By Steve Krasoff • 2017 President
We are asked by many in the media if Hurricane Harvey has impacted our local housing market—specifically our labor supply. In fact, home builders are very concerned. According to the Hurricane Harvey Impact Survey conducted by Metrostudy, nearly 72 and 77 percent of builders reported that the Category 4 storm was responsible for decimating material supply and labor supply, respectively. But that’s not where this story begins.
In Central Texas, the home building industry has been enjoying a steady, healthy growth streak year after year, seemingly without an end in sight. While a majority of headlines have been declaring Harvey-related labor shortages along with increased demand, that’s not how we see it at HBA. Hurricane Harvey may have added to demand for construction laborers, but there was already too few workers to go around when the storm made landfall on August 17.
While it’s true that everything changed on that summer day—the cost of property damage was roughly $200 billion—a domino effect across the entire state took hold in terms of increased cost of supplies and materials. But what good do supplies and material do when we don’t have a workforce to build homes?
What really happened following the storm of the century, according to 70 percent of Austin, Dallas, and San Antonio home building industry professionals, was that the existing labor shortage was stretched even more thin.
As recovery from Harvey progresses, builders, developers, vendors and suppliers say their overall year-to-date performance has been progressing well—“as expected.” However, many of us are concerned that in the current climate, consumers’ pockets may take another crushing blow, which only began with the debilitating labor shortage. The cost of materials has skyrocketed, insurance and permitting requirements are tighter and capital is more difficult to attain.
Even one area spared by the storm — high-end properties that are as profitable as ever —will also suffer from the labor shortage. Even more worrisome, developers are saying the incentive to build smaller is not very strong right now—a time when housing demand is at its highest in decades. That’s really going to hurt the middle class.
In a 2016 survey of 2,000 men and women between the ages of 18 and 25, conducted by the National Association of Home Builders (NAHB), three-quarters said that they were decided on their desired career field. Of those, just 3 percent said they were interested in a construction trade. Despite these statistics, at HBA, we believe that there is a way to turn around the labor shortage.
First, the study helps us understand what potential laborers are looking for. “Results show that the two most important benefits are good pay (cited by 80 percent of this group) and the view that it allows them to obtain useful skills (74 percent).” Further, when the 25 percent of career undecideds were asked if they would consider working in a list of various fields, construction trades came in ninth place, behind a slew of non-labor careers that require higher education. The data does show, though, that some undecided young people “may be more willing … to consider working in the construction trades if the pay is high.” This is the demographic we need to target.
The compensation level that would help reduce our labor shortage starts at $40,000. For our part, we need to combat the assumption that construction trades pay too little and provide even less opportunity for learning new skills and advancing up the career ladder.
With interest in pursuing construction as a career at three percent, we know things can’t get much worse. So moving forward, we need to set our sights on education and training, especially for young people who don’t want to get ensnared in decades of paying college loans.
In 2015, a nationwide economic development organization ran a summer program for middle-school kids in Houston. For one week, kids learned to build electric windmills, toured a chemical plant and watched science demonstrations. The goal was to introduce the 6-9 year olds to the various opportunities in manufacturing, oil and gas and maritime careers and instilling in them that after high school they can have a bright future in skilled labor.
The crop of kids who attended this particular career camp won’t be 18 years old until around 2025, so we need to do something about our labor shortage now. That may mean increasing wages, offering more apprenticeship opportunities or working with organizations that educate kids about enrolling in low-cost associates-degree or certificate programs. In Central Texas, the demand for laborers is not going away anytime soon, so these are investments worth making. RL