Blueprint for building crisis

Colorado has massive shortage of construction workers

By Erin Douglas
The Denver Post

In a 25,000-square-foot warehouse that smells of freshly cut wood in north Denver, 20 adults — including a refugee family from Somalia, a math teacher and a laid-off retail worker — gather in the unfinished frame of a house to take notes on the Pythagorean theorem.

They are hoping that the equation, along with other basic measuring principles, will help them find work at the end of an eight-week construction course.

“When the market crashed in 2008, a lot of people were forced to do something else. Now that the industry is booming, there’s really not that quality craftsmanship anymore,” said Tim Reyna, who enrolled in the class at the Colorado Homebuilding Academy after he lost his retail job. “I definitely think there’s a ton of opportunity.”

As far as the construction industry is concerned, Reyna and his classmates can’t hit the job market quickly enough. Industry officials in Colorado say the shortage of skilled laborers is at a crisis level. They need people now — to build homes, malls, office buildings and roads.

In a state with a red-hot real estate market and hundreds of new residents arriving each day, the situation isn’t expected to improve anytime soon. Experts at Colorado State University’s department of construction management estimate that by 2025 there will be 96,000 vacancies in the construction trades — a 38 percent increase from today.

Construction leaders say the problem was caused by a perfect storm: record low unemployment, an aging workforce, the narrative that everyone has to go to college, massive layoffs of construction workers during the recession who never returned, a lack of affordable housing and a huge demand for construction work across Colorado.

“I don’t know someone in construction that doesn’t have this shortage issue,” said Michael Smith, director of the academy, a nonprofit that trains workers for construction jobs. “Colorado is experiencing (an explosion) in every sector of construction.”

And the shortage is impacting everyone from homebuyers who are reeling from sticker shock to commuters who are fed up with prolonged work-zone traffic.

By 2025, the state expects to add 56,000 new construction jobs, and 40,000 more could become available because of retirements, according to an economic impact study released in January by the CSU researchers. Right now, the industry employs 148,604.

The shortage is nationwide but particularly distressing in Colorado, a state with the lowest unemployment rate in the country (2.3 percent) coupled with one of the highest growth rates. In other words, there are a lot of things to build and too few people to build them. As some observers put it, if you are unemployed in this state now, there’s a reason — typically a lack of skills.

To highlight the need in Denver, Colorado Association of Mechanical and Plumbing Contractors executive vice president and chief executive Dave Davia said, “Count the cranes.”

Anyone with a stake in Colorado construction is frantically trying to come up with solutions to meet the mounting demands of a growing population before circumstances become too dire. Some say they already are.

Statewide population is expected to increase to 6.43 million by 2025 — adding nearly a million more people in a decade — and it’s projected to hit 7.3 million by 2035, according to the State Demography Office. Denver alone needs between 16,000 and 18,000 new homes per year to keep up, according to John Covert with the Denver Metro Association of Realtors. But last year, only 11,038 home starts were counted across Denver by Metrostudy, a Hanley Wood company that tracks home foundations.

“The bottom line is that there is a significant amount of new workers that are needed to support this work. If those workers are not here and not trained, then there’s a fear that some of those projects won’t be able to happen,” said Tony Anderson, training and business development manager for the Colorado Office of Economic Development. “The economy will continue to grow, but it will impede the rate at which the economy can grow.”

High home prices

The industry would typically rely on migrants to take jobs that the natives don’t want. But though Colorado has no problem getting people to move here, the right ones can’t afford to.

Because home prices are high — the median sales price for a single-family home in metro Denver reached a record $407,000 in May, and statewide it topped $365,000 — homeowners can no longer afford to upgrade to new homes. They remain “stuck” in smaller homes than they could typically afford in another market, occupying houses that would otherwise be available as affordable housing.

In turn, this further deepens the labor shortage because first-time home buyers, such as construction workers, can’t afford to move to Colorado to take the jobs the industry so desperately needs them to fill. And the customers “stuck” in smaller homes turn to renovations and upgrades, another strain on the construction workforce.

The shortage forces companies to fight for crews, according to Smith. He said he has seen entire crews leave a project for a raise of 50 cents per hour.

In 2007, before the recession, the median hourly wage for construction and related workers in Colorado was $13, and construction managers made $77,720 per year. Nine years later, in May 2016, median hourly wages were $16.17, and construction managers made an average of $92,370 per year.

“Construction jobs pay very well now,” said Jeff Whiton, CEO and executive vice president of the Home Builders Association of Metro Denver. “The labor shortage has never been this bad.”

Wages have responded, but workers have been slow to notice.

“Many times (students) are nearly doubling their hourly wages and getting benefits for the first time,” said Michael Gifford, president and CEO of the Associated of General Contractors of Colorado.

But the perception that construction is a “dirty job” remains in the way, according to Davia, with the plumbing contractors’ association.

“There still exists some kind of stigma attached to construction,” Davia said. “So, I think we’ve got an image correction that we need to embark on. … These are careers with benefits and a lot of room for advancement.”

The effort to make that correction involves the state, companies, city officials, trade associations and community colleges frantically trying to reach working-age millennials through social media, career fairs and diversity outreach.

“The hardest challenge is recruiting students,” said Scott Thor-son, COO of Oakwood Homes, a Colorado-based home building company. “I don’t think people realize the earning potential. It’s a message that’s been lost.”

That message is part of Anderson’s job. His state office works with workforce centers to develop better trained workers and a better image. Construction hopes to replace aging-out baby boomers and the hordes of people laid off during the recession with younger generations.

In 2008, construction took a hard hit. And in April 2010, the industry reached an 18.8 percent unemployment rate in Colorado. While builders were preoccupied with recovery, a looming boomer retirement was overlooked.

Now, Thorson estimates the average age on any one of his construction crews is 45, and he said his company’s inability to find hireable workers is affecting how quickly they can build.

Alternative to college

The huge loss of labor, coupled with the increasing cultural emphasis on higher education and loss of shop classes in high school, is what many in construction attribute as the cause for a shrinking number of young workers.

“We believe that not every student is bound for college,” Davia said. “I started and stopped college more times than I care to admit, because I didn’t know this opportunity was out there. It’s a highly technical career.”

Pat Hamill, chief executive of Oakwood Homes, said he believes students do not choose construction because they were not exposed to the benefits. He says the notion that “everyone goes to college” is hurting students. They have options, he said. Go to college and graduate with $100,000 in debt, or go into industry and end up with a $100,000 salary.

To draw high school graduates to the trades, big companies, nonprofits and lobbying organizations are pumping money into training centers, outreach and state supported programs.

The Colorado Homebuilding Academy trains workers in residential construction. The Colorado Association of Mechanical and Plumbing Contractors, one of the oldest trade associations in the state, is ramping up recruitment efforts.

Similarly, Michael Gifford, president and chief executive of the Associated of General Contractors of Colorado, said his organization started buildcolorado.com in 2014, a recruitment site that helps people find apprenticeship programs. AGC also received a $1.1 million grant from the state in 2016 to ramp up recruitment efforts across Colorado, and was one of the leading authors of the “Work Act.”

The act, which started as House Bill 15-1276, created a three-year investment program for training programs such as the homebuilding academy. Colorado has also attempted to implement more apprenticeship programs and to help with recruitment by connecting job seekers and employers, Anderson said.

In the academy’s free “boot camp” course, students learn basic safety, measurement, math and how to read blueprints. The program also offers courses to become a superintendent for those looking to move their careers forward but do not have the right certificates or skill sets.

“We want all jobs to be earned,” Smith said. “What we do is teach them the skills that employers are looking for and we put you across the table with them. There’s no reason you should not be employed within a week (after completing a course).”

Smith said the academy “casts a wide net” when it comes to recruitment and outreach. Similarly, Davia said his organization’s workforce development strategy is “all of the above.”

Though CEOs and state officials alike said they are encouraged that education, training and apprenticeship programs are the most viable route to solving the issue, many admitted it will take time.

“This is a longer-term battle,” Davia said, “and there’s no short-term solution.”