Most construction firms project demand for their services and hiring to expand in 2020, but even more firms are worried about their ability to find qualified workers to hire, according to a survey conducted by the Associated General Contractors of America (AGC) and Sage Construction and Real Estate. The survey, Strong Demand for Work Amid Strong Demand for Workers: The 2020 Construction Hiring and Business Outlook Report, reports 75% of firms plan to increase headcount in 2020, but 81% of respondents reported they are having a hard time filling salaried and hourly craft positions.
“Contractors are very optimistic about demand for construction in 2020,” said Stephen Sandherr, CEO of the AGC, in a prepared statement. “At the same time, many construction executives are troubled by labor shortages and the impacts those shortages are having on operations, training and safety programs, and bottom lines.”
Of the firms planning to expand in 2020, just over half of the respondents report their expansion plans will increase the size of the firm by 10% or less. One in five respondents plan to increase headcount by 11-25% and only 5% of respondents plan to increase employment by more than 25%. In addition to the firms currently having trouble hiring qualified workers, more than 40% of firms expect it will continue to be hard to hire in the next 12 months and nearly a quarter of firms expect it will become even harder to hire in 2020, according to the AGC.
A shortage in skilled labor is having an impact on construction costs and project schedules. More than 40% of respondents reported staffing challenges drove costs higher than expected and, as a result, 41% of firms are putting higher prices into new bids and contracts. Nearly a quarter of respondents are also putting longer completion times into bids and contracts.
To combat the labor shortage, firms are investing in more training programs for current and new workers, are increasing pay and providing bonuses, and are increasing information technology spending. Two in five respondents to the AGC survey reported they revamped initiatives to recruit labor in 2019 and around one-third reported increased funding for technical education programs. Two in five firms reported they increased base pay rates more in 2019 than in 2018 and around a quarter of respondents provided incentives and bonuses for current employees. Nearly half of the firms participating in the survey indicated they will increase their information technology investments in 2020.
Despite labor concerns, a majority of firms are optimistic for the construction industry in 2020. The percentage of respondents who expect a market segment to expand exceeds the percentage who expect it to contract in 2020.
The report from Sage and the AGC was based on survey results from nearly 1,000 firms from 48 states. Contractors of every size answered over 20 questions about hiring, workforce, business, and information technology plans.
