The ripple effect of the construction industry’s shrinking skilled labor pool is beginning to reach businesses in Houston. Hill Magnuson, general manager of Richmond-based commercial and residential concrete supplier Concrete on Demand, said he is suffering the consequences through a lack of skilled workers.

“There are no shortage of workers who claim they have skills or experience but can’t perform as expected,” Magnuson said. “When contracting concrete work, I personally have lost business due to a lack of qualified contractors to execute contracts.”

Over the past five years, the number of overall construction workers increased 14 percent in the Houston/Fort Bend County metropolitan statistical area, according to U.S. Bureau of Labor Statistics data. Despite an increase in the number of 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 would like to have,” said Ken Simonson, chief economist for the Associated General Contractors of America.

SUPPLY AND DEMAND

The shortage is noticeable because of the vast amount of construction underway and in the pipeline—roads, bridges, and transit—according to Steven Burch, president and chief operating officer of White Construction Co. He said the shortage 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 in labor, it definitely does—because a lot of the subcontractors are competing for the same people, and they get them [by paying] 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.

Although 29,700 jobs are projected to be added to the greater Houston area, the construction industry will loose 16,000 jobs this year, said Patrick Jankowski, the Greater Houston Partnership vice president of research, in an email. He said the loss will be largely due to the slowdown in the petrochemical and industrial market.

“The petrochemical/industrial market differs form the residential and commercial markets,” he said. “It is more likely that many workers who are let go will travel along the coast to follow the work elsewhere rather than stay and find employment within the Houston Region.”

LABOR ISSUES

Houston-based Fails Management Institute consultant Candice Hernandez said in an email that skilled labor worker shortages have been an issue in the construction market for the past several years.

According to an AGC survey of 131 firms in Texas, 32 percent of companies had a hard time finding salaried and skilled hourly positions, and 27 percent found difficulty in hiring skilled hourly positions.

About 51 percent of the firms said they would continue to have a hard time filling these roles, with 54 percent reporting they have had to increase base pay and 38 percent had to provide bonuses or incentives to workers. The biggest concern among these firms is worker shortages at 49 percent.

The industry has been asking school districts to reinforce trade programs in high school to put students onto a path toward skilled labor, said Parker Holt, property and casualty broker and construction practice leader with insurance firm Higginbotham, and president of the Central Texas Subcontractors Association.

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

Randall Wooten, Texas State Technical College’s (TSTC) vice chancellor, chief execution officer and executive project manager for Fort Bend County, and TSTC field development officer John Kennedy said that as skilled laborers are starting to age out of the workforce, they are harder to replace, partially due to the mistaken assumption that skilled laborers cannot make a living.

“The fact of the matter is that you can indeed make a good living, provide for your family, and enjoy a very comfortable lifestyle if you receive the proper technical training and if you are willing to work,” Kennedy said.

Wooten said another factor is many  parents believe if children go to college, everything will be fine.

“Things aren’t fine for most high school students who seek a four-year degree in non-STEM related fields,” Wooten said. “Furthermore, many of the students who do graduate are strapped with an average of $37,000 in student loans.”

TSTC recruiters work with high school counselors and nontraditional students who have entered the workforce with little or no technical skills.

“[They] realize that they need a skill set to get a great job and make a living wage,” Wooten said. “The average age of our students is 28 years old, so TSTC is not only for the recent high school graduate.”

A shortage of skilled workers is a concern for developers and business owners alike. Low-quality work performed by workers without the necessary skills or experience can produce unsatisfactory results that must then be redone.

“I once replaced a large driveway for a customer,” Magnuson said. “The contractor I used did not properly level the surface of the driveway. I had to break out and repour approximately 60 percent of the driveway at my expense.”

Additional reporting by Olivia Lueckemeyer