Like other sectors, construction experienced record levels of job openings in late 2021. But two factors make filling positions especially tough. First, an ongoing survey by the Delphi Group at Carnegie Mellon University of individuals by coronavirus vaccination rate has consistently found that respondents who identify their occupation as construction have a much lower vaccination rate (57% as of late November) than other occupations (83%). As more owners require all personnel on their premises to be vaccinated, contractors are likely to have greater difficulty than in 2021 fielding full, healthy and eligible teams.
Second, the wage premium that construction has paid relative to other sectors has eroded sharply since the pandemic struck, while some other industries have improved working conditions as well as pay. From 2006 to 2019, hourly earnings for craft workers and other “production and nonsupervisory employees” in construction averaged 20 to 23% more than for all other private sector employees. That premium shrank to less than 18% in 2020 and 2021 as historically low-wage industries such as fast food, warehousing and local delivery services dramatically increased hourly wages and added bonuses. In addition, some industries can offer flexible hours or work locations. As a result, construction firms are likely to have a harder time attracting and retaining workers unless they raise wages.
Supply chain problems include outright unavailability of some materials, extreme lead times on production and transportation bottlenecks. All these woes have affected the construction/infrastructure industry in 2021 and many will continue in 2022. However, manufacturing capacity is gradually coming online. And some shortages, such as the lack of numerous construction plastics attributable to the shutdown of resins plants in Texas caused by an extreme cold snap, will probably not recur.
Materials costs are likely to be volatile, but in both directions instead of rising across the board as in the first half of 2021. After hitting record levels in May through August 2021, futures or spot prices have dropped considerably for aluminum, copper, steel and petroleum products, implying that delivered prices for materials using these inputs will fall as well. However, the declines are unpredictable and subject to sudden reversals, as shown by the extreme ups and downs in lumber prices throughout 2021.
In summary, contractors will be busy in 2022. Firms selling goods and services to construction/infrastructure can expect plenty of demand. But firms hoping to get a project built by a firm date at a known price may be out of luck.