When the hammer hits the drywall, it still comes down to the quality and quantity of the construction firm's employees. And generally speaking, construction workers have been in short supply.

“The labor shortage is a serious issue in the construction industry and has been for the past three to four years,” said Michael Bolen, CEO of St. Louis-based McCarthy Building Cos. “An aging labor force, together with the need to accommodate the demand for accelerated construction timetables and an extremely busy building market, are putting pressure on the unit labor cost.”

Given the extensive backlog of work, Bolen doesn't expect a decline in building activity over the next few years. “However, the activity level in commercial construction overall could slow if the general economic slowdown continues,” he said. “But such a slowdown will take some time to impact labor availability. So the labor shortage could continue for a time.”

How has McCarthy been dealing with the labor issue? “Clearly, planning work in advance to ensure an adequate workforce is available is critical,” he added. “Also, we maintain a substantial company labor force to perform certain types of work. Having our own labor force enables us to directly control project schedules.”

External company efforts include playing a role in schools and communities to encourage young people to consider construction as a career. That's a good start, but that's help down the road. Today, the labor shortage may have more detrimental effects, like stopping some buildings from happening altogether.

“The largest way these shortages have affected our business is its direct effect on higher costs,” said Peter Marchetto, president of the Northeast region for New York's Bovis Lend Lease. “In fact, some projects simply won't be built as a result of the labor shortage due to the fact that schedules can't be made and costs are too high.”

According to Marchetto, the labor shortage is particularly acute among electrical contractors. “With the surge in building construction, it appears that the electrical trades have not grown their workforce in anticipation of the increasing demand for electrical/telecommunications intensive projects.”

Construction Unemployment Rate
AUG SEPT OCT
2000 2000 2000
6.4% 6.4% 6.5%
NOV DEC JAN
2000 2000 2000
6.9% 6.5% 6.8%
Source: Bureau of Labor Statistics