How Competitive Benefits Can Address the Labor Shortage in the Construction Industry

How Competitive Benefits Can Address the Labor Shortage in the Construction Industry

During the Great Recession, the construction industry experienced the largest percentage decline in employment of the post-WWII era, according to the Bureau of Labor Statistics. Over two million jobs were lost from 2006 to 2010, according to Architect Magazine. And when the recession hit, many workers left the industry and never returned.

Now, as countless workers are hitting retirement age, there is not enough young talent to fill their spots. A recent U.S. Bureau of Labor Statistics survey found that there are nearly 350,000 unfilled construction jobs nationwide.

This labor shortage is forcing companies to think outside the box – starting with unique recruitment and retention efforts to attract younger workers. In this article, we take a look at how the construction industry can use certain incentives to successfully recruit and retain younger skilled workers.

Recruiting skilled workers

The current median age of a construction worker is 42.5, the Bureau of Labor Statistics reported. Industry insiders estimate that for every five construction workers retiring, only one worker is entering the industry, according to a recent Associated Press article.

Construction industry officials know that recruiting young talent is essential. But, to recruit and retain the next generation, they must create a culture that attracts this targeted demographic.

For example, Home Depot hopes to attract an additional 20,000 construction workers by offering $50 million in skilled trades training. Likewise, Lowes launched a “Track to the Trades” program, where employees can train for skilled trades without worrying about tuition.

Additionally, many high schools are bringing shop class back for students who don’t always fit the four-year college mold. And, in an effort to disrupt the traditionally male-dominated industry, more companies are educating women about the benefits of working in the construction sector.

Defining new ways to train skilled workers in the construction industry is just one piece of the puzzle. Businesses must also find ways to differentiate in a tight labor market and retain employees longer. 

Defining weaknesses in the existing benefits model 

It has been proven that a strong benefits program gives companies a better chance of attracting and retaining employees. And, just like the rest of the workforce, a benefits package matters to employees in construction.

In a 2017 Aflac WorkForces report, construction employees were surveyed on the importance of a benefits program. The report found that:

  • 66% said a benefits package is important to their job satisfaction
  • 65% said a benefits package is important to their employer loyalty
  • 75% said they’re more likely to accept a job with slightly lower pay but better benefits
  • 47% said improving their benefits package is one thing their employers could do to retain them
  • 33% said they have left a job or turned down an offer due to the benefits offered

Still, it’s no secret that the construction industry has struggled to offer competitive benefits – including health insurance. Because many construction workers are classified as independent contractors, they do not receive health insurance coverage. And, when health insurance is offered, workers are accepting lower-valued health plans that often include high deductibles and out-of-pocket costs.

Larry Lopez, president of Green JobWorks, a construction staffing service in Baltimore, Maryland, told CNBC that his workers are employees – not contractors. Because of this distinction, his employees are offered top benefits, such as healthcare, paid time off and annual raises.

“Having employees really feel like they are permanent here and that there are opportunities attracts them,” Lopez told the news outlet. “I think having some kind of ownership and belonging to the company, because we are doing our own projects, is a benefit I don’t think any other staffing company is doing.”

The sense of belonging Lopez has created within his company is an important tool to attract top talent and one that helps improve retention rates at Green JobWorks. 

Evaluating the benefits standard in the construction industry

It should come as no surprise that in a poll of more than 10,000 construction workers, the most popular and requested benefits are non-medical: 

  • Paid holidays and vacations
  • Paid sick leave
  • Paid cell phone
  • Company car
  • Casual dress and atmosphere
  • Life insurance and disability coverage
  • 401(k)

But, because a construction job is hazardous in nature, health and medical benefits still matter. Therefore, companies must also consider offering benefits like:

  • Life and accidental death and dismemberment
  • Short-term disability
  • Long-term disability
  • Accident insurance
  • Critical illness insurance

On top of health coverage and income protection, companies can also offer more robust benefit options at little to no cost to the company:

  • Wellness programs: Companies must make their employees’ health their top priority. Offering paid time off for doctor visits will keep workers healthy and on the job.
  • Dental and vision care: This type of care should be a part of every benefits package. And, this type of plan can be designed as voluntary – making employer contributions unnecessary.
  • Mental health programs: The construction industry has been identified by the Centers for Disease Control and Prevention as one of the top occupations at risk for suicide. To ensure employees are given appropriate resources, a mental health program must be considered a critical component in a company’s benefits package. The program can include resources like access to trained counselors via an employee assistance program.
  • Savings and retirement programs: Companies should provide their employees with savings programs. These programs include flexible spending accounts, health reimbursement accounts, health savings accounts, and retirement and college savings plans.

As with any benefits package, employee feedback is imperative to determine which options are most important and necessary.

Thinking about outside-of-the-box benefits for improved retention

While each of the aforementioned benefits is useful to your employees, they aren’t necessarily different from what your competitors offer. In an already tight labor pool, research proves that employees will leave a job to look for better benefit opportunities, which means employers in the construction industry need to think outside of the box when it comes to the benefits they offer contractors or employees. 

Though in a different industry, consider this story about Captain D’s, a U.S.-based fast-food seafood chain, that has taken steps to implement creative recruitment and retention solutions.

Like the construction industry, the fast-food industry has a difficult time recruiting and retaining employees. As such, Captain D’s decided to test out a daily payment benefit to see the impact it would have on their performance metrics. Captain D’s performed a beta test using DailyPay to gauge the impact that this unique benefit would have on their recruiting and retention efforts. 

Within 30 days, Captain D’s saw a 72% decrease in employee turnover at the test locations. In addition to seeing turnover plummet after offering this unique payment benefit, the restaurant saw a significant impact on recruiting when it highlighted the benefit to job candidates as a means to differentiate itself from the competition. There was so much interest in the flexible payment benefit that the fast-food chain was able to hire 89 employees from 391 applications submitted during a one-day job fair. 

The Bottom Line

It’s imperative that companies in the construction industry take into account the needs of their employees and the trends in the industry to stay competitive. Without reflecting on the current needs of your employees, your company might not be able to maintain healthy staffing numbers in the years to come. 

This is a guest post from our friends at DailyPay.

Further reading

Top 10 Challenges Construction Material Suppliers Face

Cash Flow Management in Construction: Issues and Solutions

5 Ways to Improve Construction Efficiency Across All Your Projects

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