Worker shortage handicaps building recovery

Across the country, the homebuilding industry is facing a potentially critical labor shortage. In Idaho, workers that left the area or the trade after years of little activity appear not to be returning.

Steve Martinez, president of the Idaho Building Contractors Association, said workers left for greener pastures when the recession hit and construction work ground to a near-halt around 2008.

“We’re hit hard on a couple fronts. We lost a lot of labor to North Dakota when the market got slow,” said Martinez, also the president of Tradewinds General Contracting, a custom homebuilder. “With the oil boom in North Dakota, a lot of our subcontractors and workers went there.”

“We haven’t seen a lot of those laborers return,” said John Cotner with Cotner Building Co. and president of the Snake River Valley Building Contractors Association, which includes Canyon County.

Highly skilled workers are especially scarce.

“Skilled laborers that are good at their trades are booked up right now and have plenty of work,” said Cotner.

In Idaho, the number of construction jobs is increasing, though it is still below peak levels. U.S. Bureau of Labor Statistics data and Idaho Department of Labor Current Employment Statistics show year-over-year increases in construction jobs for 16 of the last 18 months. Residential construction has seen year-over-year growth for every month since September 2011, though the total number of jobs remains less than half of peak employment in 2006 and 2007.

While jobs are improving, the number of contractors hasn’t turned around. The Idaho Board of Contractors, part of the Idaho Bureau of Licenses, reported 19,195 registered entity and individual contractors in 2007. That number has declined every year since, dropping 25 percent, to 14,384, by 2012.

A survey conducted by the National Association of Home Builders indicates the shortage is widespread.

“The survey of our members shows that since June of 2012, residential construction firms are reporting an increasing number of shortages in all aspects of the industry,” NAHB Chief Economist David Crowe said in a news release. “The same holds true for subcontractors.”

The survey found that more than half of builders reported that labor shortages over the past six months have caused them to pay higher wages or subcontractor bids to secure projects. Consequently, home prices are up.

“What used to be high-paying, skilled jobs vanished as builders across the nation went out of business or were forced to let workers go,” NAHB Chairman Rick Judson said.

Worker shortages hurt economic growth in general, he added.

Nationally, construction of 1,000 single-family homes generates more than 3,000 jobs, approximately $145.4 million in wages and more than $89 million in federal, state and local tax revenues, Judson said. That doesn’t count the increase in annual property taxes that cities rely on to pay for schools, police and firefighters, he added.

NAHB officials anticipate total housing starts of 970,000 this year and 1.18 million in 2014 as the market continues its gradual rebound. To support that rebound, Judson said immigration law must be changed.

“We need to look holistically at the homebuilding infrastructure to meet growing and future demand,” Judson said. “To avoid a run-up in prices in hot markets due to labor issues, we need to complement our current training programs with a market-based visa system that would allow more immigrants to legally enter the construction workforce each year when there is a dearth of workers to fill the jobs that are needed.”

The construction labor shortage isn’t only affecting homebuilders. John Treinen, an estimator with CSDI Construction, a Boise commercial general contractor, said it is becoming more difficult to find bidders for projects. He said the Boise market hasn’t been as bad as other areas where CSDI has projects, though.

“It has tightened up, especially in certain areas. The California market is extremely tough to find subcontractors to bid. The bigger metropolitan are extremely difficult,” Treinen said.

The lack of labor supply could lead to an increase in labor costs. Those costs would be passed on to buyers.

“Because labor’s getting harder to find, we’re seeing the cost going up,” said Martinez. Builders are also seeing increasing costs for many building materials. “Everybody has been operating on such thin margins. We don’t have any room to absorb those price increases.”

“We’re going to get to the point where we’re not able to sustain (higher costs) anymore, and it could slow construction back down,” Cotner said.

It’s unclear where builders can find more skilled construction workers. Cotner said Idaho builders can’t match prices paid for labor in North Dakota. Training and vocational programs are producing workers, but they lack experience.

Jon Chandler, CEO of the Oregon Home Builders Association, said the irony is that the economy is getting better. The problem, he said, is that many of the workers are long gone.

“If you’re an unemployed carpenter, you’re not going to sit around for five years,” Chandler said. “You’re going to go out and do something else.”

Chandler said it is particularly hard to find specialty subcontractors such as plumbers, electricians and carpenters.

“Our membership has dropped,” he said. “Any time you come out of a recession, it takes time to get people back in.”

Tom Henderson with the Daily Journal of Commerce contributed to this story.