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Construction Industry Faces Shortfall of 200,000 Workers

The construction industry faces a shortfall of 200,000 workers, according to a new report released by the Home Builders Institute.

"The home building industry faces a major shortage of skilled workers," says Ed Brady, HBI's president and CEO. "This persistent challenge endangers the affordability and availability of housing and hinders a robust economic recovery. As a nation, we need to build the next generation of skilled tradespeople. That means recruiting more women. It means training and placing minority, lower income and at-risk youth for job opportunities as an important way to fight against social inequity. It means providing trade skills education to veterans and transitioning military. And it means reaching out to high school students, and those who influence their decisions, to change their perception of careers in the trades."

The share of builders reporting a worker shortage was 60 percent. The percentage is especially high relative to the acceleration for total housing starts, which increased from a seasonally adjusted annual rate of under 1 million single-family and multifamily units in April 2020 to a rate of roughly 1.5 million at the end of 2020.

The numbers reported pertain to labor directly employed by builders, though builders employ additional workers through subcontractors. "We estimate that builders subcontract more than 80 percent of the construction in the typical home they build," says Brady. "And worker shortages for subcontractors continue to be even more severe."

HBI's chief executive stressed that labor represents approximately 30 to 40 percent of the cost of a typical new home. "That share of the costs is rising, due to the shortage of available labor," he says. "When you consider that scarcity of labor causes construction delays, which then creates further costs, you can see how both housing supply and affordability are negatively affected."

The first-ever HBI Construction Labor Market Report notes that shortages of skilled trade workers directly employed by home builders and subcontractors remain widespread throughout all regions. Builders nationwide cite the difficulty in filling positions as among their top concerns, ranking third behind high lumber prices and regulatory burdens.

The report, based on research of the Economics Group of the National Association of Home Builders, will be issued semi-annually. The first one is compiled using year-end 2020 data. Citing more recent numbers, Brady said the total shortage of construction workers rose even higher to 309,000 in January 2021.