It has become common knowledge that today's construction industry is falling short in regards to attracting and retaining a workforce that matches the complexity and demands of the current economic environment.

According to Rose Hoyle, of AXA XL,an insurance and reinsurance company, the immediate effects of this shortage are already visible in troubled projects and businesses, as well as rising insurance claims. We will soon see this affect the up-front costs of construction and scheduling as contractors attempt to hedge the additional risks they are assuming.

What are the factors that contributed to this situation? How can we address these issues and keep our industry thriving?

Aging Up and Out

According to the U.S. Bureau of Labor Statistics, the median age of construction workers has been steadily trending upward. These masters of their art are approaching retirement age and, after gaining the experience that only decades of work can grant, they are taking their expertise with them into retirement.

The concerns around aging out are not limited to field labor. Contractors and subcontractors are experiencing similar struggles with their management teams as well. AXA XL claims that data suggests subcontractors that have been in business for more than 20 years are defaulting nearly twice as frequently as those in business less than 10 years. Many of these defaults occur when an older generation of owners approach retirement age and begin to transition the business to the next generation.

The Talent Pipeline

To say there's a lack of interest in the craft trades by millennials and Generation Z is putting it mildly. Considered the most-educated generations to-date in the United States, many have been raised by hard-working baby boomers and early Generation X-ers whose life goal was to work hard enough to provide their children with the opportunities they never had.

The construction industry competes for top talent not just with the other construction companies down the street or even just with other professions. We are competing with a whole different business model in an age where a teenager can sit at home in sweatpants and blog about his or her cat and rake in a cool $200,000 per year. #morelikesthankyliejenner This is a whole new opponent.

The Construction Boom—Mo' Money, Mo' Projects

As the current economy rebounds, the demand for construction is spanning multiple market sectors at once, placing an unprecedented burden on the workforce.

• Multifamily residential—Urban living is cool again, especially for younger generations who would prefer to live a minimalist lifestyle and spend their money on experiences rather than material items, effectively re-energizing the apartment and condo market.
• Multifamily residential—
• Health care—Advanced medical care and greater longevity translate to a greater need for facilities in which to treat and care for patients. Many hospitals, clinics and facilities are in desperate need of renovation, expansion and/or new buildings.
• Technology—Don't look now, but we're experiencing a mini-tech boom driven by tech giants' expansion of territory and domain (think Apple, Google, Tesla, Amazon, etc.). They have plenty of money and are building world-class facilities literally everywhere.
• Leisure and entertainment—There are currently more than 40 brand-new stadiums/arenas in progress across the United States set to open in the next three years.
• Commercial office space—An increase in corporate mergers and acquisitions driven by the economic upturn is resulting in the impetus for renovations of high-value spaces in cities all over the world.
• Airports—In an effort to modernize aging and outdated facilities, more than 50 US airports could collectively account for up to $70 billion in construction projects over the next three years.
• Infrastructure—Aging and ailing bridges, tunnels, roads and water resources projects are also taking emergent precedence due to life safety.

All of these demands and more are pulling on the construction industry. While the capital is available, labor shortage issues that historically were able to be solved by "throwing money at them" are now much more complex.

Reboot Interest in the Construction Industry

Rebooting interest in construction is possible in three important ways, and now is the best time to get started.

Solution #1: Construction technology—Do more with less. Embracing new construction technology is a business imperative. It can advance work efficiency in the field, keep contractors relevant and make construction a more attractive career for younger generations. Robotics enables employees to work more safely and productively. Advances in automation, prefabrication and modular building can help protect workers by removing them from the hazards of construction.

Solution #2: Diversity—Let's reach into the untapped pool of talented individuals who perhaps never considered a career in construction and show them how fun, rewarding and unique the industry is. A shortage of skilled workers and managers in construction is not merely a numbers problem; it's a perception problem. How do we make a career in construction attractive to everyone?

Solution #3: Mentorship, sponsorship and apprenticeship—These programs provide personal and professional enrichment at all levels. Some companies are adopting "earn as you learn" incentives that help pay for training, education and other learning programs while maintaining the worker's value to the company. Lastly, be sure to include and encourage the human-to-human element of mentorship and training, which is just as important as proverbial book smarts.

See the full agenda for IRMI CRC 2019