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Report: Labor Shortage Hits Home in the Crossroads Region of Texas

Employers across Texas are changing up their workforce game plans as a shortage of skilled labor really starts to affect the ability of those companies to deliver for their customers.

In the Crossroads region, in and around Victoria, Texas, the skilled labor shortage is taking a toll most significantly in the construction industry. Other sectors like petrochemical are feeling the pinch as well, reports the local newspaper, the Victoria Advocate.

As part of their reporting, the paper spoke with a local custom builder:

Steve Klein Custom Builder has the same number of subcontractors it did before the housing bust in 2008, but the number of workers under those contractors is about half, said Moses Kim, company south Texas division manager.

The company, which is building the Teravista subdivision in Victoria, has completed eight of 15 houses. One house under construction only has two brick layers working on it, instead of a full crew of four.

"Definitely, there is a hole inside our labor force," Kim said. "We've lost a lot of labor since 2007 to 2008 that left the industry and never came back. Whether they went to a different industry or left the state, we were never able to replace the typical trade set."

Experienced skilled workers aren't easy to replace, because someone who has undergone six months of training won't have the same skills as someone has many years of experience, Kim said.

The lack of skilled workers slows down construction and increases the overall costs, which is passed on to the customer, Kim said. Experienced workers cost more now because of demand, he said.

"They become a commodity when all the remodelers and, builders in town are competing for workers," he said.

In the case of that company, managers have shifted from building one house at a time to working on four or five homes simultaneously to make the most of the workers available during a specific time-frame.

Across the United States, about 200,000 construction jobs were unfilled earlier this year, per the Bureau of Labor Statistics. In the DFW Metroplex, for example, industry leaders say they need about 20,000 more construction workers to keep up with the demand associated with the region's explosive growth.

The Advocate also talked with the Federal Reserve Bank of Dallas:

As the construction industry recovered from the housing bust in 2008, the oil boom in Texas caused workers to leave construction and join the oil industry, said Laila Assanie, Federal Reserve Bank of Dallas senior business economist. When the oil bust happened in 2014 and 2015, the shortage in residential construction eased a little, but not much, Assanie said.

The many construction projects underway in Texas is a contributing factor to the shortage, Assanie said. Texas is one of the top states for domestic migration. "When people move, and when job growth is heavy, we need space for them to work and live, and that's why we've had so much construction even with the oil boom slowing down," she said.

The entire report from the Victoria Advocate is here.