As construction is on the cusp of transformative changes, it’s imperative for financial leaders to grasp the reins of innovation, adaptability, and foresight. The construction industry, with its amalgamation of challenges spanning from demographic shifts to technological disruptions, beckons for a people-focused approach in financial stewardship.
Demographic Challenges
By the end of this decade, the U.S. construction workforce will experience a large reduction, as almost a quarter of workers are currently older than 55.
This “retirement of Baby Boomers” is the main factor impacting the severity of the skilled labor shortage, according to Tim Mongeau, Director of Workforce Development at the Associated Builders and Contractors. He explains, “It is estimated that by 2030, 40% of the construction workforce will retire. This cuts across all industry occupations. Unfortunately, this translates into many more people leaving the industry than new entrants coming in.”1
This data is reinforced by studies from the National Center for Construction Education and Research that similarly claim that 41% of the current construction workforce will retire by 2031.2
Another demographic challenge facing construction includes the predominance of men, as women make up only 10.9% of the construction workforce3 and just 1% of site workers.4
There are also inequalities in the demographics surrounding race and ethnicity. According to 2022 data from the U.S. Bureau of Labor Statistics, just 6.7% of construction industry workers are Black, and 2.1% are Asian.5 And, Construction Dive reported in 2021 that Hispanic construction workers constitute 30% of the workforce, yet they are often stuck in lower-level positions with limited upward mobility.6
The Decline in Accounting Students
The impact doesn’t end on the jobsite — accounting departments may also
experience the shortage as the number of individuals entering a career in accounting is declining. For instance, the annual number of new CPA candidates has dropped by 37% since 2016 (Exhibit 1).7
Like many other industries, construction competes for workers; high turnover rates and the cultural shift of workers has resulted in them reconsidering their line of work and their desire to try different roles or industries. The construction sector has yet to benefit from this role switch up, as most jobs depend on workers having acquired particularly specialized skills. As a result, this role rotation has only further narrowed the candidate pool.
Finding Opportunities in the Next Generation
In this wave of impending retirements and shortages, the construction sector has a huge opportunity to rebrand as the industry with not only high-wage jobs, but also the ability to afford high-performing individuals an opportunity to build their career in science, technology, engineering, and mathematics (STEM). For the burgeoning student nearing their step into the job force, the construction sector is now rife with opportunities for career advancement and mentorship.
In addition, the sector is poised for robust technological implementations that will further advance and develop laborers, managers, and accountants to be even more safe, efficient, effective, and engaged. Gen Z could be enticed by the rapidity of technological advancements, integrations, and potential for career growth.
Beyond simply having more people to do the work, there is another upside. According to the Peterson Institute for International Economics, businesses that rank in the top quarter for gender diversity see better results, being nearly 50% more likely to surpass their industry’s average performance. Also, companies with women in their C-suite see 34% greater shareholder returns.8
And, for teens debating their post-high school futures, there is high pressure to attend college, with a total of 86% of teens saying they feel pressure from family and society. Despite this pressure, 58% think that a vocational education fits better for them.
This hesitation surrounding college is reinforced in 61% of Gen Z, who think that college should only be an option if they already know what they’ll do with a degree.9 This creates an opportunity for construction to recruit these undecided students.
The push toward salary transparency has had some benefit in helping highlight how viable trade school is from a competitive compensation lens vs. bachelor’s degree earnings. In terms of entry-level jobs, there is a $12,000 average annual pay differential between those who went to trade school vs. those who earned a bachelor’s degree across all majors;10 when the tuition costs are factored in, that gap disappears.
As the average federal student loan debt for a four-year college is around $37,338, with private student loan debt estimated to average $54,921 per borrower, there is a potential financial cost to college for these undecided students of the next generation. Showing them the more immediate return on income and career growth in the trades — and the fact that half of student borrowers still owe $20,000 on average after 20 years in the workforce — could help
influence that decision.11
Beyond financial benefits are opportunities to improve construction’s brand reputation. The common misconception of construction is that it is an analog industry dependent on hours in exceedingly hot or adverse weather conditions with most roles requiring heavy lifting, having unsafe work conditions, and being unwelcoming to newcomers, casting an archaic and less attractive path. Yet, construction is filled with science, technology, engineering, and mathematics — an ideal path for students with aspiring STEM careers.
In fact, managing the pace of technological change and embracing the culture of innovation that permeates the most successful companies influences safety, supply chains, deliverables, design, process, training, and effectiveness. This can have a multiplier effect and create bigger wins; communicating both this level of new employee engagement and how this furthers company strategy can help the pipeline of talent grow as well as increase the opportunities for revenue growth.
So, what can you do? Here are some short-, medium-, and long-term approaches to consider, but the effort is needed throughout the industry.