Jentri Quinn and Alex De Mola said they were hoping for a smooth transition when they closed their retail store, Cotone Clothing + Beauty Bar, in downtown Austin to relocate to The Domain. However, the duo ended up going five months without a sustainable source of income.

“We were delayed for months because there was a lack of contractors,” De Mola said. “We were bounced around by two contractors. They themselves were overwhelmed by work.”

Their 3,600-square-foot remodel job in The Domain 2 near Dick’s Sporting Goods proved to be too small of a job for most contractors but too large to hire a handyman, Quinn said.

When they finally found someone to do the job, Quinn said they were not pleased with the quality of the work.

“We paid a good price and were getting less-than-desirable outcomes,” she said, adding their new flooring was marred by paint. “The flooring workers disappeared for days … because they were working other jobs.”

Delays such as this are not uncommon during a time when building permits have increased more than 25 percent in the past six years in Austin, according to city data. During the same time, the number of construction workers has increased by more than 27 percent in the Austin-Round Rock metropolitan area, according to U.S. Bureau of Labor Statistics data.

Despite an increase in workers, many construction sites are understaffed, namely with skilled laborers who must have specific certifications or licensing before they can perform work.

“We have been adding workers, but companies are saying they aren’t the workers they ideally they would like to have,” said Ken Simonson, chief economist for the Associated General Contractors of America.

Supply and demand

In Austin, the shortage is noticeable because of the vast amount of construction underway and in the pipeline. Steven Burch, president and chief operating officer of Austin-based White Construction Co., said it comes down to supply and demand.

“Since people have choices and there’s a lot of work, prices are going up—not because it costs a lot more [for materials but] in labor, it definitely does—because a lot of the subcontractors are competing for the same people, and the way they get them is they pay them more,” he said.

As a result, Burch said many owners have to rethink the project’s viability to stand up to delays and come up with a more realistic time frame and budget.

“When there’s more demand than there is supply, [subcontractors] can raise the price and [they] can be ultra-selective about who [they] do business with,” he said.

The lack of workers is a two-fold issue, said Parker Holt, property and casualty broker and construction practice leader with insurance firm Higginbotham and president of the Central Texas Subcontractors Association.

When the oil boom occurred in the early 2010s in South Texas, many construction workers left their jobs in search of high-paying posts in the oil industry, Holt said. Although that industry has slowed, Holt said the jobs have not returned as quickly, and the labor pool is still thin.

“These guys are having a hard time finding good help,” he said. “A lot of times they are losing their good help who are going down the street to a job that has a better compensation plan or insurance plan.”

Because more infrastructure work—roads, bridges, transit and airports—is still on the horizon in Austin, Holt said he thinks the problem will continue.

“If there’s light at end of tunnel, that might be ambitious,” he said. “This is going to be an issue for a while.”

What could exacerbate the shortage is President Donald Trump’s immigration policies and the effect on Texas’ economy and construction industry, Simonson said.

“If people are being denied entry or deported or getting the message that the U.S. is not a welcoming place for this talent, this will put a pinch on the workforce and will slow economic growth on an area that depends on that talent,” he said.

Jose Garza, executive director of Workers Defense Project—an Austin-based organization that advocates for the rights of low-income workers, especially construction workers—said Trump’s executive order, which removes priorities for the standards by which immigration enforcement officials can detain people, will decimate the Texas economy.

“We’re seeing a slowdown because people aren’t coming to work,” he said. “That policy really starts to have a ripple effect on our economy.”

Labor issues

According to an AGC survey of 131 firms in Texas, 49 percent of firms polled reported worker shortages are their biggest concern.

Bill Farnum, vice president of pre-construction services for White Construction, said seasoned workers are retiring from the construction industry.

“There’s not as much interest in that profession,” he said. “It’s not the profession it was 20 years ago. People have many more choices for similar pay.”

Holt said the industry has been asking school districts to reinforce trade programs in high school to put students onto a path toward skilled labor.

Garza said about 50 percent of Texas construction workers are undocumented immigrants, and 60 percent report not having basic training. He said few places besides labor unions offer workforce training programs.

“There’s a disconnect between the labor market and training options for that labor market and an insufficient emphasis on training,” he said.

Garza said the industry needs to focus on increased wages, increased training and a path to middle-wage jobs.

“You can’t import labor from other places in the country or from around the world,” he said. “We depend on a strong, well-skilled labor pool. If there is a labor shortage, it means businesses grind to a halt.”

Cause and effect

Dead time is a concern for developers and business owners alike. The increased time to find workers not only can set a project back by months—it also affects businesses’ bottom lines because they have to pay more to obtain workers.

“They run into unexpected overtime costs because they couldn’t find workers,” Simonson said. “Once [the contractor] tells the owner a firm bid, they’re stuck with those costs.”

Sonny Horton, president of BCS Concrete Structures, a local concrete subcontractor firm, said he had to start paying workers $2 more per hour to get positions filled, resulting in higher-than-expected labor costs.

“We’re just trying to keep our eye on the market a little better,” he said.

Farnum said a developer or project owner pays for downtime, including through taxes or rent payments.

“Just to get a site development permit used to take 90-120 days,” he said. “Now if you get one in six to nine months, you’re lucky.”

Given that the city of Austin reported a 25.7 percent increase in the number of residential and commercial building permits filed from 2011-16, Matt Allen said he was happy to receive his site permit in 3 1/2 months after using a permit expediter.

In total it was an 18-month process, including six months waiting on inspections and construction delays, to open Coffee Shark coffeehouse in the Jester neighborhood of Northwest Austin.

“I considered my permit like a golden ticket,” he said.

Allen said he received six bids for the build-out, which included adding a kitchen, bar and coffee bar.

“They were all higher, and it was a huge range,” he said. “Some were 50 percent higher than the lowest ones.”

The permitting delays also affected the construction timeline, Allen said.

“[The contractor] had an expectation, too, of when we could start, and we blew way past that,” he said. “He had to readjust and move his crews elsewhere, and then when we were ready to go he had to scramble and cobble crews together to get going. It was a challenge for him and as a result a challenge for us.”

Even though he faced unforeseeable delays, Allen said he would go through the process again.

“In the end I enjoyed the process of opening a new business,” he said.