A severe shortage of skilled labor in construction has been ramping up for a decade now, but as an industry, we seem to be just as far from solving it as we were when it started.
The National Association of Home Builders (NAHB) characterized the shortage this way: “More than four out of five builders expect to face serious challenges regarding the cost and availability of labor in 2019 … Just 13% of builders cited labor issues as an important concern in 2011, with the rate steadily rising over the ensuing years and peaking at 82% in each of the last three years (2017–2019).” [NAHBNow]
The NAHB/Wells-Fargo Housing Index surveyed builders, reporting that 83% of builders are hindered by shortages of framing crews and rough carpenters, 78% by a lack of finish carpenters, and 70% to 73% by shortages of bricklayers, masons, and concrete workers. Nearly every trade is listed in the report—including all mechanical trades, interior finishing trades, even landscapers, excavators, and weatherization workers—with more than half of builders feeling hindered by not being able to fill these key positions.
Similar numbers are posted in the remodeling sector: The NAHB Remodeling Market Index reported that roughly 85% of remodelers reported shortages of workers available to perform finished or rough carpentry, and nearly half (48%) classified the shortage of finish carpenters as "serious."
The McKinsey Global Institute, a think-tank that has surveyed construction progress worldwide for decades, assesses the damage this way:
“Labor availability is the primary concern of homebuilders ... Due in part to a 70 percent decrease in new housing starts from 2009 to 2011, a large number of skilled workers left the industry. Demographic shifts, from an aging population to a lack of interest from young workers, are also reducing the pool of skilled workers. To compound the challenges, productivity growth in construction has been flat over the past 20 years, compared to 3.5 percent for the manufacturing sector and a global average of 2.8 percent.” [McKinsey&Co]
In this article, I want to unpack those demographic shifts and focus, ultimately, on the root causes underlying the “lack of interest” from younger participants in the building trades. What never gets discussed in industry reports, but may prove to have the greatest impact on the lack of youth participation, is the issue of social class.
Where the various sectors of the construction industry do align with positive media and technologically sophisticated challenges, young participants are showing a high degree of interest, even showing great innovation and leadership. In the article here, I want to frame the issues and point generally to some pathways that might lead in a positive direction. We will continue to build this out as an on-going thesis for leading change at JLConline.com and provide a range of positive examples over time. Here, the focus is on dampening myths and pointing to prospective solutions, however uncomfortable they might be to consider.
Is Off-Site a Solution?
The McKinsey group (among others) points more and more often to modular and off-site building solutions that lean on robotic and other highly technological processes as the answer that will take home building out of its slump. Following on the quote above, the McKinsey report continues:
“These intersecting realities leave many companies no choice but to implement significant innovations (often digital) to their products and processes. One such innovation is off-site home building. An analysis of 14 leading modular (off-site) builders reveals more than $2 billion of disclosed funding in the market—not including investments by incumbents—led by private equity funds and large technology firms.”
To be clear, the “no choice” part of this boils down to this important fact: The home-building industry, the remodeling industry, even the global construction industry as a whole, are not standing by while the next generation of carpenters and masons is trained. While many in the residential sector remain nostalgic about what used to be, the world roars on. Yet, I think the industry think-tanks are over-optimistic about off-site building. Despite the seemingly massive funding going there, the numbers just aren’t sufficient. Currently, fewer than 5% of the houses built in the U.S. are produced using off-site or panelized building methods. There are some intriguing examples of off-site framing techniques from companies like Entekra and Unity Homes (see “Factory Building: The Next Wave,” Feb/19). These companies show that off-site-framed homes can rival the best stick-built homes in quality and performance. But the capital investments needed to scale this production method for the entire nation far exceed investments in the low single-digit billions. Simply put: We have a long, long way to go before off-site methods replace stick framing.
One point in the McKinsey report that may be underemphasized is this statement: “Incumbents are also starting to innovate: building-products manufacturers have created products that save on labor by combining process steps or lowering the skill level required to install appropriately, and distributors are experimenting with new digital selling tools for contractors.”
On the building materials side, our industry is no stranger to the trend towards component manufacturing, beginning with trusses, plywood, and window and door units. (Remember, there was a time at the beginning of the last century when joiners built doors and windows on site. We have come a long way from that, and the consolidation of steps and joining of systems will continue to bring efficiency to home building and remodeling.)
Building products continue to get more sophisticated, and this brings enormous impacts, both positive and negative, on labor and productivity. In some cases, the impacts have positively increased productivity: Standout examples include MiTek’s Sapphire system that has made truss and panelization quicker and easier to customize; Zip System sheathing that has zipped two processes and two passes around the exterior of buildings into one; and Ready-Frame, which has essentially done for entire house frames what precut studs first did for walls. (For more on understanding the impacts of component manufacturing, see "The Future of Framing," Feb/18.)
But the impacts of material sophistication have also had negative impacts on productivity that raise the bar on the training demand. The number of “engineered” building components that require specific installation instructions defined by Evaluation Service Reports grows by the day, amplifying the need for a more astute, fast-thinking, problem-solving workforce. The technical sophistication of an increasing number of “engineered” products demands that installer-level workers have a broad understanding of the impacts that specialized systems can have on the overall build. But the education system designed to support the trades for the last century has been much more focused on increasing specialization—an ideal born out of manufacturing that is ill-suited to efficiency or quality on building sites.
How Did We Get Here?
The history of public education for the U.S. building trades traces its roots to a few key sources that I’ll touch on here. However much we have progressed as an industry, our legacy continues to define who we are, and not only has a bearing on how we got here, but also suggests steps in a path forward.
As with much of U.S. history, we have a historical ethos established in pre-Revolutionary America that has had a powerful, lingering effect on trade knowledge. History also delivered the Smith-Hughes Act—a Federal law passed in 1917 that forged our national outlook but doomed the performance of vocational education in America. Both deserve attention.
The ethos of home building is epitomized by the Carpenters’ Company, the oldest trade guild in the U.S.—founded circa 1724 with ties to similar European guilds. Mark Luzio presented a lucid description of the business climate for general contractors in the early period in America (see “The Carpenters’ Company,” Jan/17); it was a time of intense cooperation among builders and widespread public trust in the building professions, and created a strong basis for the transfer of knowledge though the trades from Europe to Colonial America that leaked into business practices during the westward expansion. In the new rural communities, the building trades flourished on practical ingenuity and self-taught knowledge. References like Asher Benjamin’s The Architect, or Practical House Carpenter (the professions were largely the same then) and The Farmer His Own Builder (we were an agricultural-dominated country in previous centuries) provided an important transfer of technical knowledge across the U.S.
Fast forward to the early 1900s, when the sheer velocity of technological change created skilled labor shortages in almost every sector of the economy. Home building was disrupted by innovations in industrial lumber processing and early component manufacturing, but these disruptions paled in comparison with what was happening in retail product manufacturing. What once belonged to home craft—the making of clothes, home goods, farm implements, and tools—became the domain of start-up corporate enterprises using steam-driven technology at first, and then electricity, to create entirely new industries.
Educational reform. The biggest disruption of all came from laws aimed at curbing child labor and keeping kids safe. It’s hard to argue with the need for these laws now, but the disruption on the transfer of practical knowledge was profound and often overlooked. Children were no longer taught skills and crafts by working alongside their parents, and suddenly the country had a need to educate millions of children like never before. The solution was to reform public education, and the big change came in 1917 with passage of the Smith-Hughes Act—a bill that provided massive amounts of federal funding to states for vocational education and immediately set in motion programming at colleges and high schools across the U.S. It even allowed the development of vocationally focused Normal Schools in rural areas previously underserved by formal education.
John Hillison at Virgina Tech describes the political atmosphere that allowed passage of the Smith-Hughes Act as a “powerful coalition of unlikely allies ... with initially antagonistic perspectives.” This coalition included the National Education Association (NEA), the National Association of Manufacturers (NAM), The American Federation of Labor (AFL), US Chamber of Commerce, Farmers Union, National Grange, American Home Economics Association, and publications (which at the time, before radio or any other electronic media, were the forms of knowledge transfer with the widest distribution), including Wallace’s Farmer and Hoard’s Dairyman.
Unintended consequences. Unfortunately, the way the Smith-Hughes Act was written, it controlled the salaries of vocational teachers and set limits on what vocational instructors could teach. The intent was to prevent schools from raiding vocational funds to promote academic programs, but the effect led to tracking—educational programming that sorted students into either a college-prep track or a career-training (vocational) track.
The Smith-Hughes Act, which remained in place until 1963, required states to submit a plan to the Federal Board of Vocational Education. These "state plans" were really not written to reflect state priorities, but rather to prove adherence to the Federal procedures required under the law. Many states ended up setting up a separate Board of Vocational Education, outside the state Board of Education, just to ensure it wasn't locked out of receiving the Federal funds. But this meant management and oversight for vocational education was separated from the rest of the state's public education policy, and it's not surprising that vocational training has atrophied and is now often associated more with entitlement programs than with a state's strategic education goals.
Educational philosophers argued they were “fitting people to their probable destinies,” but in effect, these reformers perpetuated, and even grew, a huge class divide. Kids from poorer families who could not afford college tended to be shunted down the vocational track while kids from more elite families were prepped for college. This social divide, more than other pressure, remains an obstacle by limiting the social will to advance "mind and hand" educational solutions today.
A List of Proposed Solutions
Politics is an issue we at JLC tend to avoid. We welcome the fact that we have readers from all facets of the political spectrum, and we don’t mean to support or alienate any one perspective. But on this topic, we are seeking a complete upheaval of public systems and a rewiring of the social consciousness, touching on topics that are political dynamite. Small, palatable gestures, such as fat scholarships to trade schools, or hashtags that foster goodwill, are not enough to move the needle on the change required for our industry. In reviewing the points below, I ask for your open mind. I have made every attempt to balance the options to entertain both public and private options. This is certainly not a problem the government alone can solve; any meaningful solution will require commitments from government, corporations, associations, individuals, and small businesses.
Top of the list is the pointed suggestion that companies that pay employees well and on time do not report much of a problem with skilled labor. If we want to create viable careers for young people in the trades, make jobs as lucrative as possible. These are not so much “dirty jobs” as they are lucrative and challenging, comparable to other top professions. The challenging part is not a problem for our industry, but making it lucrative for all involved is not often written into the business models of builders, developers, and contracting firms. But there are viable exceptions.
David Gerstel is an admirable example of someone who gained financial independence early in his career and ran what he coined an “employee-centered company”—not only paying higher than average wages but also instituting benefits like the four-day work week that allowed his carpenters to prosper as families and individuals in the community. This one shouldn’t be political. The labor demand for business owners certainly weighs heavily on the bottom line, but what is this work without labor? This one is solved by employers putting themselves in their employee’s shoes: What opportunities would you want? Why aren’t your employees or prospective hires where you are? Compassion and team building go hand in hand.
Mind and hand. As a nation, we could be doing much more to support trades-inclusive public education. If we did, we would have much more bandwidth to entertain ways to integrate “mind and hand” solutions—integrated academic and technical programs. At the high-school level, technical instruction should not be a separate discipline. Instead, building-science, statics, and business administration should be academic electives, and most STEM courses could be combined with hands-on training that provides students with first-hand knowledge of tools for all industries.
Funding. By “support” for mind-and-hand curriculum, I mean not just a nod of approval but real dollars. The idea of a charter solution to overhauling public education is compelling, but evidence of large-scale progress is still forthcoming.
Traditionally, as a nation, we have supported education with taxation, and that is the political hot button we need to get clear about. Countries like Germany, Sweden, and Poland and other countries in Scandinavia and Europe do show results with apprenticeship programs in the building trades that are completely ingrained in the social fabric and public education systems, and the building professions in those countries tend to not have quite the same social stigma they do in the U.S. But if we as an industry continue to marvel at these apprenticeship programs, we need to be willing to provide the same level of public support for such programs.
Or not. Show us something that performs as well without public funding. I am greatly encouraged by the work of Richard Laughlin and company who have revived a very effective trade-school program at the local high school in Fredericksburg, Texas, relying on the support of local and national companies, and their own fund-raising, without requiring any tax-payer support at all. Such a program could well serve as a viable model for other communities throughout the U.S. (see "Build with Pride," Remodeling 11/2019).
But I am skeptical of any for-profit, educational models, such as those advanced by companies advocating corporate-based charter schools. So far, corporate charter solutions for education have been fraught with under-performance and corruption.
Real change might come from corporate foundations, however. If Google.org or the Ford Foundation were to focus on trade education, or, better yet, join forces and solicit foundational help from Amazon, Apple, Berkshire-Hathaway, and others, there would be ample support for overhauling public education to include feasible “mind and hand” high-school and early college programming. As a society, we enjoy enormous generosity from our nation’s corporate leaders, evidenced by the likes of Bill and Melinda Gates, George Kaiser, Gordon Moore ... the list is long. Why hasn’t the goal of ensuring affordable, high-performance, healthy housing ranked just as high on the list of needs as any other health initiative? Maybe asking that question is a start.
Unions. If we look to apprenticeship programs from abroad for inspiration on effective educational methods, a tip of the hat is owed to the United Brotherhood of Carpenters. The Carpenters run one of the most sophisticated and effective networks of training centers, including the Carpenters International Training Center in Las Vegas, which is free to union members.
Yes, in the residential sector, union labor is widely discounted. But it shouldn’t be. There are examples, chief among which is Neil Kelly—a Certified B Corporation and one of the nation's top-rated remodeling firms based in Portland, Ore.—that runs exclusively on union labor. Founder, Tom Kelly, runs a tight ship focused on high-performance homes that marries well with plenty of bottom-line revenue. Union labor is his choice in large part because of the skill quality the company can tap.
But the union has to bend, too. Not every city, town, or county can support union-only labor, so why do the Carpenters insist that members work only for union shops? Membership would surge in areas where union chapters are non-existent or withering if members could work for either a non-union or union company. This is particularly true in the residential sector where there aren't enough union companies, and workers would starve if they could only work for a union company. When taking a non-union job, workers wouldn’t enjoy the wage and benefit protections that union jobs provide, but could—if the rules could bend a little—gain access to union training, afforded by an increase in member dues. Right now, in areas with marginal union participation, there is zero union action in the residential sector. Some participation must be better for the union than none, and it would likely grow the number of union companies, once company owners see the increase in the talent pool.
This is only a start. What other solutions might emerge when we start to look beyond material and production technology, and look at reshaping the social fabric, instead?