Despite ongoing concerns about a talent gap, employment in West Michigan’s construction industry continues to rise.
Total regional employment in the industry grew to 26,570 people in 2015, up 4.6 percent over the previous year, according to a September study released by Grand Rapids-based Talent 2025 Inc. Employment growth in the building and construction trades actually outpaced other leading regional industries, including manufacturing, health care, agriculture and food processing, energy and I.T.
The construction sector paid $1.5 billion in wages in 2015, according to the report.
The steady growth in the industry has led to largely flat enrollment — and in some cases, negligible declines — for Grand Rapids Community College’s construction trades program, according to Scott Mattson, jobs training manager at the school.
However, Mattson attributes much of the stagnant growth in enrollment to generally good news: Students are getting jobs in the field.
“As the industry is in such dire need for workers, employers are willing to hire with very little experience,” Mattson said.
But that also means contractors are having to invest more in various training and programs, he added.
One such program is the Grand Rapids-based Construction Workforce Development Alliance of West Michigan (CWDA), an organization founded by three regional trade associations: the West Michigan chapter of Associated Builders and Contractors, American Subcontractors Association of Michigan and Home Builders Association of Greater Grand Rapids.
GRCC teaches the curriculum, which is developed by the CWDA. Several general contracting firms and subcontractors from around the West Michigan region are among the participants in the CWDA. Curriculum for students includes core construction principles, ironwork and concrete.
Despite gains in the workforce and employers choosing to invest in their people in the hopes of further growth, Mattson said addressing the shortage requires long-term strategy and an all-hands-on-deck approach.
“You’re starting to see young people interested in skilled trades, including construction,” Mattson said. “But it’s been a conscious and ongoing effort. I don’t think it’s just something you do to fill a little gap. I think it will be an ongoing issue and an ongoing plan.”
TIME TO PAY
Higher wages make for one obvious example of how an employer could address a worker shortage. Indeed, sources say wages in West Michigan’s construction industry have started to rise.
Paul Lemley, senior vice president at Grand Rapids-based general contracting firm Triangle Associates Inc., estimated that higher labor costs are adding approximately 5 percent to the costs of the company’s projects.
“Across the board, bids are higher (in the last 24 months) because companies are having to do extraordinary things to accomplish the work,” Lemley said, adding that he sees the biggest shortages in specialty trades such as carpenters and masons. “While we’ve had the normal kind of fall ease-off of some projects … there’s still lots of work available and we’re still short people.”
Current wages in the construction industry vary depending on position and specialty, but the average wages in West Michigan range between $16 and $35 per hour, according to the Talent 2025 report.
One economist says that based on conversations he’s had with executives in the industry, contractors still need to address wages, which tend to be lower in West Michigan.
“Often, they’re still trying to get people at a lower wage than they probably should be,” said Paul Isely, a professor of economics and associate dean at the Seidman College of Business at Grand Valley State University. “There are workers there at the right price. But they’re getting harder and harder to find, and highly skilled workers are really in short supply.”
Isely said the continued challenge for construction companies to find workers should only accelerate wages in the industry in the coming year, which will be both a blessing and a curse.
“That wage growth is what will bring on the next recession,” Isely said.
ROOM FOR GROWTH
While the Talent 2025 report didn’t offer specific projections for the construction industry, multiple industry executives say they expect their book of business to remain strong for the next year or two as they continue to struggle to find people.
Norm Brady, president and CEO of the Western Michigan chapter of the Associated Builders and Contractors, said the group’s membership of general contractors and subcontractors all report backlogs of work stretching to at least 2017, with some spanning into 2018.
“The backlog is really good and that’s a question I ask members all the time,” Brady said. “Construction, on a general basis, has a pretty good pulse for about a year. You get out any further than that, and it’s a little bit murky because you just don’t know.”
That dynamic held true at a recent conference he attended with other ABC chapter presidents, Brady said. Still, groups from areas like northern Wisconsin have already started to express concerns about the pipeline of work beginning to dry up, he added.
“At least here in West Michigan, there doesn’t seem to be any concern,” Brady said.
His comments are buoyed by the recent Talent 2025 study, which paints West Michigan as somewhat of a bright spot in terms of overall growth in construction workforce numbers.
By contrast, a report released in early September by Arlington, Va.-based Associated General Contractors of America Inc. (AGC) noted that total construction industry employment for the month of August fell by 6,000 workers, largely because of the shortage of workers.
“A variety of indicators suggest contractors would be adding to headcount if they could find qualified workers,” AGC Chief Economist Ken Simonson said in a statement.
He noted that employment has doubled in the last year on a national basis and that wages are on the rise, all while unemployment in the sector is at the lowest rate in 15 years.
“No wonder more than two-thirds of the respondents to a survey of our association … reported difficulty filling craft worker positions,” he said.