Heading into 2019, the labor shortage continues to be a major concern for contractors, which they believe has impacted their business and driven technological adoption, according to “The 2019 Construction Hiring and Business Outlook” survey from the Associated General Contractors (AGC) of America and Sage Construction and Real Estate.

In 2019, 79 percent of contractors surveyed expect to increase headcount. That’s up from 75 percent in 2018. Of the more than 1,300 contractors surveyed, 49 percent expect to increase headcount by 1 to 10 percent, 22 percent expect an 11- to 25-percent increase, and 7 percent expect to increase headcount by more than 25 percent in 2019. Nineteen percent of contractors expect no change in headcount while only 2 percent expect a decrease in headcount this year.

A large portion of contractors, 78 percent, reported having a hard time filling some or all positions, indicative of the continuing labor shortage. Only 11 percent of contractors surveyed reported having no difficulty filling positions while 11 percent reported having no openings for positions.

Many contractors are pessimistic about the availability of craft workers in 2019. Forty-two percent expect that it will continue to be hard to hire over the coming 12 months and 26 percent expect it to become even harder to hire skilled workers. Only 3 percent think it will become easier to hire workers over the next 12 months.

Several changes can be made to attract new workers to a company, including increasing pay or benefits for salaried or hourly craft personnel. Of the contractors surveyed, 59 percent reported that they did increase pay in 2018 because of difficulty filling positions. Twenty-nine percent said they provided incentives or bonuses in 2018, 21 percent said they increased a portion of their benefits, 13 percent reported not increasing pay or benefits, but considering doing so in the near future, and 11 percent said they are not considering increases in pay and/or benefits.

Contractors said that staffing challenges have impacted their projects in many different ways, including costs being higher than anticipated (33 percent), projects taking longer than anticipated (34 percent), having to put higher prices into bids or contracts (37 percent) and no longer putting completion times into bids or contracts (18 percent).

As companies continue to adjust to the labor shortage, many are adopting methods to replace workers or skills on the jobsite, including:

  • Methods to reduce onsite worktime such as lean construction, building information modeling (BIM) or offsite fabrication (32 percent);
  • Using labor-saving equipment such as drones, robots, 3-D printers or laser- or GPS-guided equipment (28 percent); and
  • Adding specialists such as BIM or lean construction personnel, drone or other equipment operators, data or IT personnel (18 percent).

However, 50 percent of companies reported making no changes to replace workers or skills. Despite adopting any of those methods, 63 percent of contractors reported plans to increase their investment in training and development in 2019 compared to 2018. Thirty-six said they plan to keep their investment the same.

Contractors are most worried about the worker shortage (30 percent), increased competition for projects, safety, growth in federal regulations, worker quality, rising direct labor costs and lack of infrastructure investments are some of the other concerns firms are facing in 2019.

When it comes to challenges regarding the safety and health of contractors’ workers, 43 percent reported being concerned about inexperienced skilled labor/the workforce shortage, while 16 percent see poor subcontractor safety and health performance as a challenge, and 14 percent said lack of cooperation from government agencies or regulators is a challenge. Only 5 percent of contractors surveyed said low quality of available safety and health training is a challenge to worker safety and health.