The ongoing labor shortage in the construction industry is changing how firms operate and could lead to an increase in the cost of construction, according to a new report from the Associated General Contractors of America (AGC).

Seventy percent of respondents in an industry-wide survey by AGC said they are having a hard time filling hourly craft positions, which make up a bulk of the sector’s jobs. The high number of companies voicing their concerns on the issue is similar to the 2016 survey results, and most firms believe the shortage will remain or only get worse over the next year.

AGC CEO Stephen Sandherr said on a media conference call Tuesday that if this trend persists, there will be “significant short-term and long-term implications” for the broader U.S. economy.

“In the short-term, fewer firms will be able to bid on construction projects if they are concerned that they will not have enough workers to meet their contractual obligations. If that happens, the cost of construction will likely increase,” he said. “At the same time, it may take longer for firms to complete projects as they cope with workforce shortages within their firms and subcontractor firms as well. Higher construction costs and slower schedules may serve as a brake on broader economic growth.”

Sandherr said the long-term economic implications may prove even more significant. Firms will find ways to be more productive without adding headcount, utilizing new technologies such as robotics and lean construction techniques.

“There could be a significant displacement in the number of people employed in construction should firms have no option but to address workforce shortages by finding ways to do more work without workers,” he said.

Construction firms are already taking some of these steps to cope with the shortage.

Forty-seven percent of firms report they are increasing overtime hours. Forty-six percent are doing more in-house training, and 41 percent of firms are increasing their use of subcontractors. AGC chief economist Ken Simonson said on the conference call that even though firms are relying more on subcontractors, those subcontractors are also having trouble filling craft positions, which is exasperating the problem.

Twenty-seven percent of respondents report getting involved with career-building programs at the high school and college levels. “A smaller, but still significant, portion of firms report they are increasing their use of labor-saving equipment (22 percent), offsite prefabrication (11 percent) and virtual construction methods such as BIM (7 percent),” according to AGC’s analysis. “Meanwhile, 22 percent are working with craft labor suppliers and 19 percent are working with staffing firms to fill non-craft positions.”

Sandherr said persistent labor shortages in the industry are prompting many firms to expend more time and resources trying to recruit new workers.

“In particular, they are working to attract more veterans, women and minorities into the construction industry,” he said. “At the same time, they are raising wages, increasing benefits and expanding training programs to help recruit and retain workers. Many firms are taking extra steps to recruit and train workers because they have such a low opinion of the pipeline for preparing new hourly construction craft professionals.”

He added that a lack of government investment in career and technical education programs has resulted in a deficiency of incoming workers with the skills needed to operate safely on most construction sites. “It also means that few high school students are even exposed to the fact that construction is a potential high-paying career option to consider,” he said.

In its analysis of the survey, AGC urged federal, state and local officials act on the measures outlined in its workforce development plan, which was published last year.

“If federal, state and local officials enact measures to expand construction-focused career and technical education opportunities, and make it easier for all firms to establish construction training programs, then the solution will come from an influx on new, highly-paid workers,” AGC says. “But if elected officials fail to make the necessary investments and reforms needed to develop the next generation of craft workers, then the industry is likely to use labor-saving technology and techniques to meet demand, leading to fewer construction jobs in the future.”