The Expert Podcast

You think it's bad now — what happens when a lot of these municipal government projects kick in for construction in an environment that has a shortage of construction workers? According to the Wall Street Journal, there's already a labor shortage for construction work, and a trillion dollars of infrastructure spending is going to kick in — building bridges, building highways, building government infrastructure projects. This is part of the investment in the country's government-owned resources.

Contracting companies are offering signing bonuses and housing allowances to attract and retain workers. Well, we already have a shortage of workers for building houses. Construction projects are running short on labor just as one trillion dollars of infrastructure money starts kicking in — and there's already a shortage. How much more is that going to be a crisis when that money starts hitting the projects? The severity of labor shortage means you're paying workers more, and your construction schedules are longer — and that increases the cost.

So whatever was budgeted by the government for these projects is probably going to be higher now, because you have to pay people more and they're going to take longer, because there's less workforce available to do this. What are you seeing in your business? Are you seeing shortages for staff at your contracting company? If you're a client, are you seeing jobs take longer? And we're not even near the peak.

According to Moody's, which is a big ratings firm, the peak impact will be the fourth quarter of 2025, where there will be about 872,000 more jobs as a result of projects. So in about two years to almost three years, there will be almost a million more jobs needed than there are now. Are there going to be a million more workers between now and then? There's already a shortage. Are we going to be able to fit in 872,000 more employees in that time? Higher labor costs could sap the value from this project. It could mean that you can't do as much — can't do as many projects — because the costs are higher.

They call it a "talent pipeline challenge" that presumably they didn't know about. Did you? Did you know about it in your industry? Did you see this coming? Did you see this shortage many years ago happening? Was it like a train coming down the tracks or did it surprise you too?

According to a quote from one of the government agents, the big constraint in their lifetime was there wasn't enough funding for these government projects. A lot of my lifetime, the big constraint has just been a lack of funding and failure to invest. Now, according to this Transportation Secretary, they got the funding — but now they don't have the workforce.

Are they related? Is the fact that there's all this funding part of the reason why there's a shortage of workforce? Or is it just two totally random, coincidental facts? What are your thoughts?

According to somebody else, they say the wage pressure is a function of supply, not demand. Is that true? In some cases, the workers can't find places to live. One worker worked for a company and they were redoing a highway, and it was only two hours away from where he lives, but he said he likely would have found a different job if the company hadn't agreed to a housing allowance — money that enables him to stay in a hotel near the project a few nights a week — because it's hard to find housing now as a worker in a lot of areas.

There's a lot of perks in these jobs. These are high-paying jobs that don't require a college degree, and they're starting to have other perks like 401(k) and paid time off and vacations. Even with that, according to the Human Resource Department, it's a hard job to fill.

What do you think? Is this something that is going to work itself out? Is there going to be more labor shortages in the retail, residential construction, and also the government/public sector construction? Is it going to result in higher labor costs for work in the future? Let's see your comments.