Construction Trades
Housing Construction Trades
Overview
The residential construction sector has faced significant hurdles in replenishing its labor pool due to an aging demographic and difficulty attracting young workers and women. Despite employment growth post-Great Financial Crisis, the number of jobs per new construction unit remains below historical levels.
The Associated Builders and Contractors (ABC) projected a shortfall of approximately 550,000 workers in 2023, unable to meet the industry's demands. This deficit leads to increased labor costs and consequently, higher home prices. However, according to the Home Builders Institute (HBI), a national nonprofit focused on strengthening the housing construction workforce, annual gains for construction employment have been consistent in recent years. In the Institute’s Spring 2024 Construction Labor Market Report, HBI reported that a net total of 75,600 construction jobs were added in the 12 months prior to the report’s publication.
List of Construction Trades
The Construction Labor Market Report draws from the results of the NAHB/Wells Fargo Housing Market Index survey. The survey draws from responses from NAHB members to “take the pulse” of the single-family housing market. In the survey, HMI asks builders about the following 16 trades:
Carpenters - finished
Bricklayers/Masons
Carpenters - rough
Framing crews
Plumbers
Concrete workers
Electricians
HVAC workers
Drywall installation workers
Flooring installers
Painters
Excavators
Weatherization workers
Roofers
Building maintenance managers
Landscaping workers
Labor Shortages per Trade
Homebuilder-Reported Labor Shortages by Construction Trade, 2024
Source: NAHB/Wells Fargo Housing Market Index survey via HBI Construction Labor Market Report - Spring 2024
Some of the construction industry’s labor struggles may be attributed to structural issues - the increasing availability of work-from-home and office-based jobs, concerns around workplace safety and ergonomics, and reduced labor-force participation among prime-age men, to name a few. However, there also exist a number of more tractable factors at play, many of which are actively being addressed by startups and nonprofit organizations. The following section details some of the solutions that currently exist in this space.
Construction Labor Innovations
Tech-Enabled Vocational Training
Age Breakdown for Construction Industry vs All Industries, 2021
Source: 2021 American Community Survey PUMS data via NAHB
As illustrated in the graph above, relative to the total labor force in the US, the construction industry had high concentrations of workers aged 35 and older at the time of the most recent census. The industry has historically struggled to attract younger entrants to the workforce, and as time passes, older workers age into retirement, and without new, younger workers to fill their place, the overall labor pool gradually shrinks. This effect is illustrated in the graph below - between 2003 and 2020, the percentage of construction workers aged 55 and older nearly doubled. Meanwhile, the percentage of construction workers aged 16 to 24 fell significantly.
Percent of Industry Employment by Age, 2003 to 2020
Source: U.S. Bureau of Labor Statistics
Naturally, the solution to this problem is to attract more young workers to the construction industry. While the industry has begun working towards this solution by raising wages, an influx of new workforce entrants requires effective training protocols, especially considering that these workers will be replacing highly skilled industry veterans.
To address the need for more effective training, organizations are turning to tech-enabled solutions. These include, for example, virtual reality scenario simulations, which have been proven in research to lead to measurably better worker performance outcomes in safety training scenarios. Various platforms also offer mobile app-based training platforms that workers can utilize while in the field, allowing organizations to get new employees to work without losing confidence in their abilities to carry out more skill-intensive or complex tasks.
Attracting Tradespeople from Historically Underrepresented Groups
Construction Industry Employees by Sex, 2003 to 2020
Source: U.S. Bureau of Labor Statistics
As illustrated by the graph above, the US construction industry workforce has a particularly high concentration of workers aged 35 and older. However, this is not the only demographic imbalance that the industry faces. Construction workers are also disproportionately male. In 2020, women represented approximately 10 percent of the construction labor pool.
As shown in the following graph, racial and ethnic disparities exist as well. Specifically, Hispanic workers are overrepresented in the industry relative to US employment as a whole. While Hispanics represent a 17.6 percent share of the nation’s workforce, within the construction industry, Hispanic workers comprise roughly 30%. And although the share of non-Hispanic white workers is roughly equal between total employment and construction, non-Hispanic Black and non-Hispanic Asian workers are underrepresented, with the former occupying a share of 11.8 percent of total employment but 5.1 percent of construction and the latter occupying a share of 6.2% of total employment but less than 2 percent of construction.
Construction and Total Employment by Race and Ethnicity, 2020
Source: U.S. Bureau of Labor Statistics
Despite high job demand and growth prospects, these disparities signify that the industry has failed to tap into a large share of the national labor supply. By targeting underrepresented groups, construction firms can both rectify longstanding inequities and unlock the potential of a diverse workforce, driving economic growth. Efforts in this space include local trade-based educational programs for high school aged youth and gender-inclusive nonprofit contractors which provide low-cost labor for home improvement and renovation projects, as well as national programs led by trade organizations like the Home Builders Institute (HBI), which has opened tuition-free, trade-specific training academies in partnership with local nonprofits across the country.
Marketplace Platforms Connecting Workers and Job Openings
Self-Employment in the Construction Industry, 2003 to 2020
Source: U.S. Bureau of Labor Statistics
As illustrated in the graph, above, as of 2020, nearly a quarter of construction workers was self-employed. This rate is more than double that of workers in all other industries in the US, and speaks to the challenges faced by the industry in connecting unmet demand with available labor supply. Additionally, because job opportunities, especially with smaller firms, are typically project-based, demand for employees is more likely to be subject to frequent fluctuations. As a result, the industry benefits significantly from the emergence of marketplace platforms that efficiently match workers with opportunities that fit their specific geographic constraints, skill levels, and income requirements.
Leveraging new technology to streamline the job-matching process may also offer increased potential to attract underrepresented groups to the construction sector. These platforms may help the industry appeal to younger, more tech-savvy workers, for example. And, by simply making job opportunities visible and accessible to a larger number of prospective workers, employers are more likely to reach those from underrepresented groups.
Innovative Labor Solutions from Ivory Innovations’ Portfolio
Ivory Innovations’ annual Ivory Prize for Housing Affordability recognizes pioneering solutions from private-sector companies, nonprofits, and government agencies in the housing sphere. Each year, the Prize recognizes winners in each of three areas of focus: Construction and Design, Policy and Regulatory Reform, and Finance. Over the years since the Prize’s inception, organizations from the former two categories have provided the housing industry with a wide range of innovative models to help the construction industry attract and retain talent and more efficiently match tradespeople to available work opportunities. Below is a list of these organizations:
On3 - On3 is an award-winning AI/Mobile Based Learning Application for fieldworkers in construction, trade contractor, and manufacturing industries. On3 allows companies to seamlessly capture their critical work processes in video, create multilingual video-based learning modules, and transform their teams by using artificial intelligence (AI) to verify retention of critical knowledge among frontline personnel.
Revalue.io - Revalue.io prepares communities for the transition to clean energy by removing home health hazards and fossil fuel based systems. Leveraging resources from utilities, government and community programs, Revalue.io provides local minority contractors access to a sustainable pipeline of projects to increase the skilled labor workforce and diversity within the construction and energy industry.
Tough Leaf - Tough Leaf is a B2B SAAS platform focused on empowering certified Minority, Women, and Veteran owned businesses (Diverse Firms) to grow by connecting them with opportunities and capacity-building partners. Tough Leaf does this by seamlessly connecting General Contractors & Developers with Diverse Firms to meet and exceed their compliance requirements on projects.
Build UP - Build UP tackles root causes of intergenerational poverty--low educational attainment rates, low-skilled workers lacking social and economic capital and mobility, and unstable, unaffordable housing to rebuild the minority middle class and close racial wealth disparities. Build UP’s value proposition redefines what affordable housing is by taking a long-game approach to rebuilding and owning from within a community. This model, at the intersection of high-quality education, workforce development, and community revitalization, results in dignified, affordable homeownership and retention of talent and wealth, both of which seed stable home and school experiences for generations to come.
Kairos XR - KairosXR combines traditional online training techniques for various trades with virtual reality technology to provide a more immersive training experience than traditional online training. It bridges the gap between effectiveness and availability for users. With the changes in workforce training and education brought upon by Covid-19, KairosXR provides a solution to recruit more young professionals to skilled trade positions.
The Building Talent Foundation - The Building Talent Foundation is strategically addressing the severe and persistent labor shortage across skilled trades by connecting trained talent with builders.
Community Action of Allegan County - Community Action of Allegan County’s Dual Community Development Program (DCDP) addresses education, employment, and housing through a single program. The core of the DCDP is education in the Home Building Trades industry. The current operational program provides the Pre-Apprenticeship Certified Training (PACT), which is an education curriculum preparing students for careers in the building trades. The program is 20% classroom, and 80% applied learning for actual home construction and remodeling projects.
Hammr - Hammr is a professional network and labor marketplace for the construction industry. Hammr empowers the people who boot up and build our world.
HBI - The worker shortage in residential construction is severely hurting housing supply and affordability. To solve the crisis, HBI is thinking of new, innovative ways to train skilled workers for the industry. In order to meet the needs to make fundamental changes, HBI is working on bringing public and private industry partners together. HBI’s research shows that to meet the nation’s housing demand, the residential construction industry will need to train and place 2.2 million new workers within the next three years. HBI is addressing the worker shortage head on. To fill the severe worker shortage, HBI is advocating and working towards increased training, compensation, diversity and productivity.