‘Doing without,’ like suffering under the restraints of a constricting budget, often pushes us to get creative with our needs. As many a young person has experienced, I was near-penniless when I set off on my own and moved into my first apartment. Used furniture, borrowed draperies, thrift store flatware, and area rugs rescued from a friend’s attic.

One item I needed desperately but failed to secure in my scavenging was a vacuum for the rugs that management mandated to protect the ancient hardwood floors. Mind you, this was The Land Before Letgo and Craigslist - opportunities for an affordable vacuum were limited. But with a cat and dog that gave up more hair than a barber’s chair, I needed a solution.

Somehow I figured out that dragging the sole of my running shoe across the carpet lifted out hair and dirt and compacted it into easy-to-pick-up debris balls. Like magic. Took a bit more time, but it did work. I soon found a cheap rubber broom that produced the same results with a little less effort.

A shortage of funds and tools hindered me from accomplishing a task – but I found an effective way around it.

The construction industry today is suffering a far more serious shortage and requires a viable solution.

The Scarcity of Skilled Labor

Record-low unemployment and a thriving economy is invigorating construction project growth…or at least it’s trying. A marked skilled labor shortage stands in the way. According to an Associated General Contractors of America report, 79 percent of construction firms want to hire more workers, but workforce expansion is estimated at a mere 5 percent.³

An analysis of the U.S. Bureau of Labor Statistics determined that 278,000 open construction jobs existed in the U.S. as of November of 2018.¹ Between May 2018 and May 2019, Texas alone added 35,000 jobs; California 32,200; and Florida rang in third with 28,000.⁴ Many other states tallied job additions into the thousands as well.

President of Goliath Construction Consulting, Tyson Conrad, confirmed the workforce concerns, saying, “We're in a place now where you have a booming economy and booming construction industry and lack of manpower.”

And the Bureau of Labor Statistics anticipates the industry will require another 747,000 workers by the time we reach 2026. ⁵

Tightening the Screws

The same two points instigating the construction surge are also contributing to the labor shortfall. Nevertheless, insiders suspect other factors might be at play: an aging workforce; younger generations wooed by the pristine cutting-edge of the tech industry see construction through a ‘dirty,’ outmoded lens; rhetoric suggesting a four-year degree for a white-collar job is the only path to success; and stripping down of trade-school options.

The 2019 Quarter 2 Commercial Construction Index (CCI) statistics hammers home the skilled labor concerns:

• 46% of all contractors claimed strong concerns about worker skill levels
• 54% of contractors claimed difficulty in finding skilled workers
• 40% found a moderate challenge in securing skilled workers
• 2/3 of specialty trade contractors revealed a high level of difficulty finding skilled workers²

Contractors surveyed in the report also indicated how the skilled labor shortage is impacting them:

• 73% asked skilled workers to do more
• 61% have been challenged to meet schedule requirements
• 63% were pressured to bid higher on projects
• 47% turned down opportunities for lack of labor²

Pouring the Foundation

So what can construction leaders do to mitigate their labor woes? They can start by participating in the federal Work Opportunity Tax Credit (WOTC) program.

This dual-benefit incentive program delivers up to $9,600 to a business for each new employee hired who qualifies as defined within 14 target groups. This is benefit number one.

Delving into the target groups uncovers a new labor pool of possibilities that the firms may not have considered in the past. Benefit two.

Also, there lies a third benefit: because the categories are comprised of individuals who often experience difficulties securing employment, the WOTC offers challenged workers a helping hand.

As veterans are one of the target groups, firms may just find a wealth of skills in that ‘toolbox.’ Many vets acquired transferable proficiencies during their military service and would therefore potentially require less training, if any. But for others who may need additional training, the tax incentive can help offset those costs.

The WOTC really is an all-around win-win.

Double Support Beam

Many states also present additional tax-saving opportunities with “piggyback” credits. These may be applied for at the same time as the WOTC as they use overlapping qualifiers to obtain state tax credits. And still, other states provide other training program assistance and incentives.

The Framework

The WOTC, and any potential state incentives, are formidable tools to help firms build a solid framework of savings, acquire workers, and offset training costs - all to combat the effects of the skilled labor shortage.

A construction firm should also consider partnering with a tax professional to ensure they capture all potential credits and help power their business.