To recover from the drastic consequences of the Great Resignation and combat the talent gap, home builders must transform their strategies to recruit and retain capable workers.
Last year, the sheer number of Americans who resigned from their jobs due to the pandemic was astonishing. The Bureau of Labor Statistics (BLS) reported an unbelievable 47,845,000 job resignations in 2021 alone! Through July 2022, we saw 44 million additional voluntary departures - while the final numbers aren’t in yet, this rate was on track to surpass the previous year's numbers.
While demographers, sociologists, and pundits cast about to explain the phenomenon of so many leaving work, it became evident that the exits weren’t just about compensation. While it may have seemed that the Great Resignation represented a rejection of a conventional work ethic and the erosion of good employer/employee relationships, instead it has been demonstrated that people were leaving work in 2021 because of their level of at-work engagement and their overall sense of well-being.
The Great Resignation should have been the ideal scenario for the home-building industry. So many workers unmoored from their previous jobs could have been quickly funneled into building, which is always in need of more workers– which was especially true with the massive house-buying crush that was also taking place at the same time. However, builders and contractors were not prepared to take advantage of the situation. Not only did they not have the ability to foresee labor mobility, they had the added disadvantage that construction hasn’t been a top-of-mind career path for most workers for a generation or more. The fact that construction isn’t a top career choice for many reflects that fact that the building industry has been slack for many years in promoting its opportunities.
For a quarter-century and more, construction vocational training and in-school programs have been in decline. The industry’s internal critics also frequently work against the recruitment of the next generation of construction workers by emphasizing the possibilities of low wages, lack of career advancement or of job security, challenging working conditions, or high stress.
Individual construction companies, trade organizations, and other labor entities must take steps to counter such images of the building industry. And in fact, in recent years, they have been doing just that, working to highlight the industry’s long-term job opportunities, the many benefits to its workers, the increasing number of companies with which to work, the excellent support provided by the various trade organizations, and the great opportunities for prosperity and security that construction provides over and against other occupations such as hospitality, retail, and food service.
What More Do We Know about the Factors Driving Quitting?
Among the major temporary changes brought about the pandemic were– as we all vividly remember– lockdowns and fears of virus transmission. We also remember how the pandemic prompted the government to provide numerous stimulus relief payments and programs, longer unemployment benefits, mortgage payment forbearance options and eviction moratoriums, such changes not only caused workers to reevaluate their values but also ushered in a time of greater financial–again, temporary–stability.
Initial research into the rash of resignations revealed that quitting was most prominent within competitive technology and medical fields, which should come as no surprise, as so much of the heavy lifting of getting our whole society through that difficult time initially fell on these shoulders: medical care because ever more demanding and stressful to provide, and through the lockdowns and distancing efforts, technology workers had so much more work to do to provide the digital support to all the people using tech in order to carry on working. Individuals from 30 to 45 represented the greatest numbers of resignations based on age-group, and the industries which experienced the greatest volume of quits were retail, food service and hospitality– which also saw a considerable decline in rehiring following the pandemic.
Harvard Business School professors, Joseph Fuller and William Kerr, pointed out in a recent paper that the quitting trend actually preceded the pandemic, rising steadily since at least 2009. “What we are living through is not just short-term turbulence provoked by the pandemic but rather a continuation of a long-term trend,” they wrote.
Many experts were astonished when the labor market remained so tight, despite a large portion of people exiting their jobs. Unemployment had rebounded from its pandemic peak of 10% in early 2020 to approximately 3.5% by September 2022; however this only added to the confusion as to why it remains difficult for employers across industries to fill positions with qualified workers.
“The Great Resignation isn’t a dramatic shift in worker sentiment,” wrote Derek Thompson in The Atlantic. “It’s a dramatic shift in worker opportunity,” which reveals a common craving for greater control over work and life.
The latest data from the Bureau of Labor Statistics (BLS) and the 2020 US Census point to more job swapping within the same industries after quitting, generally a one-to-one correlation. This is especially true in high-paying industries such as technology, finance, and media. However, in manufacturing and construction—industries that generally pay well—quits outnumbered swaps according to the Federal Reserve Bank of St. Louis (FRBSL).
Quits in manufacturing and construction may be in part accounted for by an inflation-adjusted decrease in average nominal wages from 2020 to 2021, whereas job-jumping leisure-industry workers experienced a 6% pay increase during the same time period. “The larger the increase in job-to-job transitions, the larger the wage growth,” the FRBSL report concluded.
“The last year brought less giving up and more trading up” for opportunities that not only paid better but provided more work-life flexibility, broader benefits, and more job security, according to an article in The New York Times in May 2022.
In the midst of this, it is heartening to know that more and more people are venturing outside their comfort zones, leaving office jobs behind in favor of non-conventional careers or even setting up new businesses - both activities being an integral part of construction.
Are Builders Ready to Leverage this Opportunity?
Because many states allowed construction jobsites to remain active throughout the pandemic, there was an impressive boost in residential building and specialty trade contractors. The Bureau of Labor Statistics reported that, from the beginning of the pandemic in March 2020 to August 2022, 232,600 workers had joined these sectors– a 7.9% growth compared to pre-pandemic years.
“That was huge, and it made some people ask questions and rethink their original career choices,” says Brian Turmail, VP of public affairs and strategic initiatives for the Associated General Contractors of America (AGC). He notes that AGC members had been adding workers steadily over the past 18 months, even as the quits rate for residential and commercial construction ranged from 130,000 to 248,000 per month—a rate of roughly 3% in August 2022 and second only to retail (3.6%) and leisure and hospitality (6.1%) across the industries that BLS tracks.
Based on the Home Builders Institute's (HBI) Fall 2022 report on Construction Labor, and NAHB’s analysis of Bureau of Labor Statistics data, we can expect 740,000 new job openings every year within the construction industry through 2024. This includes all types of constructions such as residential, commercial, retail and industrial.
“What’s different now from the late ’90s and early aughts is there’s more awareness of how great this industry is to work in.” —Mark Matyanowski, president, MatchBuilt
The actual amount of human labor needed for the residential building sector is not precisely known. However, home builders and specialty contractors are realizing that they cannot miss out on recruiting the next generation of construction workers, that new workers need to know the excellent employment opportunities in this field. To that end, builders and contractors are redoubling recruitment and coaching ventures with universities, secondary schools, and even primary schools to inform younger generations of various jobs and career options in home building.
“What’s different now from the late ’90s and early aughts is there’s more awareness of how great this industry is to work in,” says Mark Matyanowski, president of MatchBuilt, an Indiana-based recruiter that connects talent with home builders. “There are so many ways you can go to earn a really good living, and you don’t have to go to college.” Adds Ed Brady, CEO of HBI, “The carrot of entrepreneurship is a big incentive. We need to promote opportunity.”
Attracting employees is one challenge, but keeping them around is a whole different ball game. To ensure your home building business succeeds and thrives, it needs to have an effective employee retention strategy - now more than ever!
At the International Builders’ Show press conference in February 2022, Brady called housing’s chronic labor shortage “a long-term structural crisis,'' saying it necessitates home builders changing the way they do business, from the ground up. He called on the entire industry to band together to improve training, compensation, diversity, and productivity.
To reach these goals, the Home Builders Institute encourages hiring more women and people of color into the trades industry to even out the representation; compensation should be tailored to fit the industry's cyclical nature with a wider range of benefits included; middle and high schoolers need additional financial support for their trades training programs; there needs to be an influx in legal immigration within construction through a national visa program; as well as greater use of online learning tools.
Supporting the call to action of Ed Brady, Branka Minic the CEO of Bulding Talent Foundation based in Orlando, said, “This industry has to work together. [The worker shortage] can’t be solved with everyone playing in their own sandbox.”
CLB wants to help builders play their part in the fix for the entire industry. To that end, we have developed tools to help your company to do outreach, recruitment, and training, to assist you in informing potential construction industry workers about the great opportunities that the industry represents, in finding the high-caliber workers you’re looking to hire, and providing the continuing training and education that those excellent workers need to succeed at your company and to advance their careers. Our Team and Hiring Benchmark can help you evaluate how your company is doing on all these metrics, and we can help you achieve great in all of your personnel and hiring needs. When all builders are working at these goals, the whole industry wins.
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