Demand for Construction Will Remain Strong Regardless of Near-Term Economic Conditions

I read an interesting article in the McKinsey Quarterly this weekend regarding construction employment. Almost everyone in the Architecture-Engineering-Construction (AEC) industry knows there is a labor shortage, acutely for skilled trade positions. What I found particularly interesting is that the demands for such labor will increase markedly over the next few years as projects funded by H.R.3684 - Infrastructure Investment and Jobs Act (IIJA) commence. As of September 2022, there were approximately 7.7 million people working in the construction industry.

​This amount is just slightly less than the peak construction employment achieved in April 2006 (7.719 versus 7.726 million to be more precise). However, the gains in employment since the market cratered in the housing bust that catalyzed the great recession of 2007-2008 are not enough. There are currently over 440,000 openings in the construction industry.

​If those open positions are to be filled, we need to increase construction employment by over 10%.  But that’s not all. The McKinsey article estimates that we will need over 200,500 additional positions between 2027 and 2028 to accommodate the projects that will be funded by the IIJA. Most of these jobs will be in areas that most people associate with traditional infrastructure, such as:

• Transportation (roads, bridges, etc.): 8,100 engineering positions and 34,000 trades workers
• Water infrastructure: 5,500 engineering positions and 23,000 trades workers
• Passenger and freight rail: 4,200 engineering positions and 17,000 trades workers
• Resilience and other infrastructure: 3,700 engineering positions and 15,000 trades workers
• Airports, ports, and waterways: 3,300 engineering positions and 14,000 trades workers

 
Yet, the biggest increase in employment will be necessary to build broadband infrastructure (9,100 engineering positions and 35,000 trades workers). These totals do not include people in the industries tied to delivering construction materials, which is in even greater need. The McKinsey article offers some recommendations for increasing construction employment (upskilling/reskilling existing workers, hire from nontraditional segments e.g. military, enticing people into the workforce with subsidized housing and other benefits e.g. childcare, and of course apprenticeships. Another key point to entice people into the construction industry is the pay. Strong demand for people for the foreseeable future and steadily increasing compensation are great selling points. However the case is made, it needs to be made strongly, because the construction industry is understaffed just as we are finally making serious investments in our built environment.