Industry News

Labor

Construction workforce shortage tops half a million

The construction industry will need to attract an estimated 501,000 additional workers on top of the normal pace of hiring in 2024 to meet labor demands, according to a proprietary model developed by Associated Builders and Contractors (ABC), Washington.

In 2025, the industry will need nearly 454,000 new workers on top of normal hiring to meet industry demand, even with anticipated declines in construction growth spending.

“ABC estimates that the U.S. construction industry needs to attract about a half million new workers in 2024 to balance supply and demand,” says ABC President and CEO Michael Bellaman. “Not addressing the shortage through an all-of-the-above approach to workforce development will slow improvements to our shared built environment, worker productivity, living standards and the places where we heal, learn, play, work and gather.”

ABC’s model uses the historical relationship between inflation-adjusted construction spending growth, sourced from the U.S. Census Bureau’s Value of Construction Put in Place Survey, and payroll construction employment, sourced from the U.S. Bureau of Labor Statistics, to convert anticipated increases in construction outlays into demand for construction labor at a rate of approximately 3,550 jobs per billion dollars of additional spending. This increased demand is added to the current level of above-average job openings.

Projected industry retirements, shifts to other industries and other forms of anticipated separation also are embodied within the computations.

Based on historical Census Bureau Job-to-Job Flows data, an estimated 1.9 million construction workers will leave their jobs to work in other industries in 2024. This should be offset by an anticipated 2.1 million workers who will leave other industries to work in construction. These frictional interindustry transfers are estimated exogenously and serve as inputs to the model.

The U.S. construction industry unemployment rate averaged 4.6 percent for the second straight year, matching the second lowest level on record, while job openings remained historically elevated at an average of 377,000 per month through the first 11 months of 2023. As a result of labor shortages, contractors laid off workers at a slower rate than in any year between the start of the model in 2000 and 2020.

ABC Chief Economist Anirban Basu says two factors are shaping the interaction between construction worker supply and demand: structural factors, such as outsized retirement levels, megaprojects in several private and public construction segments and cultural factors that encourage too few young people to enter the skilled construction trades.

Structural factors also can include those related to interest rates, consumer sentiment and general economic performance.

“Over the past two years, cyclical influences have helped diminish the gap between construction worker supply and demand,” Basu says. “Though nonresidential construction spending has continued to surge, homebuilding segments have felt the impact of higher borrowing costs more intensely. With interest rates set to decline in 2024 and 2025, the expectation is that construction worker shortfalls will remain elevated. Among other things, that would delay the rebuilding of American infrastructure and the creation of new domestic supply chains. It would also tend to drive up the cost of construction service delivery, impacting American enterprises and taxpayers alike.”

Basu adds that structural influences persist, with more than 1 in 5 construction workers being 55 or older, meaning that retirement will continue to contract the industry’s workforce.

“These are the most experienced workers, and their departures are especially concerning,” he says.

While construction employment is growing, Bellaman says it is not growing fast enough to meet the demand to complete work on the books in 2024.

“To address this shortage and grow the construction talent pool, ABC has a network of more than 800 apprenticeship, craft, health and safety and management education programs—including more than 450 government-registered apprenticeship programs across 20 different occupations,” he says. “ABC chapters also have 323 entry point programs in place nationally to welcome all to begin a career in construction. To address workforce demand that drives the U.S. economy, Congress must also look toward much-needed reforms to our legal immigration system and provide high-demand industries, like construction, with access to new or expanded visa programs.

“Exclusionary policies and programs that do not welcome all to compete to build our public works projects, such as project labor agreement mandates, will further exacerbate this shortage and undermine significant investments made by taxpayers in infrastructure, clean energy and manufacturing projects,” Bellaman adds. “Taxpayers and workers are best served by inclusive, win-win policies that create a level playing field for all contractors to compete to build public works projects.”

To view the methodology of ABC’s 2024 construction workforce shortage model, visit www.abc.org.

Events

C&D World 2024: Recyclers focus on refining end products

Construction and demolition (C&D) recycling facility operators can only raise tipping rates so much—ultimately, success depends on end markets, according to a group of operators at the 2024 C&D World Conference & Exhibition, which took place Jan. 31-Feb. 2 in Bonita Springs, Florida.

During an Operations Panel session led by moderator Troy Lautenbach of Lautenbach Recycling in Mount Vernon, Washington, operatorsAndrea Johnson of Charlottesville, Virginia-based van der Linde Recycling; David DeVito of New Hampshire-based ReSource Waste Services; and Allen Burns of Philadelphia-based Richard S. Burns & Co.delved into the regional differences and operational aspects of running a recycling plant and offered ideas for innovation.

More and more C&D recycling facilities are getting into the business of creating products such as gravel and mulch, but they also often face bias when it comes to selling those products, Johnson said.

“We’ve found there is some bias because it comes from a recycling facility. People are not expecting it to be a really good product,” she said. “So basically, we have to do twice the work to be able to have a really good product. We’re making sure that there’s no contamination.”

That may mean spending more time on sorting and investing more in ground labor to keep contamination to a minimum and ensure the highest-quality end product, as well as empowering the sorting line to think in terms of the end product.

C&D recycling is more than sorting, it’s manufacturing a product to a spec, DeVito said. Those working the line are not just sorters, they’re working on a manufacturing line. Some operators are starting to pay a commission on what’s pulled from the line, turning their sorters into entrepreneurs.

“I try to turn my guys into entrepreneurs, and pay them a commission,” Burns said. “They also have a base salary, and then [on top of that you earn] so much per pound for everything you pull out.”

When it comes to trusting sorters with the quality of the end product, experienced workers can prove to be invaluable, the operators agreed. Paying a higher wage to keep people around pays off in the end, Johnson said. Because it can take tremendous effort to train new employees, she explained, there’s huge value in having seasoned employees, and a seasoned staff can improve productivity as well as the end product.

Finally, operators are starting to get creative with end markets. Bringing innovative new end products to market, the operators explained, often looks like working with vendors to create new products that will help them. For instance, DeVito worked with a customer to use paper sludge to create daily landfill cover. Finding creative new uses for recovered materials will help the operator to move more materials in the long run, the operators agreed.

Metals

Downward price trends evident in ferrous market

Domestic steel mill scrap purchase transactions recorded by MSA Inc.’s Raw Material Data Aggregation Service (RMDAS) show the high-volume grades lost value in nearly every region of the United States in late January and the first few weeks of February. The sole exception was shredded scrap remaining flat in the RMDAS North Central/East region.

Unfortunately for shippers that prefer higher scrap prices, mid-February reports indicate export demand levels seemed unlikely to boost those prices the remainder of the month. In the domestic steel industry, output is stable but down year on year.

Mill transaction figures recorded by RMDAS from Jan. 20 to Feb. 19 show prompt grades falling by $19 per ton as a national average, while No. 1 heavy melting steel (HMS) lost $11 in value and shredded scrap’s value fell by $5 per ton.

In the RMDAS South region, the prompt industrial composite grade lost more value, $27 per ton, than in the North Midwest and North Central/East regions, where the grade lost $7 and $16 per ton respectively.

While shredded scrap held its value in the North Central/East region, it lost $2 per ton in the North Midwest and dropped by $12 per ton in the South.

No. 1 HMS, a frequently exported grade, suffered its biggest drop in the domestic mill-dependent North Midwest RMDAS region, losing $17 per ton in value in late January and the first two-and-a-half weeks of February.

In the North Central/East and South regions, with greater availability to export docks, No. 1 HMS dropped by $10 per ton in the South and just $9 per ton in the North Central/East.

Stable domestic mill demand offers one relatively positive piece of news, according to production statistics compiled by the Washington-based American Iron and Steel Institute (AISI).

According to AISI, in the week ending Feb. 17, domestic raw steel production rose by 0.6 percent compared with the previous week. However, output through mid-February lagged behind production levels in early 2023.

In the week ending Feb. 17, 2023, some 1.8 million tons of steel were made in the U.S., while in the same week this year that figure was 1.72 million tons, down by 4.4 percent.

Through Feb. 17, output of more than 11.65 million tons was down 1.8 percent from the more than 11.87 million tons made in the first seven weeks of 2023. According to AISI, mills through mid-February were operating at a 76.5 percent capability utilization, or capacity rate, compared with 78.1 percent rate in the same period last year.

Davis Index, meanwhile, was reporting in the third full week of February that overseas buyers shopping at East Coast ports were able to purchase scrap for up to $5 per ton less compared with the week before.

According to Davis Index, the dockside price for No. 1 HMS fell by $5 per ton in Boston and Philadelphia, while the grade lost $4 per ton in value in New York as of mid-February. On the Gulf Coast, buyers only managed a $1 per ton discount in the third week of February.