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Construction Labor Series Part One: Defining the Challenge

At the Missing Middle Housing Fund, we are laser focused on finding ways to reduce the time and cost to build housing for middle income earners. In previous posts, we have discussed innovations that contribute to these two end goals in policy, financing, and product, materials, and design. A fourth area offers the potential to accelerate housing production and deserves a closer look: the availability and cost of construction labor.

Due to the complexity of this topic and the breadth of solutions that offer hope, this feature is comprised of two parts. Today we will lay out the current challenges facing the construction workforce and why it has been so difficult to attract and retain talent. Next week we will present some of the inspiring opportunities that can accelerate our housing production goals.

Source: Oregon Office of Economic Analysis, “Addressing Oregon’s Housing Shortage”, 9/21/22

The Construction Workforce Challenge

We currently have a substantial shortage of workers to address our housing underproduction crisis. Governor Kotek has outlined the goal of building 36,000 housing units annually for the next ten years, but the state’s Office of Economic Analysis has identified that approximately 13,000 new construction trade workers are needed to offset the current deficit of 140,000 housing units.

The development of a qualified workforce is critical if we are to achieve these goals, but significant hurdles remain.

Perhaps the biggest issue is that the construction workforce is aging (according to the Bureau of Labor Statistics, the average age of a construction worker is 42.5 years old) and retiring at a rate that is outpacing the entrance of new, younger workers. This shortage of new, younger workers is due to several factors.

First, the industry is still suffering from the effects of the 2008 housing crisis, when construction of new homes dramatically slowed and forced construction workers to find other careers. Additionally, during the COVID pandemic, the construction industry was also impacted along with other professions as unemployment increased, a shift occurred to at-home work, and others chose to leave the workforce all together as part of “The Great Resignation”. Supply chain issues in home building materials created additional challenges with specific trades. It has been difficult to attract new talent back into the industry.

Second, construction is suffering from an awareness and perception issue. John Gilson, Director of Innovation at Walsh Construction, believes we need to find ways to engage with potential new workers at an earlier age, and make them aware of the many benefits of entering the field. “Currently people are not thinking about going into the trades as a career. The technical programs in schools like woodworking and metal shop have essentially gone away so younger people don’t see the trades as an option. They aren’t aware that they can make $50-$60 hour a few years out of high school in the trades or $70K a year as a beginning project engineer or management professional,” he said.

And the need is not just for laborers and tradesmen to build new homes. There is currently a deficit of workers in the public sector to approve, permit, and inspect more units if we want to support the state’s current housing production goals. The Oregon Office of Economic Analysis believes that 400-500 more of these workers are required, based on current staffing ratios of .04-.05 full time employees per housing permit.

This all amounts to a greater need for recruitment and training earlier in career planning and thinking differently about how we can expose a wider pool of talent to careers in construction. Fortunately, there are creative solutions taking shape in our region. One lies in the partnership between public, private and non-profit organizations to pool resources and achieve greater program scale. Another solution is to enable access and advancement of under-represented populations in construction, including women, minorities, and disadvantaged youth. Next week we will share more about the organizations who are leading these efforts and their best practices for how to think differently about attracting, hiring, and retaining more talent to meet our housing needs.

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