To win in the labor market you gotta understand the labor market.
Here’s the summary you need to know.
The labor market today is unlike at any other time in recorded history. This perspective is proven by data (below).
The broader US labor market is in turmoil. And the construction labor market is definitely in turmoil. This macro picture is concerning.
Things are changing fast, and companies need to adapt quickly.
Here are the three (3) mega trends that are fundamentally changing the construction labor market
Mega Trend #1: Labor demand has never been higher
Construction labor demand is at all time highs in 2022. Here are the key highlights:
- Highest ever demand in 2022. This year has been the hall time highest labor demand year for construction
- Highest ever demand in one month. September 2022 was he highest ever demand for labor at 8.347 million people
- Average monthly demand in 2022. On average, demand has been 8.09 million people per month
- The year with the 2nd highest demand was 2006. In 2006 (the 2nd highest demand year) it was 7.853 million people per month. This is 155,000 people less than 2022.
Mega Trend #2: Labor supply isn’t keeping up
And with demand soaring, the labor supply isn't keeping up.
- Peak labor supply was in 2006. The labor force peaked in August 2006 at 8.549 million
- 2006 average labor supply. From January 2006 through September 2006 the labor force averaged 8.241 million
- Today's labor supply. The labor force in September 2022 is 8.231 million
- 2022 average labor supply. From January 2022 through September 2022 the labor force averaged 7.99 million
- Still short of people. The industry is still 251,000 people short of its 2006 all-time highs
For the first time ever in 2022, labor supply is less than labor demand.
Mega Trend #3: The makeup of the workforce is changing
The makeup of the workforce is changing. Baby Boomers continue to retire. They are replaced with younger, less experienced workers.
Not only do workforce demographics change, but the number of high quality people goes down.
- The workforce is getting younger. Average age is down since 2012 which shows younger people are replacing older people in the workforce.
- There are fewer “A” players. Some of the best people - especially in supervision - are leaving the industry for retirement. This is putting a premium on top level talent.
- There are fewer experienced skilled workers. A younger workforce is a less experienced workforce. The 0.3 year reduction in age from 2012 represents 2.4 million years of collective experience loss in the construction industry.
How will companies adapt and win in this environment?
Keep reading future issues of this newsletter to find out. |