AGC: Labor crunch will continue to squeeze contractors in 2024

Dive Brief:

• Contractors’ struggles to find workers will continue in 2024, but the majority still intend to increase their staffing due to rising demand for multiple project types, according to a new Associated General Contractors of America survey of its members.
• Nearly eight in 10 respondents said they have a hard time filling salaried or hourly craftworker positions, but 69% still said they anticipate a “total increase” in headcount. A fifth of respondents said it will get harder to hire in 2024.
• Nonetheless, contractors will need those workers. In 14 of 17 sectors, respondents anticipated the dollar value of projects they compete for to increase this year compared to 2023.

Dive Insight:

Hiring isn’t the only ingredient creating what AGC CEO Stephen Sandherr called a “mixed-bag” for contractors this year.

Respondents’ top concerns for 2024 included:

• Rising interest rates or financing costs: 64%.
• Economic slowdown or recession: 62%.
• Rising direct labor costs (pay, benefits, employer taxes): 58%.
• Insufficient supply of workers or subcontractors: 56%
• Worker quality: 56%.
• Material costs: 54%.

During a Jan. 4 webinar about the report, Lynn Hansen, CEO of Charlotte, North Carolina-based Crowder Constructors, expressed cautious optimism for the new year. Crowder works in the energy, mechanical, transportation and electrical sectors in the Southeast, where Hansen said federal work from the Infrastructure Investment and Jobs Act has benefited the company, but she also anticipates competition to increase.

That competition isn’t only for projects, but to find and keep talented workers.

“Our good people are constantly being recruited,” Hansen said. “We’re always looking for top qualified people and paying them competitively is key.”

In order to recruit and retain more workers, nearly two-thirds of respondents to the AGC survey said they increased base pay in 2023 more than they had the year before, and a quarter introduced or increased incentives or bonuses.

Hansen said younger workers value more flexibility and time off, and Crowder intends to invest more in technology to recruit workers.

At the same time, IIJA funding has come with more strings, as federal projects require adherence to recently updated Davis-Bacon rules.

“Paying our people and reporting requirements have not been difficult for us,” Hansen said, though creating a registered apprenticeship program in compliance with the Inflation Reduction Act took nearly a year to get up and running, she added.