Guest Column

Pay will increase if demand continues

April 14, 2017
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A recent string of news articles has focused on the shortage of skilled trades in the construction industry, most recently in the GRBJ with Mr. Lou Glazer, president of Michigan Future Inc., making the case that supply and demand economics still applies to the construction trades in the March 27 guest column, “Low wages causing skilled trade shortages?”

As an active participant in the West Michigan construction market, I agree with Mr. Glazer’s assertion the market will begin to correct for the labor supply, as demand continues to increase the compensation for tradespeople. People will be enticed into this market by stability and commensurate wages, and I believe it’s happening right now.

I can attest to the relative decline and the subsequent aging of skilled labor in construction trades in our area. It is both statistically and anecdotally a “tight market” relative to what we became accustomed to just a few years ago.

During the recession of ’08, buyers could call a trade contractor and secure a team of skilled tradespeople on immediate notice. General contractors could bid a project with the expectation it would start within days. While the buyer may have become accustomed to having teams of people on the sidelines as overhead waiting for that next project to start or going through regular cycles of layoff and work (and back), this capacity was not a healthy market for skilled trades.

Our “product” had a carrying cost of people and their families’ living wage when work was inconsistent. Companies either carried people as overhead during slow times or had to move them along to something else. It also didn’t help the image of our industry as we attempted to attract new talent.

Now, as people are working at capacity, I maintain that we have a much healthier skilled trades market and that the supply will follow as wages and conditions continue to improve. Contractors and owners’ expectations may have to adjust back to a bit of a longer-range planning scenario to secure the resources they need to construct facilities. This is the tradeoff to have a fully utilized market with stable jobs vs. supply (aka people) sitting on the shelf waiting for a buyer.

The market currently offers people with a planning horizon competitive construction rates and available trades that can be booked in advance. For those whose cost-benefit analysis indicates they need an immediate start, there’s a premium, and it’s being paid in the pricing they receive.

Continuing with the retail analogy of people as our product, come into my store every morning before 9 a.m. for your supply, and we’ll have product; arrive after 3 p.m., and there’s no telling what I’ll have left — and it’ll likely cost more.

The market is actually working and rewarding those who are serving well in ways that it couldn’t in recent years. That labor premium is making its way through successful contractors to training programs, pay and benefits, as the market creates confidence to trade, train and hire people for consistently open positions. If demand continues to increase, pay will continue to increase, as well.

In short, I support marketing our industry to newcomers as a rewarding and growing profession open to people with a wide range of skills, but I believe the ultimate solution to the issue of the day arrives with time, as the demand in the market remains consistent and positions continue to offer wage incentives enticing people to choose construction over other available careers.

I understand how long it takes to train some of these trades. I understand the price of construction has forced some owners to change plans. I’ve seen years of “too cold” and years of “too hot,” but I’ve rarely experienced the “just right” market, and these growing pains are the sign of a healthy skilled trades market.

Josh Szymanski, PE, LEED AP
Chief Strategy Officer
Owen-Ames-Kimball Co.

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