The state of the construction workforce and a possible solution
Editor’s note: The following article by Jim Stevenson was written for the McCarthy Building Companies, Inc. newsletter. Reprinted with permission.
In December 2009, a small group at the Houston Associated General Contractors held its first discussion about developing the craft workforce needed for the commercial construction industry to effectively perform future work in Houston. Since then, seven task forces and more than 50 volunteers have worked diligently on developing a long-term vision for creating a sustainable craft workforce. Owners, contractors and specialty contractors have committed to three principles – competitive wages and benefits, safety training, and craft training – as absolutely necessary to attract, train and retain a verifiably qualified workforce.
Out of this vision the Construction Career Collaborative, known as C3, was created as a standard-setting organization, providing project owners with the specifications to establish the necessary principles on a per project basis, thereby demanding 100 percent participation.
Attracting, training and retaining a skilled craft workforce are important factors on many fronts. Currently, the average craft worker is approximately 50 years old, with more than 20 percent of this craft workforce expected to retire in the next three years and upwards of 80 percent by the year 2020. The average age of entry into the workforce is 29 with less than 10 percent of those entering the workforce having any craft training at all. Additionally, productivity of the craft worker has consistently declined in the past 30 years. In fact, the commercial construction industry currently operates only half as efficiently as other industries.
Contrast these statistics with the state of construction needs in the future. First, six of the 15 fastest growing cities in the nation are in Texas. Nationally, a study by The Brookings Institution indicates commercial development in the next quarter-century will eclipse anything seen in previous generations, with the built environment where we live, work and play doubling. In addition, an aging infrastructure will need to be replaced, and a chemical processing industry is on the rise due primarily to the low cost of natural gas. Billions are expected to be spent commercially, and somewhere between $45 billion to $95 billion is expected to be spent along the Gulf Coast industrial market in the next five years. This demand is expected to continue for the foreseeable future.
Generally in the Greater Houston area in the last 30 years, the craft workforce has become less skilled as a result of a decline in knowledge and skills training previously provided in a high school curriculum, formal union or non-union training programs, and secondary or trade schools. The industry has also seen a contraction of real wages. The actual wage of a carpenter is the same today as it was 30 years ago, but the unit costs of labor have quadrupled in many cases. In other words, owners’ labor costs have risen four times while the actual wage paid to the craft worker has at best remained the same due to lack of productivity, inefficiency and lower quality. On top of that, there are few-to-no benefits, making it a less-than-attractive field to enter. On the positive side, it has become a safer workforce because owners and many general contractors have demanded it.
Two owners, Texas Children’s Hospital and MD Anderson, have embraced the C3 concept and are performing beta projects using C3 principles. These beta projects involve four contractors, numerous specialty contractors and hundreds of craft workers. The beta projects are allowing C3 principles to be codified in processes for verification of payment by the hour, verifiable data collection of the safety training of craft workers that can be relied on by the entire industry, and a better understanding of the state of craft training as each contractor and specialty contractor completes a craft training assessment. The University of Texas MD Anderson Pavilion project currently under construction by McCarthy is one of the beta projects.
McCarthy’s commitment and ability to self-perform work is a differentiator among our competition. We are committed to the principles promoted by C3 but compete against others in the industry that misclassify workers and provide no training. An owner adopting the C3 principles on their project will make our competition rise up to our standards, creating a better environment for craft workers to be attracted into the construction industry and stay.
Surveys by the Houston Business Roundtable emphasize the benefits of investing in training as follows:
- Increased productivity by as much as 24 percent
- Reduced turnover by as much as 43 percent
- Absenteeism down by as much as 59 percent
- Recordable injuries reduced by as much as 90 percent
- First aid cases reduced by as much as 90 percent
Commercial construction is a career choice for many who enjoy the challenge of creating unique projects. The ever-changing work surroundings, as a project proceeds from the time the first shovel of dirt is turned to becoming a fully functioning environment for work, life or play, provides an exciting environment many workers find attractive. Talented craft workers are required to execute the work to create these unique projects in such an environment. Attracting, training and retaining craft workers with the proper knowledge and skills are imperative to continue supporting the growth of Houston and the associated commercial construction projects.
C3 is the organization for project owners, contractors and specialty contractors: recognizing all parties must work together to establish the principles necessary to attract, train and retain the craft worker and define the processes to execute future principles of the commercial construction industry.