The construction industry is facing a mixed year ahead, according to a joint report from the Associated General Contractors of America and Sage, entitled “High Hopes For Public Funding Amid Workforce And Supply Chain Challenges: 2023 Construction Hiring & Business Outlook,” which was published in January 2023.
The report reveals that contractors are less optimistic about several private-sector segments compared to last year. This could be attributed to higher interest rates, remote work, and the popularity of eCommerce, which have all impacted demand for office, retail, hospitality, and multifamily residential construction projects. In addition, the fear of an economic downturn has led to a reduced demand for warehouses, data centers, and manufacturing plants in the short term.
However, contractors remain bullish about the public sector market, with an expectation of increased work due to the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act, as well as more projects for state and local governmental entities.
Despite these positive developments, the construction industry continues to face challenges such as supply chain problems, which have led to inflated costs and delays in the delivery of construction materials. In addition, the industry is experiencing a persistent shortage of skilled workers, with 80% of respondents reporting difficulty in filling salaried and hourly craft positions, according to the survey results.
To address these challenges, contractors are taking steps to entice and retain workers by boosting pay and benefits. The survey results indicate that 72% of respondents increased base pay rates last year, and one-third of firms provided incentives or bonuses. Over a quarter of the firms increased their contribution to benefits or improved employee benefits.
Contractors in the South were found to be more likely than those in other regions to have used steeper pay increases to attract and retain workers. Nationwide, average hourly earnings for construction workers climbed 6.1% in response to these shortages.
In addition to investing in their workforce, contractors are also investing in technology and techniques to improve operational efficiency and reduce the impact of supply chain challenges and labor shortages.
Overall, the construction industry faces several challenges in the coming year. However, with increased public sector work and investment in technology and skilled labor, contractors can remain optimistic about the industry’s future.
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