If you’re struggling to find the workers and materials needed to complete orders in 2021, you’re not alone. The U.S. is in the middle of both a labor and materials shortage squeezing multiple industries and driving prices higher while delaying job completions. Here’s a brief look at the current shortages, what’s causing them and what the forecast is for the rest of the year.
Where are the current shortages?
Labor – The U.S. had been experiencing a labor shortage in certain industries even before the Covid-19 pandemic. In construction, retiring workers and a lack of skilled workers was already affecting the industry. Since the Great Recession in 2008, which drove many workers out of the industry, the labor force has been slow to rebound.
In March of 2020, over 600,000 workers were laid off during the first wave of the pandemic, followed by 709,000 more in April. Now, as demand for construction comes roaring back, finding workers, especially skilled ones, is proving difficult. This is also driving up wages as companies compete to hire and retain labor. According to the annual Marcum Job Opening and Labor Turnover Survey (JOLTS), construction wages reached their highest level ever in January 2021 at an average of $32.11 per hour. The Associated Builders and Contractors Association forecasts the construction industry will need to hire 430,000 more workers than they employed in 2020 to meet demand.
Materials – Shortages have been reported across the construction industry, with prices skyrocketing most notably for timber and steel. However, the paving industry is also feeling the constraints of a cement shortage affecting many states due to a number of factors. The pandemic first shut down production facilities. Layoffs in the trucking industry followed and a full recovery hasn’t taken place, which means materials are experiencing delays in transport.
The same delays are affecting the shipping industry, where large containers were left in ports when the pandemic forced a shutdown. These containers are still being shifted to where they are needed, causing more delays in transportation. The February winter storm that hit Texas has also squeezed supplies as the Lafargeholcim plant sustained damage and is still awaiting repairs.
How are the shortages affecting the pavement industry?
A shortage of materials is expected to continue through 2021, causing delays on jobs and possibly driving prices higher. Contractors should be aware of the situation and initiate communication with suppliers as early as possible within projects to set realistic timelines and prices. Demand within the construction industry is expected to grow steadily this year and into 2022, with a moderate increase of 3.1% growth. Demand for non-residential projects is returning and demand for residential projects, which increased during the pandemic, remains steady.
Solving the labor shortage within the construction industry is a much tougher problem that will persist past the effects of the pandemic, and require more sustained efforts from companies to recruit, train, and retain skilled workers. As for the 2021 outlook, as long as the transportation industry can sort out its pandemic hiccups in supply lines, future growth for the paving and construction industry looks good through the end of the year and into 2022.