The Expert Podcast

Today we're going to talk about two major factors in the construction industry: one is materials and the other is laborers. An article actually in a forum AG talked about the price of lumber as reported nationwide. But first, we're going to talk about the labor realities.

One of the videos we did a few weeks ago had to do with labor cost and finding good help. There was a comment that was interesting from a viewer who said, you know, what's the matter? You can't find people that will work cheap for you, kind of like an indictment of builders that maybe they're trying to underpay. And maybe that's the case. There may be builders that try to underpay.

The implication was that you can't find, you know, what this person called monkeys to work for construction for a cheap price. And our experience, and if you're a builder you can tell us, is actually the opposite. We can find plenty of what this person called monkeys—I won't use that term—but what most people would call kind of drone or just day laborer types.

We can find plenty of those, and in our projects we pay, you know, 35 to 40, sometimes fifty dollars an hour for entry-level construction workers with medium skills, who can swing a hammer and know how to take direction. They're not doing any high-end craftsmanship or high-end contracting or skilled labor; it's more just job site labor. Depending upon the project and exactly what the nature of the work is, it goes between 35 and 50 per hour is what we pay. There's plenty of those; those are dime a dozen.

The problem is that, first of all, those people, even at that rate, will show up for a couple days, get some money, and then not show up for a week. They needed that money for some bill or whatever their lifestyle is, and then they disappear. Even at that rate, those people are unreliable; they're not performing well on the job site, they're not taking direction well.

The bigger problem is finding people that we want to pay more. We want to pay 80, 90, 100 an hour for higher skill people that you can just tell them, look, you know, detail, mark this wall, frame this, file these construction plans. In some cases, we've tried to elevate people up and give them training to go from 45 or 50 to 60 to 70, and we tell them, look, you could be at 120, 130 an hour labor rate paying you if you can get to this level and we'll give them the training. And they can't get to that level.

So those entry-level 35 to 50 an hour people—that's not a problem finding them. Sometimes they don't show up, but even if they don't, there's more; it'll come down the pipeline. It's more about finding the higher-end people, so that's more of what the problem is. And if you're a builder, let us know what your experience is with that.

Now, the other side of the cost equation is materials. Here is a report from a user that went to Home Depot, and we don't recommend big box stores for professional use just because a lot of times the service isn't as good and the price isn't really that great. But they found that there's a big change in price from 18 months ago, and they loaded up their truck with what looks like some tube 10, some 2x4s, and some sheet stock, and they spent about 800 bucks for a truckload, which isn't bad.

A lot of the comments below reported the same thing. They also reported that they were having a tough time getting assistance with employees of the big box store, and this is something that we see a lot. You go to the store, you buy your products, even at the pro desk, and there's nobody really to help you either source it or load it.

Whereas if you go to a local lumber yard or a pro distributor and they deliver, you just tell them what your lumber materials list is, they'll price it out, send you an invoice, and they'll deliver it. Or even if they don't deliver, if you need it right away, you can drive into the yard and they have people that will load it.

So it may be that the lumber yards are having the same problem as builders finding people that are kind of staff that can do day labor or semi-skilled labor. But the lumber prices are down. We see that—not down to where it was three or four years ago, but it's down from where it was a year and a half ago—which makes some of the project bidding a little bit easier.

But there is still some volatility, and more importantly, there are some products that aren't showing up. We are finding that the quality of a lot of the sticks isn't—it's good—but there's more knots, there's more cutouts, not quite as clear span materials, and sometimes it's even created inspection permit problems. If there's enough of a chunk removed in a stud wall, the inspector might not approve it. You might have to replace it with a clearer piece of stick.

So let us know what your thoughts are in the comments and if this experience matches what you're seeing in your neck of the woods.