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Labor Shortages Spur Increased Pay/Benefits, Yet Construction Firms Bullish on 2019

Feature Photo (above): A construction crew on Soledad Street, San Antonio. Image: Google Streets.

Posted: 1-4-2019

by Adolfo Pesquera

Forty-six percent of Texas construction firms increased base pay in 2018 because of difficulty filling positions, according to a 2019 outlook survey by Associated General Contractors of America and SAGE.

The national survey, which is broken down by state, found that 79 percent of construction firms plan to expand their payrolls in 2019, but a near equal number are concerned about finding qualified workers.

The response from Texas firms tracked the national averages closely, with 80 percent anticipating a percentage increase in their headcount, 18 percent estimating no change and 3 percent predicting a decrease.

Seventy-six percent of Texas firms said they’re having a hard time filling some or all positions, and in addition to base pay increases an array of incentives are being considered–18 percent of firms said they increased benefits in 2018 and 9 percent said they are considering increases in pay and/or benefits in the near future.

Texas Results for 2019 Projected Staffing Changes. Source: AGC/Sage.

Texas Results for 2019 Projected Staffing Changes. Source: AGC/Sage.

Staffing challenges is affecting construction projects. Among Texas firms, 28 percent reported costs have been higher than anticipated as a result, and 31 percent said projects are taking longer to complete than anticipated.

This is changing the way Texas firms are bidding, with 29 percent of contractors claiming they are increasing prices on bids and contracts, and 16 percent reporting they are entering longer completion times on bids or contracts.

Texas results for current hiring issues (above), and impacts caused by staffing challenges (below). Source: AGC/Sage.

Texas results for current hiring issues (above), and impacts caused by staffing challenges (below). Source: AGC/Sage.

Construction firms are continuing the trend of looking toward technology to offset the skilled labor shortages. Thirty-three percent of Texas firms claim to be using off-site fabrication, BIM, lean construction and other methods; 20 percent are using labor-saving equipment such as drones, robots, and 3D printers.

On the job training is also becoming a more urgent priority, with 59 percent of Texas firms reporting they will increase investment in training and development.

Ranking at 33 percent, worker shortages is by far the biggest concern among a long list of concerns Texas contractors considered. Coming in a distant second at 14 percent was increased competition for projects. Rising labor costs and the growth of federal regulations ranks equally at 11 percent each.

The majority of Texas firms responding to the survey, 49 percent, were general contractors. Specialty or subcontractor firms representing 39 percent of responses. Suppliers and service providers accounted for 7 percent; architects and engineers, 3 percent; and other was 3 percent.

The Texas results on market predictions showed a lot of confidence in continued expansion across all sectors except transportation-related (transit, rail, airports). Texas firms expected the available dollar volume of projects to increase by a net 30 percent for hospitals; 25 percent of K-12 schools; 24 percent for higher education; 21 percent for private office space; 20 percent for retail, warehouse, and lodging.

Multifamily residential, water/sewer, and highway projects were all expected to have a net increase of 13 percent each. A net increase is defined as the difference between firms predicting whether volume will be higher or lower.

The Associated General Contractors of America, referring to the national averages, released a statement on the survey Wednesday noting that the percentage of respondents expecting a market segment to expand exceeded those anticipating a contraction for all 13 categories.

“Construction executives appear to remain confident about their market prospects for 2019 and plan to add headcount to cope with the added workload,” said AGC Chief Executive Officer Stephen E. Sandherr.

The national predictions on dollar volume per market were, however, considerably lower than the Texas predictions. Public buildings ranked highest at a net 17 percent. Highways, K-12 schools and hospitals all had a net 16 percent each.

Outlook by markets for Texas (above), and for the nation (below). Source: AGC/Sage.

Outlook by markets for Texas (above), and for the nation (below). Source: AGC/Sage.

Skilled Trade Wages Trend Upward

The AGC/SAGE survey followed a December report by the National Center for Construction Education & Research (NCCER) that found skilled craft professionals are experiencing wage increases.

Of 32 construction positions surveyed, average annual salaries ranged from $47,700 to $92,500. Project supervisors and program managers topped the list, earning over $88,000 and $92,500 respectively. Professions earning more than $65,000 include boilermaker, mobile crane operator, tower crane operator, millwright, industrial electrician, power line worker, pipe welder, instrumentation technician and combo welder. Additionally, seven more craft areas made more than $60,000 per year.

“The most significant pay increase was HVAC technician, up 20 percent from previous years, with sheet metal worker a close second at an 18 percent increase. Since many craft professionals receive additional pay incentives, their take-home pay is typically much greater than these incomes reflected,” the NCCER report said.

Sample of Trades in NCCER Surveys:  Years 2015 vs. 2018

  • Project Mgr $88,675 | $92,523
  • Boilermaker $58,856 | $65,341
  • Pipe Welder $62,509 | $69,222
  • HVAC Tech $52,026 | $62,472
  • Sheet Metal $49,189 | $58,160

adolfo@virtualbx.com

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By |2019-01-04T14:30:44-05:00January 4th, 2019|Feature Story, Industry News|

About the Author:

Adolfo Pesquera (Reporter/Editor) is a veteran news journalist. He has worked for Hearst Corp., American Lawyer Media, News Corp and Freedom Communications. His work has been published in newspapers and magazines across the USA. He is a journalism graduate of UT-RGV. He writes, edits and creates digital pages for VBX.

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