WAs I was standing on the sideline watching a high school football game, a friend of mine who owns a small, successful construction company complained that his son, a senior, was planning to attend a highly regarded local college that fall, and that it would cost him about $200,000 over the next four years.
“You could get him a contract job for the same money,” he said. “It would be a much better investment.”
That was in 2010. The kid actually attended that college and graduated four years later with a degree in history. Where do you think he is now? He works in construction.
Ask anyone in the construction industry and they'll complain about the lack of skilled labor. The numbers support these concerns. The Associated General Contractors of America reported last year that 92% of companies are struggling to hire workers and 45% are delayed on at least one project due to a labor shortage. The Associated Builders and Contractors' labor shortage model estimates that the industry will need to bring in 499,000 workers in 2026 to meet demand. The National Association of Home Builders estimates that number to be as high as 723,000 per year.
Why is there a shortage? Among the reasons is that over the past few decades, young workers have stopped working with their hands in lieu of office work. The workforce is aging – The National Center for Construction Education and Research estimates that approximately 41% of current construction workers will retire by 2031. And the current administration's immigration policies have not only dried up the flow of potential overseas workers, but also forced many construction workers underground, even those with the proper documentation.
Data center construction has skyrocketed in recent years, and construction workers for these projects are in such high demand that salaries are increasing by 25% to 30%, and sometimes more, compared to their previous jobs. Good for them, but it won't last forever.
What will soon happen is that as interest rates continue to fall and new tax incentives begin to take hold, new demand from both homebuyers and businesses looking to build or buy real estate will once again be strong after more than five years. This is a circular industry. The situation has reached rock bottom. However, when it recovers, the peak will be higher. That means a huge need for new construction workers.
For many industries facing such labor shortages, that scenario is daunting. I think the opposite is true.
Thanks to AI, entry-level and meaningless white-collar jobs will disappear. where will they go? There will be other opportunities – startups and new jobs we've never heard of (20% of today's jobs didn't even exist in 2000). However, many will be attracted to transactions that cannot be replaced by AI.
We are already seeing this trend developing. Vocational school enrollment has increased significantly since the pandemic and is expected to grow by up to 7% annually until 2030, a rate significantly higher than other forms of higher education. Another report found that the proportion of students studying only construction trades has increased by 23% in the past year. Young people aren't stupid either. They are after the money.
