The Skilled Workforce Shortage - NCCER

WHITE PAPER

NATIONAL CENTER FOR CONSTRUCTION EDUCATION AND RESEARCH888.622.3720 • www.nccer.org

The Skilled Workforce Shortage

By Don Whyte and Steve Greene

Our industry is in the midst of a skilled workforce crisis. For more than twenty years, the construction orkers but

broad industry-wide support needed to solve the problem has not been obtained. Every year, FMI, the nation’s leader in consulting and investment banking services for the construction industry, publishes an overview of U.S. construction markets. In the 2005-2006 report, Hoyt Lowder, Senior Vice President,

a shortfall of qualified managers and leaders.” He goes on to sayand management are the primary issues in all sectors, segments and markets.” As an industry, we must recognize this critical workforce crisis and come together to solve it. These shortages affect our entire industry, including suppliers, manufacturers, owners, operators, and contractors.

In December 2004, economic think tank The Brookings Institute released a study titled Toward a New Metropolis: The Opportunity to Rebuild America. The study noted that “Residential and commercial development in the next 25 years will eclipse anything seen in previous generations,” and that “Nearly half of what will be the built environment in 2030 doesn’t exist yet.” Our industry is facing staggering growth while simultaneously wrestling with significant workforce challenges. The construction industry

this pride, the industry no longer instills this pride in young people searching for career opportunities. Our image suffers, and not just outside our industry. Sons used to follow fathers into trades, yet today parents discourage their sons or daughters from pursuing career opportunities in the industry because of their perception of us. In addition, according to the 2002 Jobs Rated Almanac, construction jobs still score low on the jobs list with carpenter (228), boilermaker (235), welder (238), roofer (242), construction worker

1980s. Organizations like the NPRA have helped focus the industry on this critical issue by providing forums for discussion and by formulating solutions. Associations like Associated Builders and Contractors and Associated General Contractors, along with their progressive contractor members have

orkers. Despite these efforts, the issue is far from solved and has even intensified in recent years.

Our purpose is to discuss the demographics and trends of our current workforce and those of the

proportion. Finally, we will discuss the current workforce development resources that are available to address this issue and the short- and long-term strategies and solutions that are needed to build a strong

Records from the Department of Labor’s Bureau of Labor Statistics (BLS) show that less than 10% of the 7 million workers in our industry participate in a formal apprenticeship program. This ratio is down

the construction industry; prior to the 2005 hurricane season, this number was predicted to grow to 7.8 million by 2012. It is also estimated that we will lose 1.4 million workers over the same period due to

According to the BLS, the construction industry is expected to rank among the economy’s top 10 largest sources of employment growth. In fact,

professional and business services; leisure and hospitality; and retail. Figure 1 shows the BLS projections for job growth through 2012.

WHITE PAPER



Figure 1

Figure 2, below, shows BLS projected growth for the top 10 wage and salary construction occupations through 2012.

Both the Brookings Institute and the BLS are projecting significant growth in the years ahead. The growth

all but painting to meet industry demand. By 2007, FMI estimates that significant shortages will be seen

Figure 3

WHITE PAPER



In addition to the shortages shown by growth projections, it is estimated that 20 percent of our current workforce will retire in the next three years. To further complicate the crisis, the demographics of our current workforce are undergoing significant change. By 2012, the Hispanic segment of our overall workforce will grow from 12 percent to 15 percent. This is an increase of approximately 33 percent, a growth rate that is more than three times that of non-Hispanic workers. This segment of our workforce is predominantly Spanish speaking, which will increase demand for workers and managers fluent in both English and Spanish. Furthermore, the number of workers ages 35 to 44 will decrease likely causing, a widespread shortage of middle managers. These changing demographics of our workforce will create challenges and financial impact for our industry. In total, we will need to recruit and train 275,000

According to a Construction Industry Institute research study conducted in 2000, Maintaining a Skilled Construction Work Forceindustry because of pay, lack of permanent employment, poor safety, poor treatment, and poor working conditions. This impression results in fewer young people wanting to enter our industry, which is a prime contributor to our current workforce crisis. Additional factors include wage rate perceptions and/or realities, desire for less mobility, increased licensing mandates and, most importantly, relatively low participation in formal training across the industry. The cyclical nature of the construction economy has also contributed to the situation. The industry has historically survived the ups and downs of the national economy, but over the last 25 years, the industry’s ability to retain workers during the recessions

source at FMI, “People in the construction industry are either unaware of the impact of the situation or bury their heads in the sand to not deal with it.”

As 75 million baby boomers approach retirement age, a significant portion of the existing construction workforce will be leaving. Beginning in 2005, approximately 8,000 baby boomers per day will turn 60. By 2010, over half of the United States population will be over 50 years old. The youth demographic (ages 18 and younger) will shrink in size compared to the adult population, and the elderly population (ages 65 and older) will grow faster than the total population according to FMI’s report. The supply of potential candidates for our jobs is decreasing, and that may not change for many years. The National Association of Business Economics reported in 2005 that 10 percent to 35 percent of all businesses had worker shortages, so competition for these workers will be stiff. Our competitors for these candidates are other industries, like nursing, automotive, manufacturing, hospitality, services and retail. Unfortunately, the mindset is that the competition for our future workers is within our own industry - the other contractor

orkforce is

Today, 50 percent of high school graduates go to college, but only half of these students earn a degree. The result is that 75 percent of our high school graduates are looking for jobs that do not require a college

reach out to our young people and expand career-training opportunities to them. Today’s secondary, postsecondary, career and technical education students can benefit greatly from the career opportunities our industry has to offer. However, it is incumbent upon the industry to form relationships that will facilitate the transition of young people from the classroom to the job site. Currently, only 26 percent of

. Of postsecondary students . We need to substantially increase

the percentages of these young people entering our industry and we need to make sure we retain them by addressing their needs in the workplace.

WHITE PAPER



The link between industry and academia is extremely important. The educational system in general is not preparing young people for the career opportunities that are available in our workforce. An excerpt from the study titled Workforce 2020: Work and Workers in the 21st Century is shown in Figure 4. The study indicated that in 1970, 55 percent of the U.S. population had completed high school. Only 11 percent had completed a four-year college degree. In 2000, 83 percent of the population had a high school diploma, and 25 percent had graduated from college. The study also evaluated what types of jobs would be available in 2020, in comparison to what ninth graders were studying. The study estimated that 28 percent of today’s ninth graders will complete college, but only 20 percent of the jobs will require a four-year degree. Conversely, 40 percent of today’s ninth graders will have dropped out of school, or will have only the skills required for 15 percent of the jobs. The remaining 32 percent of the population will have the necessary training that 65 percent of the jobs will require. Industry working closely with schools can prevent this astounding shortfall in educational preparation.

Figure 4

In 2005, a critical shortage of skilled workers escalated to crisis proportions following a series of catastrophic events. As noted earlier, a recovering industrial market was already placing a strain on the

In August, Hurricane Katrina made landfall on the Mississippi-Louisiana Gulf Coast as a category three storm. Within weeks, powerful Hurricane Rita struck the Texas-Louisiana border. As a result of the devastating hurricanes, 350,000 homes were destroyed, 180,000 have damage requiring repair, and an additional 77,500 need roof replacement or repair. In Louisiana, seven of 16 major hospitals were destroyed statewide, and many schools were damaged or destroyed. Over 375,000 people lost their jobs and many have not returned to work. Today, 81,000 businesses in Alabama, Louisiana, Mississippi and Texas remain closed. Throughout the region, 634 power transmission structures were damaged or destroyed and 87 substations were damaged. Offshore oil production was severely impaired with the loss or damage of over 150 offshore oil rigs. In Mississippi, the $2.7 billion coastal gaming industry was shut down overnight. The state governments of Louisiana and Mississippi are losing a combined total of $1 million per day in gaming tax revenue. Engineering News Record stated in a February edition that two refineries are still closed. AGC estimates that 30,000 construction and pipeline employees have been permanently displaced from Louisiana and Mississippi. John Easley, state trade and industry program manager for Louisiana Technical College says, “Never has the construction industry in Louisiana been more in need of trained workers than it is today. Unless you see it for yourself, it is hard to understand

WHITE PAPER



the magnitude of what has occurred in southern Louisiana and along the Gulf Coast of Mississippi. On the Gulf Coast, the tidal surge came in, leveled almost everything, and then carried most of it away. In

task.” He believes that the situation in New Orleans and the Gulf Coast of Mississippi will be more than just a local problem. “It’s going to have a tremendous effect on the labor pool,” he notes. “The premium pay for skilled workers going into New Orleans is having a draining effect on the rest of the state.” Repairing and rebuilding in the area is going to take a long time and a lot of people, and that is going to

reflection, he adds, “I know it will.” He understands the situation firsthand, having seen his daughter’s house destroyed and two of his campuses closed.

Owners expressed many concerns at a recent NPRA Gulf Coast Workforce seminar. Wages have gone up $2 to $5 per hour throughout the Gulf Coast as a result of the cleanup and rebuild initiatives. In turn, companies must stay competitive, so wages have increased across the board. There is concern that once the wages rise, they will not return to pre-hurricane levels. As less skilled workers enter the lucrative market, statistics show that there is increased risk of near misses, injuries, and accidents. Overtime costs increase as the work demands 72 to 84 hour weeks. With increased overtime, quality and productivity suffer and employee absenteeism and turnover rise.

Initial estimates are that loans and grants for the rebuilding effort total over $325 billion. The oil industry predicts that it will take thousands of workers up to five years to repair all of their facilities. Over 60 million cubic yards of debris must be removed. Rebuilding 350,000 homes is forecasted to take one billion

are predicted to rise 15 percent to 35 percent during 2006 and shortages are likely.

The impact of the hurricanes on the Gulf Coast has been devastating and recovery will take years to complete. This increased activity has numerous implications for our industry’s workforce. They include:

• premium wages and incentivesExtreme recruitment and employment practices such as signing bonuses and guaranteed • overtimeRecruitment of foreign nationals to supplement crews •

• Competitive job markets with contracts awarded only to companies that have enough employees • to complete the jobsHigher overtime costs, bids, and budgets• Increased potential for missed schedules, lower productivity and work quality• Increased potential for job-site accidents•

In addition to the impact of the hurricanes, other factors have emerged that create challenges to overcoming our workforce crisis. The National Association of Home Builders has predicted a shortfall every year of up to 80,000 workers. The potential of steady work, high wages, and less regulation could draw workers out of the industrial and commercial markets. With the current increase in oil prices, the Canadian petroleum industry has announced its intention to spend $50 billion to extract oil from sand. This would create a need for an additional 30,000 workers per year for 10 years in Canada. In turn, the U.S. will spend billions of dollars to upgrade Midwest and West Coast refineries to handle the Canadian oil production. Coal and gas power, clean fuels, LNG terminals, petrochemical and paper projects expect 12 percent to 15 percent growth starting in 2006.

The challenges make our mission clear. We must invest in the development of our workforce. Twenty years have passed since the Business Roundtable (BRT) published the Construction Industry Cost

WHITE PAPER



Effectiveness Project outlining the problems with training in open shop construction. Since then, contr actors like Austin Industrial, BE&K, Bechtel, Fluor Corporation, Halliburton/KBR, Sundt Corporation, The Industrial Company -TIC, and Zachry have come together to create the National Center for Construction Education and Research (NCCER). In 1995, representatives from leading construction companies, national trade associations, manufacturers, and academia came together to establish a quality standard for training and certification in various sectors of the construction industry. Business and organizations usually in competition with one another forged partnerships for the common goals

industry’s image, and a means of career advancement. Their efforts resulted in the establishment of a nonprofit education foundation, NCCER, which is headquarters in Gainesville, Fla. and affiliated with the University of Florida’s Rinker School of Building Construction. As a result of this effort, the industry now has consistent guidelines for delivering training, the finest industry-driven curriculum in the world, uniform quality competency testing, and portable, industry-recognized credentials. NCCER was created specifically to address the workforce shortage facing our industry and to build awareness of rewarding construction career opportunities. Students can turn their goals into reality by following NCCER’s structured career path.

As the accreditation body for the industry, NCCER establishes and enforces the benchmark for quality training. Working in partnership with industry and academia, NCCER has developed a system for program accreditation that is similar to those found in institutions of higher learning. This accreditation process ensures that students receive quality training based on uniform standards and criteria. We train

ith the combined support of industry and academia for standardized training and credentialing, a curriculum that started with

level assessments, safety training with the opportunity for OSHA certification, and management and leadership preparation programs.

NCCER depends on a network of nearly 550 accredited training sponsors, accredited training units,

standards. As part of our accreditation process, NCCER has developed the Instructor Certification Training Program (ICTP). This program ensures the uniform and consistent delivery of training. Through

trained and certified to teach NCCER’s Contren� Learning Series. This network of certified instructors ensures that NCCER training programs meet the standard of instruction set by the industry. All of our master trainers, instructors, and proctors are trained and certified to provide the best teaching and mentoring possible to individuals in all stages of their construction careers. There are more than 3,100

NCCER’s curriculum, the Contren�

and trade associations. Diverse industry needs are incorporated into a single curriculum so that it is applicable anywhere in the nation. Contren� ’s structure is modular, and the modules are clustered into

venues and gives the instructors the flexibility to teach the curriculum in the order that best fits their needs.

Before students receive credit for Contren�evaluation components for each module. Each level of Contren� meets apprenticeship standards as set by Department of Labor’s Office of Apprenticeship Training, Employment, and Labor Services. The curriculum also sets or aligns to national skill standards.

WHITE PAPER



For secondary institutions and career and technical education, we have developed the National Construction Career Tests (NCCTs). These tests are built from the Contren� Learning Series, and, similar to our curriculum process, the test items are developed and validated by a regionally diverse SME

instructors to help us develop and validate tests that are fair and appropriate to the high school level. Students who take the NCCT receive a transcript of their results.

allocate an array of resources and efforts to improve the image of the construction industry by creating awareness through print ad campaigns, web sites, videos and the annual Careers in Construction Week, which this year is October 16-20.

An exciting component of our industry image campaign is the Build Your Future video, which takes the viewer inside the exciting and rewarding careers in construction. Sponsored by Monster® and

professionals, construction managers, and company owners at construction sites nationwide. Build Your Future is distributed at no cost to schools, contractors, and association chapters.

NCCER is currently developing a new Careers in Construction book designed to educate students, career counseling professionals and parents on the alternative career paths in construction. Students can also research construction careers and access industry resources on a website NCCER hosts in partnership with Monster®.

As an industry, we now have wide access to credible, quality training programs. But, even in today’s tight labor market some contractors still ask why they need to train and owners still ask why should they support training. The answer is simple. It benefits everyone, the worker, the contractor and the owner. The following statistics from the 2005 Houston Business Roundtable’s Workforce Development Awards shows dramatic proof of these benefits. These statistics were obtained from contractors who successfully train their employees:

OSHA recordable injuries were down by 67 percent• First aid cases reduced by 90 percent• Productivity was up by as much as 24 percent• Turnover was down by 32 percent to 43 percent• Absences of those employees engaged in training were down 59 percent•

To evaluate and improve the competence level of our current workforce and properly prepare new entrants, we must dramatically increase our workforce development efforts. Owners must be more aggressive in requiring contractors to participate in these efforts and in ensuring that appropriate and safe working conditions are provided. When owners enforce these requirements on a broad scale, contractor participation will rise. The 1997 Business Roundtable report Confronting the Skilled Construction Workforce Shortage—A Blueprint for the Future, stated, “Owners should only do business with contractors who invest in training and maintain the skills of their workforce.” In 2004, the Construction Users Roundtable (CURT) updated this report and made the recommendation stronger: “As they did with safety, owners should require contractors to invest in training and maintain the skills of their workforce as a condition of employment.”

We have seen owner participation steadily increase over the last five years. Today it is virtually impossible for a contractor to do business with an owner without a proven record of safety performance but it took a chain of tragic explosions, a research study, and an OSHA standard for owners to fully enforce these safety mandates. As an industry, we cannot wait for another natural disaster or catastrophic event before owners fully enforce training and skilled workforce mandates with their contractors.

WHITE PAPER



Funding for these efforts is also a key issue. Cents-per-hour funding through collective bargaining agreements has been the backbone of union training for many years. Through owner supported training in a number of industrial communities and NCCER’s National Training Services Agreement, cents-per-hour funding for open shop training has moved forward. Programs are in place that make open-shop cents-per-hour funding a viable mechanism, but the missing link is still broad owner support. These programs provide verifiable processes for managing cents-per-hour funds, but only the most forward-thinking contractors and owners participate. Owners can also help reduce the effects of the workforce shortage by working together. Coordinated planning and scheduling at the local level would create a

We must build strong partnerships and alliances for developing our current and future workforce. To support this, industry needs to partner with educators in every community to ensure that students are learning the skills needed and that training programs are fully funded and staffed. Students who want jobs in our industry must be able to acquire the necessary skills to succeed.

If we can improve our image, we will improve recruitment. This will take time; in the interim, we must tap into all sources of potential workers. Under-employed and displaced workers can participate in Rapid Start training programs that have been particularly effective in hurricane-devastated areas. Once new workers have joined our workforce, we can encourage them to stay by offering advanced training and by making proactive efforts to eliminate language and cultural barriers on the job site.

In closing, we as an industry still have a lot of work to do to solve our workforce shortage crisis. Our image affects all of us equally. Right now, it is one of the greatest deterrents to young people evaluating construction as a career choice. We must come together on this issue and turn our image into our greatest asset. The first step we can all take is a commitment to ethics, credibility, and safety performance. There are many individual associations, organizations, contractors and communities who have developed effective image initiatives, but we must move away from fragmentation and get behind an industry-wide appeal. The industry needs to work together to support a nationwide campaign that reaches all grade levels and tells them about the opportunities we have to offer. To complement that, we must also help parents and guidance counselors change their perceptions about us. Finally, we must publicize the great strides our industry makes on a daily basis so that the public is aware of our positive work.

Many ideas have been implemented and more will continue to emerge. We need to study and utilize them across the industry. We all need to work together to ensure that Workforce Investment Act and other government funding is reaching industry training programs in every community across the country.

e have made significant workforce development progress in the last 20 years, we must elevate our commitment, enlisting new and innovative approaches. Einstein defined insanity as “doing the same thing over and over again and expecting different results.” The “wait and see” strategy must stop; instead, we must unite and work aggressively to improve our image and address our workforce crisis. Investing in the development of our workforce is no longer a luxury. It is an urgent, critical need that we can only solve with immediate action and industry-wide cooperation.

“The people are the key, and finding enough talented people to keep your promises will determine your success in the coming years.” FMI

The Skilled Workforce Shortage - NCCER

Documents

Transcript of The Skilled Workforce Shortage - NCCER