Arizona Labor Blues

Quick Work Needed to Avoid Shortage Crisis

By David M. Brown

The construction industry is approaching a labor shortage of crisis proportions and its leaders are trying to figure out what it will take to fix the problem in Arizona and the entire nation.

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"This is a national crisis," says Gary Aller, director of the Alliance for Construction Excellence at Arizona State University. "We find in many skilled trades that new people coming into the market have practically dried up."

Aller's program at ASU's Del E. Webb School of Construction focuses on construction management, a market segment where there also are shortages.

The country's construction industry, which contributes 8 % to the gross domestic product, will need one million new workers in the next six years and 2.4 million by 2014, says the U.S. Bureau of Labor Statistics.

What's more, baby boomers are retiring. "It is important to keep in view that the average age of a construction worker in America is 52 years old," says David N. Jones, president and CEO of Phoenix-based Arizona Contractors Association.

James J. Kuliesh, executive director of the Tucson-based Alliance of Construction Trades, adds that the average age of a skilled craftsperson in the U.S. is 47.

"Based on the U.S. Department of Labor figures, the construction industry needs 240,000 workers each year to replace those that are retiring and to allow some growth in capacity," Kuliesh says. ACT represents 257 specialty trade contractors and suppliers in the construction industry.

"In 2006, workforce shortages became a harsh reality for much of the construction industry, and the crisis is only expected to worsen [this year]," says Dave Meyer, the 2007 national chairman of Arlington, Va.-based Associated Builders and Contractors. Rebuilding the Gulf States is exacerbating the situation everywhere, he adds.

In Arizona, finding labor, especially skilled labor, is difficult, says Mark Minter, executive director of the Phoenix-based Arizona Builders' Alliance.
Minter points out that the projected state population growth of eight million in the next 30 years. Arizona is the fastest-growing state in the country, followed closely by Nevada, and that increases competitiveness for skilled and nonskilled workers.

"That means that we'll have to more than double our entire built environment while we repair and replace the old buildings, roads, water treatment plants and other infrastructure," he says.

A February 2005 report by the Arizona Department of Commerce report cited U.S. Census Bureau figures that showed that nearly 1 in 11 jobs in Arizona was related to the construction industry. The report also noted that the state has a shortage of workers in the "core" skilled occupations, especially carpenters, electricians, front-line supervisors and painters, but also including management, field supervision and semiskilled and unskilled labor.

The report concluded that by 2014 the construction industry in Arizona will be 40,000 skilled laborers short of demand.

The problem is an expensive one to fix.

"According to a recent poll of [our] members, the labor shortage is the No. 4 reason for project delay and project cost increase," says David Martin, president of The Arizona Chapter of Associated General Contractors. The top three reasons were all related to materials pricing.

ASU's Aller says pricing for labor has increased for some trades at double the rate of inflation.

Construction leaders say there are four issues that must be dealt with promptly: immigration reform, healthcare, wages and education.

The ABA's Minter recommends a program by which undocumented workers already here can become residents - without having to become citizens - so that they can be legally employed.

In Tucson, the Alliance of Construction Trades is actively involved in a new coalition called "Arizona Employers for Immigration Reform," a grassroots campaign to lobby Congress on the importance of reform.

"If we open the doors to too many, it drives the wages down of workers who are here," Aller says. "If we don't bring in enough, wages go too high and we can no longer build projects because there is no return on investment."

The immigrant workforce is indeed filling a void that the U.S. can't fill, says Bo Calbert, president of the Phoenix-based Southwest Region of general contractor McCarthy Building Cos. "They aren't taking jobs from Americans; they're providing a workforce that we can't provide," he adds. "We need to develop a legal means for good people to come to this country to fill the void that's here and be able to do this in a safe environment with dignity."

For solutions, Aller and other construction leaders point to the industry and not Washington, D.C.

"Immigration reform cannot be accomplished by politicians," Aller says. "The industry must step up and solve this, or it will be dealing with a resolution that will satisfy voters and will, more likely than not, destroy the industry."

While higher wages aren't alone a sufficient incentive for career choice, they are important for maintaining a skilled labor force in Arizona that won't be continually looking elsewhere, says Dale D. Jacks, business manager for the Phoenix office of the International Brotherhood of Electrical Workers Local 640. "Unless the wages and benefits are higher by ratio and comparable to the surrounding boom areas, we will not only fail to attract the numbers of desirable higher skilled workers but we will loose those we have and ultimately those we will have trained, at all levels."

Insurance is another problem. The rising cost of health care has made it more difficult for local and national contractors, the majority of whom employ 20 or less, to offer competitive packages without continually upping deductibles and co-payments or passing along these costs to employees in lower wages. >>

"If the employer cannot afford health care for its employees, they will go to an employer that has health care as a part of its benefits package," the ACA's Jones says.

Aller adds: "The burden of companies not providing health care becomes an issue for the taxpayer. We get our construction projects done cheaper, but we pay for that health care one way or another."

Minter and the ABA, for instance, have been working at the federal level for legislation allowing association health care plans, which would allow groups to form affordable insurance pools and provide affordable health insurance to thousands of businesses and their workers.

But he adds that this effort has met with opposition from elected officials and lobbying groups in favor of a national healthcare approach.

To really solve the labor problem, officials agree, a wide-ranging, multifaceted educational agenda must become the construction-industry foundation.

This training problem is particularly acute in Arizona, where only 20% of the commercial workforce is union, and unions train workers, McCarthy's Calbert says.

"A lot of the workers in the trades haven't had the opportunity to get comprehensive, structured training to improve their skill levels, except those in the union training programs," says Rick Mills, administrative assistant of the Southwest Regional Council of Carpenters in Phoenix.

In the areas where the unions have a high percentage of the workforce organized, there are always skilled, knowledgeable tradespeople moving up into management positions, Mills says. "Most of the nonunion workers here never even get an opportunity to learn to read blueprints or have any professional training to advance into management positions. The construction workforce in the Valley is made up of a lot of workers that aren't here legally, don't speak English and have a limited education."

Carla Brandt, president of Phoenix-based American Subcontractors Association of Arizona and president of Cobra Stucco LLC, also of Phoenix, agrees. "One size does not fit all," she adds. "If high school students realize early on that they do not wish to further their education at the college level, they should be given an opportunity to enter a construction trade school or other vocational training that would better meet their educational goals."

ACA's Jones says that young people need to at least want to try on the outfit.

"The training programs have been around for decades, but, if you don't have interested individuals in learning the skilled crafts and committed to a career in construction, then you have nothing but a small number to fill a big demand," he adds.







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