF program is just starting, with several tracks home builders helped with the curriculum (Construction Core, HVAC, Plumbing, Electrical), and funding from Texas Workforce Commission. “BTF is an awesome group of leaders, and they’ve pulled together the right people to take part in the partnership, and the cool part is, they’ve already brought competitors together to collaborate. That work is done.”
File this one in the abject-misery-is-heartwarming-opportunity bin in real estate, construction, and economics, amidst a menacing, four-headed monster crisis—economic, health, social, and climate—of uncertainty ahead.