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Can immigration and millennials save construction in the US?

Date: 06 July 2017

As most people are aware, there has been a dramatic increase in the mainstream discussions around immigration, border controls and visa restrictions in the US.

According to a paper published earlier this year by the National Bureaus of Economic Research, President Trump’s policy changes surrounding immigration could cost the US economy up to $5 trillion over a decade.1 If these changes continue to restrict immigration they may struggle to deliver on another campaign pledge: to renew America’s economic growth.

But it’s not just the immigrant workforce that’s commanding column inches, much has been written about millennials and their approach to work, too. Millennials are often unfairly labelled as entitled or opportunistic when in fact the majority are looking to add value, make an impact, and have a clear sense of purpose in a job role.

With the construction industry struggling, could an increased immigrant and millennial workforce be the answer?

From boom, to bust, to boom

In 2008 when the market crashed, a large proportion of workers were forced to look for alternative employment, with many leaving the construction sector altogether. Nearly ten years later, the industry is booming once more; data from Sageworks revealed that seven of the top ten fastest growing industries in the US are related to construction.2

Among those are building finishing contractors; residential and non-residential builders; foundations, structure and building exteriors contractors; mechanical systems contractors (such as electricity, water, elevators, heating and cooling); and civil engineering construction.

Despite this rapid expansion, millennials are opting for non-construction-related career paths as many older generations begin to retire. In addition, the share of undocumented workers had started to fall long before the Trump administration came into power. Mexico’s strong labor market has seen more workers traveling south across the border than north.

A clear rising issue in construction recruitment is that young adults are far less interested in the construction trades. A recent survey by the National Association of Home Builders revealed that of the 74% of 18 to 25-year-olds who know the career fields they wish to pursue, just 3% have chosen construction.3

A perfect storm

The construction industry is in crisis with growing demand for new homes, offices, malls and transport infrastructure. Healthcare construction is just one example. Figures from FMI’s US Markets Construction Overview 2017 show that healthcare construction spending in the US reached $41.4 billion last year.4 This figure is predicted to grow by 4% in 2017, rising 5% annually to reach $51.1 billion by 2020.

The gap between supply and demand could be described as a perfect storm. A combination of record-low unemployment; an aging workforce; an increase in the number of students going to college; widespread redundancies during the recession (with many not returning to construction); and the huge demand for affordable housing have had a significant impact on the industry.

Rebuilding the construction industry

Contractors are facing huge competition to fill roles. A survey conducted by the Associated General Contractors of America found that 73% of firms questioned said they struggled to find skilled workers.5 Meanwhile, 76% expect this shortage to continue into 2017, with the problem either staying the same or getting worse.

Much of the workforce is attracted by the higher paid roles found in stadium or corporate headquarter construction projects. In order to attract workers, employers are having to offer more competitive wages and better benefits for construction workers.

We are also seeing more internal training programs being offered. Craft skills are being taught in sought-after areas such as concrete, steel, and solar construction, and career path programs are also being set up in a bid to entice a new generation of workers back into the industry.

How the industry can attract top talent

The construction industry needs to be strategic in planning its recruitment, retention and training packages. For example, data from the National Association of Home Builders shows that the average age of construction workers in the US is 43 years.6 Immigrants living in the US since 2000 and working in construction are younger, with half of them aged 32 and below. Attracting a combination of younger immigrant workers alongside newly-engaged millennials would help the industry win the war for talent.

The construction industry is also working hard to increase diversity in its workforce. Male employees with a background in engineering remain the dominant demographic, so the more companies can dip into non-traditional talent pools the better.

Other ways companies are attracting talent include embracing new technologies, emphasizing a better work-life balance, and harnessing the power of greater collaboration.

If organizations think strategically and plan for the long-term, the construction crisis could soon be a thing of the past.

Immigrant and millennial workers may offer a viable solution, but only if companies are able to take full advantage of this opportunity.

References

1 http://www.nber.org/papers/w22834

2 https://www.forbes.com/sites/sageworks/2017/04/09/the-10-fastest-growing-industries-in-the-u-s/#4869d46c1ef2

3 http://eyeonhousing.org/2017/04/young-adults-the-construction-trades/

4 https://www.fminet.com/wp-content/uploads/2017/03/USOverview_FINAL-1.pdf

5 https://www.agc.org/news/2017/01/10/seventy-three-percent-construction-firms-plan-expand-headcount-2017-contractors

6 https://www.nahbclassic.org/generic.aspx?sectionID=734&genericContentID=241345&channelID=311

Tagged In: LVI Associates
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