Everywhere you look in Northwest Arkansas, road projects seem to drag on for years on end, and commercial construction projects sometimes sit half-finished, with some projects dragging on for months. Everyone knows someone who has tried to hire a contractor to add to or renovate their home, only to find that half of the battle seems to be getting someone to return a phone call or look at the project.
As the COVID-19 pandemic fades into the background and the supply chain normalizes, Northwest Arkansas construction companies still face the lingering problem of an insufficient labor pool.
That isn’t unique to Northwest Arkansas. The construction industry nationwide faces a severe labor shortage. According to an April report by the U.S. Bureau of Labor Statistics, construction job openings jumped by 129,000 this past February.
The skilled labor shortage has not only affected projects in the private sector. It has delayed the start and completion of many projects in the November 2021 infrastructure bill signed into law by President Joe Biden.
In Northwest Arkansas, municipalities also needed help hiring enough workers to complete scheduled infrastructure projects. Fayetteville recently announced its list of sidewalk projects slated for 2023 with the caveat that up to 30% of the list might only be completed as planned if vacant positions on city construction crews could be filled soon.
According to a report released in February by Associated Builders and Contractors, the U.S. construction industry will need to attract an estimated 546,000 additional workers on top of the average pace of hiring in 2023 to meet the demand for labor.
It’s clear to anyone familiar with Northwest Arkansas that new commercial and residential projects are coming online frenetically. The population growth is here. The investment funding for new projects is here. The materials supply chain is mostly back on track. Where are the workers, and what can Northwest Arkansas construction companies do to stay competitive?
The first and most obvious answer is to pay more — and pay faster. With higher pay required to attract and retain both skilled and unskilled labor, project costs increase, and, in most cases, profit margins shrink. But with labor shortages being ubiquitous and larger companies always poaching talent with higher pay, small- to mid-sized firms must step up with better compensation, even if it means realizing smaller margins. A steady labor pool allows a company to be more agile, complete projects faster than the competition and ultimately attract more projects. Most skilled subcontractors value being paid expediently above all else. Pay well and quickly, and you will have loyal labor more readily available.
The second and more critical long-term solution is to re-recruit your employees. A business owner must be engaged and proactive with existing employees to recognize strengths, correct weaknesses and ABT — always be teaching. Money is the most important driver of employee satisfaction. A close second (and in construction circles, its own form of currency) is respect. It is more important than ever to appreciate and value the people who do the job on the ground. Recognize hard work. Encourage mutual respect among your workers. That is a crucial component of building a team. Our company culture values and rewards work ethic, new skills acquisition and longevity to keep our valued employees happy and motivated.
And finally, skilled labor is highly networked in Northwest Arkansas. Everybody knows somebody who knows somebody. As with any business practice, good or bad, word about how you treat your workers eventually gets around.
Scott Hill owns HTP Contractors in Fayetteville, specializing in small- to medium-sized construction and tenant-infill projects. The opinions expressed are those of the author.