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Bloomberg News
The Trade Institute of Pittsburgh is helping counter a scarcity of skilled labor in the region.

Patching up skilled labor

Worker scarcity begins to impede housing rebound

Bloomberg News
Stephen Shelton, right, owner of Shelton Masonry and Contracting and founder of the Trade Institute of Pittsburgh, instructs student Kevin Hardy in mortaring a head joint at the school in Wilkinsburg, Pa.

Stephen Shelton wants his son to inherit his masonry company staffed with skilled craftsmen. To guarantee that happens, he started a school.

“It’s a real challenge to find really good skilled guys who aren’t 50 years or older,” said Shelton, owner of Shelton Masonry & Contracting and founder of the Trade Institute of Pittsburgh.

The nonprofit provides 10 weeks of brick-laying training to participants, focusing on people with troubled pasts. It’s placed 42 people into full-time jobs since 2008, including five at Shelton’s company.

“If you’re willing to give it a shot, I’m willing to give you a shot,” Shelton, 52, said.

While fulfilling what he said is a desire to provide a chance to those who might struggle to find jobs, Shelton is also helping to solve an industry challenge.

A shortage of skilled construction workers has been reported by builders in markets including Seattle and Phoenix as homebuilding regains momentum. The situation could grow worse with an aging workforce and lagging immigrant labor, said Brian Turmail, spokesman for Associated General Contractors of America.

“A lot of folks are worried about a lack of skilled workers, a lack of carpenters, a lack of laborers, a lack of equipment operators,” said Turmail, whose Arlington, Va., group represents about 30,000 construction businesses, according to its website. “It’s less the guys who wear suits and boots, like the project managers; it’s the guys who wear boots and jeans.”

Housing is recovering and commercial construction is picking up in some markets, stoking demand for construction workers. Regional labor shortages have been cited in Federal Reserve Bank Beige Book reports on regional economic situations and in builders’ earning calls.

In the June Beige Book, the Philadelphia district commented that “builders are facing problems, as the long housing recession has disrupted the supply chain for materials and the pool of skilled workers.”

More than half the construction companies surveyed by the National Association of Home Builders said labor constraints over the past six months have caused them to pay higher wages or bids for subcontractors and, consequently, raised prices, the Washington group reported in March. Forty-six percent had experienced delays completing projects.

“The housing recovery will be a modest one, not only because the overall economy is moving relatively slow, but because rebuilding the infrastructure of the homebuilding industry is taking time,” said David Crowe, NAHB chief economist. “The labor shortage has been a contributing factor.”

The U.S. lost about 2.1 million construction jobs from December 2007, when the recession began, through January 2011, when industry employment hit its lowest level since 1996.

Some workers who lost jobs may not come back, said Robert Rulla, who focuses on the homebuilding industry from Chicago as a director at Fitch Inc.

“A certain number of those laborers retired, have left for different jobs,” he said. The industry had a 9.1 percent unemployment rate in July (not seasonally adjusted), down from 12.3 percent a year earlier.

That industry rate is still elevated – it exceeds the national unadjusted average of 7.7 percent – and Jed Kolko, chief economist from real estate website Trulia Inc., said that indicates that local shortages don’t persist nationwide. Construction payrolls had 1.7 million fewer people in July than at the outset of the recession.

Even so, builders such as Lennar Corp. and Toll Brothers Inc. say they are seeing labor shortages in some markets. They say those will be short-lived because wages will appreciate as demand increases and attract more workers.

“We’re through the worst of it, because this recovery is about a year in,” Toll Brothers CEO Douglas Yearley said during a presentation in May. “I think workers, kids are coming back into homebuilding.”

Marcellus Ologide, 20, is among those entering the workforce. The Landover, Md., native is learning carpentry at the Home Builders Institute’s Keystone Job Corps Center in Drums, Pa.

“I plan on working for construction after I get my journeyman’s certification, which will be four years from now,” said Ologide, who started at the center last August. “Especially in D.C., where I’m close to, there is a lot of construction here.”

Yet longer-term, there may not be enough entrants such as Ologide to replace aging construction workers, said Ken Simonson, chief economist for Associated General Contractors.

Echoing demographic shifts in the overall U.S. workforce, the median age of construction and extraction workers in 2012 was 41.4, based on Bureau of Labor Statistics data, up from 38.2 in 2007 and 37.9 in 2000.

“Construction was already losing out among high school students, and that was before the recession,” Simonson said, saying that the “extra-deep” drop during the recession might discourage young people from entering the field. “It’s dirty, it’s cyclical, it’s all of those things.”

Highly skilled construction workers such as master plumbers are aging out of the field, and there may be a shortage of younger Americans with the time-intensive training needed to replace them, said NAHB chief lobbyist James Tobin.

In a 2010 study, the Sloan Center on Aging and Work at Boston College found that of 58 construction firms surveyed, half said an aging workforce would “negatively” or “very negatively” affect their business.

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