The Skilled Trades Labor Shortage of 2022
(and How to Overcome)

The skilled trades division of PeopleReady (PeopleReady Skilled Trades) found that the amount of skilled trade jobs is far outpacing the supply of qualified workers to fill them. There were 388,345 jobs posted for skilled trades-related workers between May and June of last year, a 50% increase from pre-pandemic levels. The more sobering data here is that most positions remained unfilled for an average of 24 days.

They based their numbers on the growth in demand over a month and the length of time that jobs typically remain unfilled:

• Concrete masons top the list with 904% growth in demand compared to pre-pandemic numbers.
• Electricians have risen 130%.
• Plumbers are up 129%.
• And carpenters are up 121%.

PeopleReady also found that apprentice-level or helper-level type of work is the most impacted.

Additionally, 90% of US general contractors are worried about a possible labor shortage. There are more worrying statistics as the construction industry grows, yet positions aren’t being filled. With projects ramping up, the last thing contractors want to do is turn down work because they can’t find skilled workers.

Guess what? That spells big problems for skilled trades workers.

The ongoing struggle of attracting skilled trades workers to the construction industry is a big problem. As you have seen from the data, the uptake of jobs doesn’t match the ever-increasing demand for skilled trades staff.

Fewer workers are entering the trades, especially among the younger population. There is a push for more construction courses, apprenticeships, and trade school incentives. 34% of companies are starting to partner with high schools and trade schools to build demand (according to Marcum’s National Construction Survey). 

And, if you’re rightly concerned about your reputation, your onboarding process will at least include:

• Background screening
• Drug testing
• References
• Experience and skills
• Certifications and licenses

Unfortunately, this means that the average 24 day filling of a position may be even longer before you get someone in the door. Think roughly 2 months of lead time before you get boots on the job site.

And, the gap remains between contractors used to working with a particular demographic and the new wave of workers. New workers may have misconceptions that the trades “is a dirty job”, they may cite safety concerns, but the reality is that even if they want it, the biggest gap is the lack of years of certifications and on-the-job training that the previous workforce obtained to demonstrate the skills necessary for the job.

The Talent Isn’t There

In addition to the workforce aging and moving on in life, the talent just may not be there. When you’re starting a project, you might have a team of skilled tradespeople that you often rely on. But as you know, they might already be employed. By casting the net only nearby, you don’t have access to a larger talent pool.

As your desperation grows, you might be tempted to hire almost anyone who applies for the job. Construction companies tend to hire workers once a project has been secured, leaving HR departments scrambling and under pressure to search a shallow talent pool and fast. Your solution might be to cast your net wider, but there are risks involved: like not getting the right fit for your job.

Your Talent Feels…Well, Not Talented

Something to keep in mind is that, overall, despite the Great Resignation, trades workers are overall fairly happy. 83% said they were somewhat or extremely satisfied with their choice of work. 

The rub comes in at the phrase, “somewhat satisfied”.

Workers still don’t feel like they are a part of the team, but more of an asset. Which, from a business standpoint, is a dangerous game to play when you consider the crushing costs of employee turnover:

• Exit costs: Your HR team now has a flood of paperwork to fill out (electronic or paper, still painful), if there’s any severance packages to consider, and you may be prone to lawsuits (even if it’s not your fault)
• Rehiring: Posting on job boards and reaching out to your network results in lost time and money
• Training and Ramp Up: Your new hire needs not only the right skill sets but also a primer on how you do business, any safety training, etc.
• Decrease in Morale: Losing a valuable member of a team can decrease morale in the team overall and may result in workers quitting. There may be a hazing period where the new hire doesn’t feel welcomed.

Although work hours are consistent with nice breaks and offtime, the culture of the job is often demanding. Being per diem means that the workers try to squeeze as much money from the job as possible, leading to some negative effects of being on the road, like poor eating, substance abuse, or loneliness. Here are the top three reasons why tradesmen don’t valued:

1. Skilled tradesmen often show up to the job site with the right skills and find a different job than was promised.
2. Despite a deep set of experience and commitment to the company, employees are often met with the worst assignments and a cold shoulder.
3. Even with time and money riding on quality work, tradesmen with the skills are unfortunately the last one on the job, but the first one to go.

The Government

It isn’t just about the workers. Yes, the Federal Government is proving to be a big problem for skilled trades companies and their workers. In their 2021 National Construction Survey, Marcum noted the top three political issues that will have the most impact on their business:

1. Material price volatility
2. Healthcare reform and insurance rates (health, liability, etc.)
3. Income tax rates

Although many have benefitted from the Paycheck Protection Program (PPP) and the waves of funding, the Producer Price Index is showing that materials like softwood lumber rose 24.4 percent. Overall, input costs for construction soared 27.8% from April 2020 to August 2021.

That means that luckily your paycheck was not lost, but you are only staying afloat to just do business, much less turn a profit.

This will not only affect just your business, but also your workforce. Inflation has hit the highest level since 1981 with the CPI soaring at 7%. The workforce (not just your skilled tradesmen) will feel the pressure in their residential energy bills, food, gas to the job site, their per-diem pay, etc. This seeps into the availability of projects, how bids are approached, and the mental health of your employees.

The challenges facing the construction industry haven’t changed that much for 2022 - they all center around getting and keeping the right skilled tradespeople when you need them, and competing with rising costs. Here are some key the tactics that can help you win the staffing battle.

It should be a simple fact. Meet candidates where they are standing. There is talent available, but they might not check every requirement you’ve had in the past. The tradesmen fit may be under-qualified for the job in certain areas. We’re not indicating that you should accept lower talent for more money, but we as employers do need to understand that the bargaining power pendulum has swung to the side of the employee. Maintaining the resources and flexibility necessary to utilize available talent will be key to your success finding and keeping quality talent.

The Golden Rule

More than anything, when you get someone you like on-site they need to be to treated with the respect they deserve. Most employees who leave a project before completion do so because of how they are being treated by a direct supervisor or because there is a lack of communication regarding job end dates and future opportunities. Do you have a management training program with expectations set for your site leadership?  

As a job is coming to an end, are you thinking about what comes next for the skilled labor on-site and communicating appropriately? Plan ahead and avoid scrambling to find them a position.

Create an ESOP

Talk to your team about this, but it may be worth exploring ESOP. ESOP stands for employee stock ownership, or employee share ownership, which occurs when the company's employees own shares in their company. Employees who feel like they have a stake in the company will more likely stick around, but also feel empowered to speak up or make recommendations.

Recognition Programs

Many companies are meeting the challenge of retaining employees with recognition programs. This doesn’t have to be as cheesy as an “employee of the month”, but it can be in the vein of a referral program or a spot bonus for a job well done.

There are many ways you can approach this: try awarding points that the employees can redeem for swag or creating an interactive competition to see who can get the golden trophy for most projects completed on time.

Additionally, check in on your employees. Having conversations with them on things they are seeing on the job, any safety issues they may be experiencing, or just wanting to know how they are doing in life can have a big impact on how the employees feel.

Ask Yourself The Hard Questions

Also, ask some hard questions about your current workforce:

• Do you have Spanish speaking resources on-site? 
• How many women do you have working on your sites?
• Do you have job site specific training baked into your plan and budget? 
• Are you willing to train them on specific tasks?
• If skilled talent is willing to come from out of town are you willing to pay per diem? 
• Is it competitive and aligned with increasing costs of living?
• Will you accommodate a full crew who travels together? 

How about investing or partnering in a quality apprenticeship program to attract more people to the trades early in their career? (More on that in a moment.) Keep in mind that there may be candidates who have the aptitude and ability, but not the direct experience.

The average age of skilled trades is 43, and 27% will retire in the next 10 years. Although the workforce is leaving, there is still time available for mentorship. According to National Tradesmen Day, when every three tradesmen retire, there’s only one trained person to fill that role. 

Employees need to feel like they have goals to reach and that it isn’t just a job. This can include a portal where employees can access their training, one-on-one lunches with a supervisor, aligning your workers with skillsets and hobbies and putting them in “tool sharpening” groups where they learn from one another and have community.

This isn’t only about your current employees; it’s about planting the seeds for the next generation as well. Speak at local schools about the construction industry. Talk through why it’s perceived as a dirty job. Espouse the merits of going to a trade school versus a college education. Be honest…the next generation can smell BS a mile away.

Construction managers invest only 2% of their budget on IT. Which sounds like a missed opportunity when you consider the impact of:

• Augmented reality (AR)
• Wearables
• Drones
• Robots
• AI/Machine learning
• 3D printing
• Building information modeling (BIM)

The Internet of Things (IoT) helps tie all of these together…AI can predict things like scheduling, weather patterns, earthquake tolerance, etc. and take out a lot of the guesswork or even the hours of data analysis. Robots and wearables aid in the safety of the job site by allowing more dangerous or rote tasks to be done by robots, and wearables assist any job that needs a human being to monitor micro naps, blood pressure, location sensing, etc. To the credit of companies, many are using apps on their devices, cameras, and drones to expedite jobs and make the job site a little bit safer and more productive.

Even if you’re not using one or more of the above technologies, you should at the very least outsource a good portion of your manual labor (e.g., use an HRM, create a training portal, use employee networks to find your best candidates).

All of this technology might seem overwhelming with the ideas of cost, training an aging workforce, and implementation. But with a technology-based system, like an employee portal, training can be provided and signed off on, so you always know the certifications each employee has without having to look through a filing system. The setup may be a pain as well as the training, but the long term effects will benefit everyone.

Some companies believe it’s enough to have programs mandated by your state or province, but generic video presentations about safety practices are often dull and won’t engage new workers. You also need detailed training programs that cover procedures and safety for different sites.

Ongoing site-specific training for workers shows you care about their continued health, safety, and wellness. There are plenty of ways to make it interactive. You can use apps to deliver the training, including quizzes, congratulate workers on completing courses, and give recognition when they hit targets. 

Using technology for hiring doesn’t just include LinkedIn. Use industry-specific job boards like Road Dog Jobs or Tradehounds to find specific workers for your job. There’s also a new app out there called Boom Nation which is supposed to bring your network into one place. But using automated software like an HRM that’s software as a service (SaaS) can help you follow up on leads, send automated emails, provide analyses on qualifications, etc.

Labor Laws

From the top-down, train your HR and management staff on the labor laws. This is an ongoing process as regulations often change, and you must be vigilant.

Properly trained workers who already know the laws and precautions to follow are essential assets. Make sure this is part of the onboarding and training process.

HR in the modern climate takes diversity very seriously and looks to provide equal opportunities for tradespeople from all walks of life. The older generation might have a different outlook on younger workers, which can cause tension in the workplace. 

It can be challenging to manage people from diverse backgrounds, nationalities, and cultures, and starts at the top of a company, with diversity policies rolled out through HR. Make sure that your company assists in resolving disputes before they become violent. Sometimes the demands of the job can get to even the most cool of workers, and the mental health of your staff is imperative.

Eligibility to work is also a responsibility as HR should have on file an I-9 form for any worker who needs verification of their identity and authorization to work in the United States.

Safety

And compliance shouldn’t just be a checkbox that you begrudgingly check off. 

The number of construction workers who were killed on the job is at the highest level in at least 9 years since 2019 according to The Center for Construction Training and Research (CPWR).

Spend the effort and money on training your employees through OSHA training organizations. It may even be a requirement of your state. Intentional compliance can lead to safety…like the old saying goes, “Safety is no accident.” Here’s how to limit or completely eliminate accidents: six effective strategies to on-the-job safety.

Insurance

Speaking of safety, there’s also the matter of insurance. We employ insurance for those rainy days we can’t predict. Insurance brokers who are valuable will employ those with decades of experience, with common training authorized through the Department of Labor and the National Education and Safety Center. The site lead will be a veteran that is well-trained and knows the policies and procedures of the job site (most likely with a degree in Occupational Safety and Health). The lead will most likely engage in:

• Monitoring with periodic audits
• Self-inspections of the job site
• Enforcement of the rules and regulations
• Daily task analysis to avoid mistakes and communicate effectively where workers will be and when (situational awareness)

They’ll make sure you’re on top of safety from an OSHA perspective as your advocate. They don’t want a mishap to occur onsite because it will be on them to pay for workman’s compensation, any disability, or any legal fees.

For the Business

WOTC

Since the fallout from the pandemic has been raising prices, your company should make the most of the benefits the Federal Government does offer. There’s the Workforce Opportunity Tax Credit (WOTC). HR should assist in applying for and certifying WOTC hires because it not only employs workers who have consistently faced barriers to employment, such as minorities, veterans, and ex-cons, but it also helps the business come tax time. And, you’ll attract more younger and diverse talent if you show your team off.

The Workforce Training Credit

The Workforce Training Credit is a tax credit that allows businesses to receive up to $250,000 in tax credits per year for employee training.

In order to qualify for the Workforce Training Credit, your company must meet certain requirements. These include :

• The training must be for employees who are not in management or executive roles
• The training must improve the skills of the employee
• The training must be related to the employee's job duties

If your company meets these requirements, you may be able to claim the Workforce Training Credit.

R&D

Research and Development (R&D) Tax Credit may also be an option come tax time. This may seem odd for a fairly established industry, but as we mentioned earlier, technology can be your best friend here. Make that 2% investment work for you and grow it larger and larger each year.

Here’s a simplification of the four-part test as to whether you qualify for the credit or not:

1. Qualified purpose: The research has to create a new or improved business component…this could be a product, computer software, invention, formula, etc. But it ultimately has to help the business.
2. Elimination of uncertainty: Your company needs evidence to ensure that the development of your product or invention has improved a business component.
3. Process of experimentation: You must demonstrate through modeling and sim, systematic trial and error, or other methods how you evaluated other alternatives and came to your result. Recall back to science class. There’s one independent variable you change to see if you can achieve your desired outcome…and the rest are dependent variables that must stay the same.
4. Technological in nature: To receive the credit, it has to be technological in nature. Some may be groaning at this concept, but it isn’t just about computer science, there’s also engineering (hey, we’re good at that!), physics, chemistry, etc.

There’s more information about this credit online. As always, talk to your qualified tax professional to make sure you are eliminating risks while maximizing your revenue.

For Your Skilled Trades Workers

Not only on the business side, but your employees should also receive some benefits beyond compensation that can help them more easily accept the job. This could be a four day workweek, additional holidays, an employee discount, an annual retreat, etc.

Just to give you more ideas, Business Wire complied examples of what employers are doing in other countries:

Companies in Belgium are offering private health insurance to help attract and retain talent, while firms in the Netherlands are enticing workers with educational stipends and reduced work hours. Companies in Ireland are offering four-day work weeks. Additional paid annual leave and smaller-ticket items are priority for workers in the UK and Germany. UK talent desires sports and fitness equipment while free food, team events and parking spaces are popular in Germany. Flexible and remote working options were common across the board.

Finally, you have to pay your current and future employees what the market will bear. Regardless of where you find talent in your labor, the costs are going to increase in 2022.  

Have you reset your budgets and expectations for inflation? If the answer is “no”, you need to understand that there are competitors out there answering “yes”. Costs are going up, so if you bid too low, you’re going to have a hard time delivering what your client needs. Too many of these break-even bids and you’re letting manpower go. And then the rest of your talent starts to follow suit.

It may not be a sexy answer, nor do contractors want to hear it, but the biggest differentiator will be money. Your manpower budget must go up. Contractors are slow to adjust and most are still trying to under pay. It won’t fly this year.  

If you, as a contractor, want to attract and keep skilled talent you will need to pay them more money in 2022. Higher wages & higher per diem. You’ll end up paying regardless, and how long you fight it will determine how much waste you have until you figure it out.