The construction industry is expected to grow at an annual rate of 6% between 2017 and 2021. For those that worked in the industry through the recession, the anticipated increase is music to their ears. The upturn, however, is not without issues. Many operations now face the fact that 2.3 million construction jobs were lost during the recession. Although the outlook for the industry is improving, the number of skilled workers isn’t what it once was. The shortage of skilled laborers has created many scenarios where contractors aren’t paying accurate wages for talent. Most contractors determine wages on operations, not labor market research. In this article learn 3 key trends that lead to increased wages and techniques to determine an appropriate pay rate for your employees.
1: Increase in professional pay rates
A trend attributing to the rise in wages is a steady increase in professional pay rates. Through tracking of six key industry positions, base pay for skilled employees has steadily increased since 2001. The number of available jobs may have decreased during the recession, but the wages for those positions that require specialized skills and knowledge experienced a steady increase. Annual base averages for business development and project management positions are expected to exceed $140,000 by 2020, with superintendents exceeding $120,000 and general foremen exceeding $80,000 for the same period. Contractors must consider and account for this increasing wage trend in their hiring strategy.
2: Differences in geographic wage trends
Another trend the industry must account for in their wage strategy is the significant difference in pay between geographies. Failure to understand and account for the local labor market conditions can result in either overpaying your labor force or missing employment opportunities due to underpayment. Understanding the local, state and regional trends will go a long way in ensuring you have the appropriate amount of skilled labor to meet your needs.
3: Paying for the future
Due to the increase in demand in the industry, pay for college graduates in construction management has increased as well. Hiring the next generation of leadership requires a thorough understanding of the competitive pay levels for recent graduates. A lack of awareness in this area may result in the same risks we saw in our previous trend; talent shortages and over or underpayment of wages.
The construction industry is not unique in the fact that talent is limited and competitors must go head-to-head to obtain the necessary workforce. Developing a hiring strategy that involves a competitive pay model and incentives to encourage and develop loyalty will serve your operation well. For more information on creating a pay model that suits your operation, contact us.