
May 5, 1998

Construction is booming but local labor supply isn't

By LUCY BODILLY
Special to the Journal

Contracting and gambling go hand in hand. Contractors often bluff their way into jobs, betting that they will make money even though the bid they submitted is lower than their competitors'. They gamble that the weather will stay on their side, that permits will come in on time and that the site itself doesn't hold any show-stopping secrets.

This year contractors face another wager. If they are awarded a contract, if the weather holds, if the permits fall into place, and if the project goes exactly as planned, will they have enough labor to finish the job?

Talk at construction industry group meetings suggests every reputable contractor, in every trade, is turning away work. The jobs are there for the taking, but many companies are afraid that they will not have the workers to complete projects on time and within budget.

"We are trying to work only with existing clients and are not bidding on work that is normally in our sector," said Dan McTaggert, marketing director for Construction Associates, Inc., Lynnwood. In the Daily Journal of Commerce's annual survey of construction companies, many other contractors echoed the same views.

"Everybody has a huge backlog and everybody I've talked to is turning down work as a direct result of labor," said Bob Jayne, senior project manager at S.D. Deacon Construction. However, being the gamblers they are, some contractors are taking on more work, and betting that they will have the labor when the time comes.

The net effect of the labor shortage is that construction costs will rise. For Construction Associates, finding subcontractors to submit reasonable bids has been a challenge.

"Some subs are putting in bids that are 20 percent higher than we expected," McTaggart said.

Subcontractors turning in such high bids are either too busy and don't want the work, or are adding in the cost of having to use poorly skilled and/or overworked labor. Already contractors are complaining that the reliability of available workers is questionable.

"I was at a trade meeting last night when one contractor was complaining he was falling behind on a project because several carpenters had to spend so much time in court fighting minor charges and traffic violations," Jayne said.

Calculating the cost of a labor shortage can be difficult, according the quarterly cost report in the March 30 issue of Engineering New Record. Contractors may be forced to complete a project out of sequence because a specific subcontractor is busy elsewhere. Subcontractors also have to figure in the cost of using tired, overworked employees to get jobs done.

Once workers tire, usually after four to five weeks of overtime, contractors can be lucky to receive 40 hours worth of work for the 60 hours recorded on the time card, according to the ENR article.

Some contractors such as Steven Ness, president of M.J. Ness Construction, predict that increased labor cost may delay some projects. Especially vulnerable would be renovations and public projects, where developers are not holding onto land which is paying no return on their investment.

The construction labor shortage is nationwide, so don't expect an army of carpenters in white Chevys to appear over the horizon to ease the crunch.

According to statistics from the National Center for Construction Education and Research (NCCER) in Gainesville, Fla., between 1994 and 2005, the number of people employed in the construction industry is expected to increase by 14 percent. In the most recent survey of Washington state contractors (completed in 1994), 73 percent of those surveyed reported shortages of skilled workers, especially electricians and plumbers. (All firms surveyed were members of the 22 trade associations that subscribe to NCCER.)

Shortages here have been exacerbated by the current construction boom. In the mid-80s, when Seattle had its last burst of activity, workers flooded the area from all over the country, but that is unlikely during this cycle.

"You can't expect a mass migration from other parts of the country because there is no surplus anywhere," said Dave Perrin, director of education for the Construction Industry Training Council in Bellevue. "Those contractors who ignored the (warnings) are now saying 'Oh no, now were in a dark, deep hole."'

Good skilled labor is always hard to come by, but a serious labor shortage in the Puget Sound area has not hit yet. It is expected by mid-summer.

"The expectation is that it will happen shortly and that it will last five to 10 years," said Barry Sherman, director of services at the local office of the National Electrical Construction Association. "But today we filled all the requests for electricians. These predictions sometimes take on a life of their own."

" For day labor, the crunch is already happening," said Jim Meyers, the manager of the Seattle Labor Ready office. The company works as an employment office primarily for unskilled labor and carpenters. "We are putting all employees out and are short on all days."

Contractors' Labor Pool, which provides all types of skilled labor, is also expecting to see a shortage soon, said Steve Weihing, the Seattle branch manager. "In fact, I was transferred here because I am familiar with the issue," said Weihing, a new arrival from the Silicon Valley. "We are seeing quite a few people coming through from out of state. We don't expect a big shortage, just a scramble to find a good person."

Still, many contractors are doing everything they can to protect their greatest asset: their skilled employees. Some have given big raises and offered additional benefits, Jayne said.

For people like Jayne, who is working with several trade associations to set up school-to-work programs with various school districts, the problem is long term and needs long-term solutions.

"The average age of a skilled laborer with a union card is over 40. We have to attract more young people," Jayne said. But the industry has an uphill battle competing with other good employers in the area such as Microsoft and Boeing. "We also have to fight the perception that to make a good living you have to go to college. And you have to convince a bunch of kids who grew up playing video games that every good job doesn't use computers."

The school-to-work program, located at Rainier Beach High School, is attended by six students who spend two hours per day on a construction site. Jayne hopes the program will be expanded to other schools soon.

"Getting through the red tape was the hard part," Jayne said. The host contractors had to obtain work permits for the students and clearance from insurance companies. The program took almost three years to get off the ground.

At the same time, construction trade groups and individual companies are doing everything they can to attract new workers. On the national level, the NCCER held a teleconference late last year, that over 3,750 schools participated in. The group is also planning to circulate 10,000 videos to be used on career days at local high schools.