Wednesday, June 12, 2019

Is there really a shortage of construction workers?

See Behind Deadline: Home Projects In Colorado Suffer From Worker Shortage by KAREN SCHWARTZ of the Associated Press.

A shortage means that the price is below the intersection of supply and demand and that the quantity demanded is greater than than the quantity supplied. It does not mean we simply have less of something than we used to. If price were too low, we would expect to see it rise until quantity demanded equals quantity supplied again.

This article talks about a shortage of construction workers. If there really is a shortage, we would see wages starting to rise. But that is not discussed.

Lowe’s offering employees tuition and other incentives might be the equivalent of rising wages since if a worker does not have to pay to learn to be a carpenter, that field becomes more lucrative. But again, the article does not discuss that.

Some of this is driven by retirements, which means a decrease in supply which leads to higher prices (or, in this case, wages). Excerpts from the article:
"Current estimates indicate there are about 300,000 unfilled jobs in the construction industry, and the industry is expected to need an additional 747,000 workers by 2026, according to the U.S. Bureau of Labor Statistics.

An August survey of nearly 375 members of the National Kitchen and Bath Association found that almost two-thirds of the respondents said they had difficulties hiring skilled workers in the previous year, and nearly 70% felt the problem had gotten worse since 2016.

“Labor shortages have impacted start dates and completion dates on construction and renovation projects, with NKBA members citing delays on 30% of jobs,” said Bill Darcy, chief executive officer of the trade association.

A look at 15 different trades found shortages in them all"

"The seeds of the current labor shortage were planted during the Great Recession, when a lack of construction jobs prompted many workers to leave the industry.

“Not enough of them have returned to help us close the gap,” Darcy said.

Compounding the problem is the graying of the remaining workforce, with the median age for a construction worker at 42.5 years, according to January figures from the Labor Bureau. It’s estimated that for every five workers retiring from the industry, only one is entering it"

"Players in the industry are ramping up efforts to address the impending crisis, launching incentives to try to recruit new workers, especially young people, to the trades."

"Lowe’s last year started offering employees tuition and other incentives to train for jobs such as carpentry, plumbing, and appliance repair."

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