Rebuilding Skilled Labor, Part 1

by: Smith and Howard

June 15, 2017

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As Georgia and the nation’s economy continues to bounce back from the financial crisis a few years ago, growth in Atlanta and the state is thriving. Natives and newcomers alike have become accustomed to data that tells them people are flocking to the peach state. And the evidence is reflected at every turn; highways are multiplying, cranes are lifting and buildings are gleaming. Needless to say, development in Georgia is one hot topic.

A Little Background

For the past 50 years, Georgia’s population growth has exceeded the national growth rate. The local construction and real estate industries have clearly tracked alongside those trends, despite dips during the recession of 2009-2012. The National Association of Homebuilders (NAHB) estimates new housing starts in the U.S. are now 1.2 million annually, while counting cranes in Midtown Atlanta produces a tally of 19 in a 1.2 square mile area.

According to an analysis of new government data by the Associated General Contractors of America, construction employment increased by 5,000 jobs in April of 2017 to the highest level in almost a decade. Association officials noted that average construction hourly earnings are up 2.1 percent compared to a year ago, and construction workers now make $28.55 per hour on average.

Georgia on the Rise 

Smith and Howard recently conducted a survey of Georgia real estate and construction professionals to gauge their perspective on current conditions and future challenges for the industries. “Georgia on the Rise: Trends in Real Estate and Construction” detailed areas under expanding growth, obstacles to be overcome to aid future growth, and ways the new administration may affect the landscape. At a special event to unveil the results, real estate and construction professionals shared perspectives and predictions with an audience of their peers. Their observations contributed to a general message of optimism for the future, with one caveat: a serious shortage of skilled labor.

The Lack of Labor

The Smith and Howard survey showed 60% of respondents questioned said the greatest threat to construction businesses over the next 12 months is “Finding skilled labor.” In addition, 63% of survey respondents stated that the lack of skilled labor kept them from bidding on projects over the past 12 months. A 2016 National Association of Home Builders survey reflected correlating trends. Seventy-five percent of those builders surveyed said they’re paying higher wages and 68% said they’ve raised home prices.

“The need is critical. We have to step up our game,” said Mike Dunham, CEO, Associated General Contractors (AGC) of Georgia, Inc., the leading, statewide professional trade association representing the commercial construction industry in Georgia. “This is the industry’s problem.”

Solving the problem requires thorough understanding of its causes. Several factors are contributing to the shortage of electricians, plumbers, welders, heavy equipment operators, concrete finishers, HVAC installers and other skilled laborers. One cause is the lasting effect of the recession, when 40% of the workforce – 2.3 million jobs – was eliminated. A significant percentage of that workforce has not come back.

The graying of the remaining workforce is another factor. According to Dunham, out of 863 AGC supervisors, 60% are over age 50 and 26% are over age 60. Yet finding replacements for this burgeoning number of seasoned pros isn’t easy.

No More Shop Class

Unlike earlier decades, when vocational-technical schools were considered worthy education paths by many young people, those opportunities aren’t readily available to today’s students. High school curriculum has drifted away from construction related courses such as introduction to carpentry. Most schools have eliminated “shop” and vocational education tracks. School counselors, with less time to tailor career advice to individual abilities and interests, have routinely guided students toward a liberal arts education. Panelists noted, however, that statistics show only seven out of ten high school graduates attend college.

The inequity in the numbers points to opportunities – and responsibilities – for the construction industry.

Georgia on the Rise panelist Scott Shelar, of the Construction Education Foundation of Georgia said, “We’ve got to use a proactive approach to get into middle and high schools. We’ve got to make them aware of the opportunities in skilled trades.”

Showcasing Construction Careers

The Construction Education Foundation of Georgia, CEFGA, has partnered with construction executives to promote careers in construction in Georgia schools. CEFGA is known for many of its initiatives, especially the K12 Pipeline, which consists of over 150 skilled trade construction and metal programs made available to students. Another initiative is “Construction Ready,” which fast-tracks workers who attend boot camp-type training and are placed in full-time construction jobs. Completion of the SunTrust Park and work on the Mercedes-Benz Stadium has been accomplished with the help of Construction Ready graduates.

Still, the struggle is real. CEFGA reports Georgia’s skilled trade employment is currently 180,000. Projected needs through 2019 are 231,000, a gap of 51,000.

“It takes years and years of experience to be a superintendent,” said Jenny Horton, Collins & Arnold Construction Co.” In our opinion, it takes 10 years to groom a superintendent.” Collins & Arnold Construction Co. is a local leader in educating students about the industry and how one can develop a long lasting career in construction. Horton said she devotes more time in workforce development than any of her predecessors, because the market has changed so much.

Adapting to the Millennial Lifestyle

“For every person looking to retire, I have to hire two people,” she said. “Millennials have different priorities. The live-work-play balance now is different. If you insist they work the way we did, you (business owners) will be disappointed. You are going to have to change the way you think,” Horton said.

Horton has learned that flexibility is very important to younger employees, and at Collins & Arnold Construction Co., there are no set office hours. Technology has also changed the landscape, with employees able to work from any location, “24/7.”

Dunham said the construction industry hasn’t told its story very well, and that more effort must be put toward making young people aware there is opportunity for great rewards in construction. The CEFGA initiatives are viewed as a vital beginning, and incentives including higher compensation and benefits, training, enhanced recruiting and signing bonuses to retain workers are integral as well.

Dunham believes growing the workforce can be linked to a basic human instinct to create, and he’d like the industry to consider the raw talent seen as early as the Kindergarten play yard.

“Kids come onto this planet as designers and builders,” he said, recalling the joy of Tonka trucks, sand piles and the gripping sounds of heavy equipment on a construction site. “Somehow, somewhere along the line, that gets lost. We should always have that energy, and never lose the thrill of building,” Dunham said.

Jenny Horton seconded that plan.

“Take your child play and turn it into a job!”

Paul Atkinson and Mark Abrams, our construction and real estate team leaders, put together a real estate and construction survey earlier this year to gain insight on the challenges and trends in each industry. Survey respondents revealed interesting perspectives about the current and future state of their industries.

To view the results from Georgia on the Rise, click the image below. Updates will be posted every two months in our bimonthly newsletter, Georgia on the Rise. Rebuilding Skilled Labor Part 2 will be featured in the August issue of Georgia on the Rise.

As always, if you have any questions and would like to speak with a Smith and Howard professional, please fill out the contact form below or call 404-874-6244.

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