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Labor shortage? Utah construction businesses concerned about availability of workers, report finds

Crews from Dawson building systems put up a wall on a new home in Daybreak on Friday, Feb. 3, 2017.
FILE - Crews from Dawson building systems put up a wall on a new home in Daybreak on Friday, Feb. 3, 2017. A large majority of surveyed Utah construction businesses say they have difficulty filling positions due to a shortage of available labor, according to findings released Wednesday by a national trade group.
Scott G Winterton, Deseret News

SALT LAKE CITY — A large majority of surveyed Utah construction businesses say they have difficulty filling positions due to a shortage of available labor, according to findings released Wednesday by a national trade group.

In-state responses match closely with national results obtained by the Associated General Contractors of America, as 81 percent of Utah construction businesses said they were "having a hard time filling some or all positions" that are paid hourly, compared to 80 percent of such businesses in the United States.

More than 2,500 business replied to the survey from Associated General Contractors of America, including 33 in Utah.

Forty-six percent of all respondents and 58 percent of Utah businesses said a shortage of available construction labor led to projects taking longer than anticipated.

Mark Knold, senior economist with the Utah Department of Workforce Services, said the construction industry has outpaced the overall state economy in adding jobs for several years. That included from March 2017 to March 2018, when the number of Utah jobs grew by 3.3 percent, but construction jobs increased by 8.6 percent.

"Only within the last year or two has the whole economy kind of been gelling pretty good to the point where … it's tough to find the workers that they want in the construction industry," Knold told the Deseret News. "It doesn't mean they're not finding them — it probably means they're just having a hard time doing it."

The report said 71 percent of Utah respondents indicated they have increased pay rates for hourly employees, and 39 percent said they improved benefit packages for those workers as ways to address shortages in the labor pool.

Twenty-seven percent of Utah businesses said they changed their standards for hiring construction workers with regard to "education, training, employment or arrest record," and 55 percent "initiated or increased in-house training."

Forty-eight percent of Utah respondents anticipated it would become harder to hire hourly workers in the next 12 months, though 81 percent of them still anticipated making hires in that time frame.

Knold said the numbers indicate that "right now it's a seller's market" in the construction industry, with workers as the sellers of their services and businesses as the buyers. With that being the case, companies are "having to be more aggressive getting the labor they want by doing it with dollar bills," he said.

"It's a tight labor pool and the employers want to buy that labor and they have to bid for it and the prices are going up for the labor," Knold said.

But he reiterated that while economic data suggests construction companies currently "really have to work hard to find the labor," it's still the case that "the growth rates are suggesting they're getting it."

Dennis Cigana, executive vice president of pre-construction for Salt Lake-headquartered Jacobsen Construction, said managing costs has become a concern in the past two to three years amid a dearth of workers to fill valuable jobs.

"We found that for instance, just over the last month, reinforcing steel … cost per pound has increased substantially as a percentage, and that's just the pure demand on that specific (specialty)," Cigana told the Deseret News. "That trade is being spread thin. … So in order for the subcontractors to get their right guys, they have to pay their guys a little bit more to get them on the project."

Cigana said paying for projects in Utah locations outside the Wasatch Front has changed the most significantly in recent years because subcontractors are loath to take on the extra travel costs themselves during periods of favorable market conditions.

The General Contractors of America report found that the number of construction jobs increased in 281 out of 358 studied metropolitan areas from July 2017 to July 2018. But an insufficient labor pool could pose a "significant risk to future economic growth," the organization said in a release.

"Labor shortages in the construction industry remain significant and widespread," said Ken Simonson, chief economist for General Contractors of America, in a statement. "The best way to encourage continued economic growth, make it easier to rebuild aging infrastructure and place more young adults into high-paying careers is to address construction workforce shortages."

The organization also submitted a written plan for improving the construction labor pool, suggesting a doubling of public funding for career and technical education training in the next five years and making it possible for more immigrants with construction skills to legally enter and work in the United States.

"The lack of a legal visa program for construction workers and a recent tightening of legal immigration will worsen worker shortages if not addressed comprehensively," the group's written plan says.