The construction industry in Utah has been experiencing strong growth in the last few years. According to the U.S. Bureau of Labor Statistics, the industry was able to provide 47,900 jobs to its economy since 2017, increasing the number of employed individuals to 1,591,400. Utah experienced the country’s fastest job growth in the past 12 years, all thanks to construction.
Labor Shortage in Construction
Ironically, the construction industry is facing a labor shortage despite the number of jobs provided. Real estate developers and general contractors across counties expressed their frustration in recruiting and retaining skilled construction workers since the Great Recession.
The Associated General Contractors (AGC) of America and Autodesk support the Utahns’ sentiments. Their nationwide survey reveals that 80 percent of construction companies across the country are struggling to fill hourly craft positions that constitute the majority of the construction workforce.
Construction firms express their concern that this trend will carry on in the next few years. In the Western region, 48 percent of contractors believe that it will be even more difficult to employ skilled workers in the future. They report the most difficulties in hiring pipe layers, drywall installers, brick layers, general installers, concrete workers, and truck drivers.
Causes of Labor Shortage
The increasing demand for housing is one of the key drivers of labor shortage. Economists report the need for construction workers rose by 8.6 percent in 2017. Apart from that, the AGC of America is also pointing to the influence of tighter immigration rules.
Eighty-one percent of Utah construction firms rely on workforces comprising 50 percent Hispanic employees. The lack of a legal visa program for immigrants makes it hard for them to acquire jobs and for contractors to fill necessary positions.
Multiple firms also blame the Great Recession as one of the causes of the deficiency. Thousands of Utah carpenters, contractors, plumbers, and electricians left when the construction industry crashed in 2009 and 2010. Many of them didn’t return even though construction in Utah successfully rebounded. Plenty of baby boomers also retired early or transferred to other industries during the recession.
Effect on Real Estate
Analysts say that Utah’s strong commercial real estate market may take a hit from the lack of qualified labor since contractors may fail to meet the ongoing housing demand. This means general contractors in Ogden, Utah and other cities in the state with a booming housing market may have to turn down construction projects because there aren’t enough workers.
The rising cost of construction materials isn’t helping the issue either. The growing prices of construction materials coupled with the rising labor costs will have a significant effect on the real estate market.
However, industry leaders are still confident about the future of Utah’s housing market. The market has seen consistent growth in the last 10 years and they expect this upward trend to continue in the coming years. They are confident in Utah’s resiliency because of the diversity in the economy. Various strong industry sectors prevent the state from falling too quickly during a down cycle.
Industry leaders believe that Utah’s strong industries, a robust housing market, and a booming construction sector will safeguard the state from potential obstacles brought by the labor shortage.