The Q3 2018 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index (Index) released today indicates skilled labor shortages will have the greatest impact on commercial construction businesses over the next three years. The report revealed 88% of contractors expect to feel at least a moderate impact from the workforce shortages in the next three years with over half (57%) expecting the impact to be high/very high.
The skilled labor shortage has been consistently identified as a major issue facing the industry, but it is now reported by 80% of contractors to be impacting worker and jobsite safety. In fact, the Q3 report found that a lack of skilled workers was the number one factor impacting increased jobsite safety risks (58%).
"The commercial construction industry is growing but the labor shortage remains unresolved," said Jennifer Scanlon, president and CEO of USG Corporation. "As contractors are forced to do more with less, a renewed emphasis on safety is imperative to the strength and health of the industry. It continues to be important for organizations to build strong and comprehensive safety programs."
As contractors grapple with a scarcity of skilled workers, findings show a majority are working to improve the overall safety culture on the jobsite (63%) and at their firm's offices (58%). However, the indicators that were reported to have the highest impact on improving safety culture and outcomes are those that engage employees throughout the organization. This includes developing training programs for all levels of workers (67%), ensuring accountability across the organization (53%), empowering and involving employees (48%). Other indicators reported include improving communication (46%), demonstrating management's commitment to safety (46%), improving supervisory leadership (43%) and aligning and integrating safety as a value (42%).
In addition to the skilled labor shortage, the report found addiction and substance abuse issues are a factor in worker and jobsite safety. Nearly 40% of contractors are highly concerned over the safety impacts of worker use/addiction to opioids, followed by alcohol (27%) and marijuana (22%). Notably, the report showed that while nearly two-thirds of contractors have strategies in place to reduce the safety risks presented by alcohol (62%) and marijuana (61%), only half have strategies to address their top substance of concern: opioids, which is a newer growing concern. The opioid epidemic cost our economy $95 billion in 2016, and could account for approximately 20% of the observed decline in men's labor force participation.
"The opioid crisis has both human and economic costs," said Neil Bradley, chief policy officer of the U.S. Chamber. "The U.S. Chamber of Commerce remains committed to helping combat the opioid epidemic, which continues to devastate too many families, communities, and industries every day. While there is no one-size-fits-all answer, a multipronged legislative approach is a critical first step."
Overall contractor sentiment saw a slight boost in optimism with an Index score of 75 in the third quarter – up two points from Q2 2018. The Index looks at the results of three leading indicators to gauge confidence in the commercial construction industry - backlog levels, new business opportunities and revenue forecasts – generating a composite index on the scale of 0 to 100 that serves as an indicator of health of the contractor segment on a quarterly basis.
The Q3 2018 results from the three key drivers were:
— Backlog: Optimal backlog rose from 73 to 81, the largest change in any of the three components of the CCI in the last six quarters. The average current backlog was 10.3 months, up from 9.3 last quarter.
— New Business: The level of overall confidence was 74, relatively steady quarter-over-quarter (75 in Q2 2018) but down two points since Q1 (76).
— Revenues: Expectations slipped from 72 to 69, the most notable change coming in a decrease in the percentage of contractors who now expect an increase in revenues, which dropped from 83% to 72%.
The research was developed with Dodge Data & Analytics (DD&A), the leading provider of insights and data for the construction industry, by surveying commercial and institutional contractors.
Related Stories
Market Data | May 16, 2017
Construction firms add 5,000 jobs in April
Unemployment down to 4.4%; Specialty trade jobs dip slightly.
Multifamily Housing | May 10, 2017
May 2017 National Apartment Report
Median one-bedroom rent rose to $1,012 in April, the highest it has been since January.
Senior Living Design | May 9, 2017
Designing for a future of limited mobility
There is an accessibility challenge facing the U.S. An estimated 1 in 5 people will be aged 65 or older by 2040.
Industry Research | May 4, 2017
How your AEC firm can go from the shortlist to winning new business
Here are four key lessons to help you close more business.
Engineers | May 3, 2017
At first buoyed by Trump election, U.S. engineers now less optimistic about markets, new survey shows
The first quarter 2017 (Q1/17) of ACEC’s Engineering Business Index (EBI) dipped slightly (0.5 points) to 66.0.
Market Data | May 2, 2017
Nonresidential Spending loses steam after strong start to year
Spending in the segment totaled $708.6 billion on a seasonally adjusted, annualized basis.
Market Data | May 1, 2017
Nonresidential Fixed Investment surges despite sluggish economic in first quarter
Real gross domestic product (GDP) expanded 0.7 percent on a seasonally adjusted annualized rate during the first three months of the year.
Industry Research | Apr 28, 2017
A/E Industry lacks planning, but still spending large on hiring
The average 200-person A/E Firm is spending $200,000 on hiring, and not budgeting at all.
Market Data | Apr 19, 2017
Architecture Billings Index continues to strengthen
Balanced growth results in billings gains in all regions.
Market Data | Apr 13, 2017
2016’s top 10 states for commercial development
Three new states creep into the top 10 while first and second place remain unchanged.