The construction industry faces growing labor challenges. From a shortage of skilled labor to aging workers, this tight talent situation can impact jobsite safety, the rate and severity of injuries, and ultimately, a firm’s bottom line. AXA XL’s Gary Kaplan explores these issues, shares how contractors can work to get ahead of them, and explains how his team can help.
What are the biggest labor challenges in the construction industry?
Kaplan: I think two of the toughest challenges are the talent shortage and the aging labor force. The numbers tell a compelling story. According to the Associated General Contractors (AGC), construction employment hit an 11-year high in January 2019. Yet there are still over 382,000 job openings, and a recent survey reveals that 78% of contractors face difficulty filling positions. Also, the current labor force that is on the jobsite is getting older. This has crept up over the years. Back in 2000, the median construction worker age was 37.9, and in 2010 the average age reached 40.4 years. Now, in 2019, it’s 42.6 years. This is older than the overall average US workforce age.
How does this impact a contractor’s operations?
It’s pretty simple, when contractors don’t have enough skilled labor, it slows everything down. Projects are delayed, and deadlines are missed. This all means higher costs. Also, when contractors are successful in recruiting and ramp up on some new hires, there’s a learning curve. Younger workers need to be trained, need to develop and fine tune their skills, and understand all the safety measures on the jobsite.
On the flip side, with older workers, they have the expertise and decades of knowledge. Yet, since they’re older, they’re often more prone to injuries. Construction is a physically demanding job. It means long hours of manual labor, which means greater risk of injuries for older workers – everything from soft tissue injuries to more serious ones. The rising number of injuries means more workers comp claims, and in many cases, a rise in long-term disability and even permanent disability. Over a period of time, this all trickles down to impact the bottom line profits of the firm.
Also, across the industry, companies are struggling with how the labor issues impact safety. The latest Census of Fatal Occupational Injuries, published by the US Bureau of Labor Statistics, just reported that there were 971 construction fatalities for 2017. This is the highest of any industry sector by a margin of 89 fatalities. It’s just one more data point clearly showing that as an industry, we have to do better.
What are contractors doing to get ahead of the labor challenges?
When I meet with contractors, it’s great to hear that a lot of them are taking action to reduce their risks. Some of it is simple low cost actions like rolling out ‘Stretch and Flex’ programs to ensure that workers stretch throughout the day. This can reduce muscle injuries. We’ve even seen construction firms roll out yoga programs. Who could’ve imagined 10-20 years ago seeing yoga on a construction site? Now, it’s a growing trend.
Contractors are also investing in technology to reduce their risks. By using scanners, cameras, or sensors on the jobsite, they’re able to quickly and efficiently identify where their biggest safety risks are. Is everyone wearing safety glasses and hard hats? For high rise construction, are all the safety measures being utilized by everyone? Generally speaking, we’re seeing larger contractors take more actions. They have dedicated resources, such as Safety Directors, as part of their operations. Smaller contractors often do not have the budgets for robust safety resources, and are stretched too thin. This is where we see bigger risks.
The rate of retirement of skilled labor is another major issue. What can companies do about this?
There are all kinds of numbers out there – but the one I’ve seen quoted is that every day 10,000 baby boomers are retiring. Think about that. This pretty much means that no matter what industry you’re in, you’re losing knowledge, expertise and trusted experience at a rate that you can’t stop. This has huge ramifications for the construction industry where skilled labor is critical. I wrote an article a few years ago, “Don’t let the shift hit the fan”, that was all about the retirement issue and what companies can do.
One easy, low-cost solution that construction companies can implement is to establish “Toolbox Teachers”. It means taking action now to capture that wealth of knowledge of your highly skilled workers before they leave your company forever. Here’s how it could work:
How does your team help customers address these growing labor challenges?
There are several things. First, our risk engineers are partnering with clients every day to help them improve their safety measures. They’re onsite taking in the big picture as well as the little details of the customer’s construction operations. They make recommendations for actions to take to reduce risks and offer a full suite of risk mitigation resources that customers can take advantage of. This includes several training options such as online safety compliance training, driver safety training and safety videos.
Customers also have access to Risk Resource, our Internet-based portal that delivers vital risk management and safety information to customers at their desks or in the field. We also have several partnerships that benefit our customers. For instance, we’ve partnered with Predictive Solutions which can help companies predict the likelihood, frequency and location of workplace injuries.
Also, as companies employ more Spanish speaking workers, we’ve partnered with Red Angle, a firm that provides Spanish language training to Construction managers. This helps to improve communications and ultimately safety and quality.Also, we’re leveraging our technology partnerships with Pillar Technologies and OnSiteIQ to help clients boost their safety. Right now, we have a few customer pilots underway to further evaluate how sensors, cameras, and imaging can be used to reduce risks and elevate safety across various jobsites. Another way that we help customers is through our customer-centric culture. This permeates every aspect of our North America Construction team. It means that our people go above and beyond for our customers - whether it’s partnering with customers to elevate their safety program, identifying their biggest exposures, developing the right insurance coverage, and being highly responsive in claims situations.
About the author: With nearly four decades in the industry, Gary Kaplan is passionate about helping construction firms tackle their business challenges. How are you addressing the labor shortage in your business? He’d love to hear from you. Contact him at gary.kaplan@axaxl.com
This is part three in our article series focused on talent development and workforce shortage challenges. See part one, “Constructive Conversations: Talent development and building an empowered team” by Justin Gress, and part two “Made in America: Impacts of the workforce shortage in the construction industry and beyond”, by Rose Hoyle.
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