Labor shortfall threatens construction boom

When the economy derailed in 2008, Doug Sutter, vice president of Sutter Roofing Co., made a tough choice. He decided to keep as many of his workers employed as possible through the lean years of the Great Recession, sacrificing his bottom line to keep a firm grip on what he predicted would one day be a limited commodity — skilled labor.

“We really did a good job of trying to keep our core guys through the downturn,” Sutter said. “We tried to find ways to keep guys busy because we knew finding skilled labor would be a problem coming out of the recession.  We saw this coming.”

After five years of the worst economic crisis since the Great Depression, a shortage of skilled labor threatens to take the wind out of the sails of Sarasota’s resurrected construction industry. The problem is that a lack of workers threatens to drive up construction costs and limit the amount of projects contractors are able to tackle.

“I hope we can keep the boom going, but we have to get more people into the industry,” Sutter said. “The labor shortage is a big, big concern, particularly in skilled labor.”

The construction industry in Sarasota County is considered a bellwether for the area’s economy and a driver of economic growth. According to a county report, property tax revenue is projected to increase by about $6 million next year, due to a 4.2% increase in property values countywide. And many area businesses and lawmakers point to a new round of development projects popping up around the county as an indication that Sarasota’s economy is on the mend. But the skilled-labor shortfall could limit the economic benefits of resurgent development and add uncertainty to government budgets.

Mary Slapp, executive director of the Gulf Coast Builders Exchange, acknowledged that an increase in building costs may affect the scale of new projects, but said the real casualty of the labor shortfall will be the pace of growth.

“I hear from the general contractors that they're not going to bid because they don't have the labor,” Slapp said.

Brian Jones, director of development for Core Construction, said he noticed smaller sub-contractors turning down jobs, but it wasn’t until CECO Concrete Construction, the nation’s largest concrete subcontractor, stopped taking new jobs in Florida for 2014 that the scale of the problem became apparent.

“That caught us off guard,” Jones said. “We didn’t expect a contractor as big as that to start canceling jobs.”

The problem is one of supply and demand. In 2006, prior to the downturn, the Sarasota County area construction industry employed more than 32,000 workers, according to Florida Department of Economic Opportunity (FDEO) data. But the recession hit Sarasota’s construction industry hard. By 2010, the construction workforce slimmed down by more than half, dipping below 15,000 workers. And, despite the recent development rebound, the industry workforce has been stuck at around 15,000 for the past two years and shows little to no signs of growth. The FDEO reports that Sarasota’s construction workforce was 15,600 in July 2013 — a 3.2% drop from July 2012.

“These things have a way of working themselves out,” Jones said, referring to the labor shortage. “But it means prices will have to go up.”

Slapp said that much of Sarasota County’s construction workforce uprooted to other areas of the country such as Texas and the Carolinas, where construction was less affected by the economic downturn.

“When you have to feed your family, you go where the jobs are,” Slapp said. “Now we have to find a way to lure them back.”

Sutter added that new government regulations such as E-Verify and the Affordable Health Care Act’s employer mandate are burdens for businesses seeking to hire new workers.

“It certainly thins the herd,” Sutter said, referring to E-Verify, an Internet-based program used to determine an employee’s eligibility to work in the U.S. “But, there really isn’t much of a herd, anyway.”

The labor shortage could also throw area governments a budgetary curveball.

Scott Lempe, chief operating officer for the Sarasota County School Board, said cost increases could send some projects to the chopping block.

“I anticipate the costs to tick up,” Lempe said. “If the cost of material or labor goes up dramatically, then it would force us to reevaluate the number and magnitude of projects we can take on.”

Sarasota County Commissioner Christine Robinson said the county budget has yet to feel the labor shortage’s effects.

“In the short term, I don’t see it as huge problem,” Robinson said. “But we may have to take another look at our budget in the future.”

Robinson said an increase in construction costs would likely lead to a decrease in funds available for smaller projects that periodically pop up and are paid for out of the county’s unfunded projects list.

“We tend to budget conservatively,” Robinson said. “If costs start to go up dramatically, our unfunded project list may be unfulfilled. We’ve already seen the price of asphalt affect our road renovations.”

According to area contractors and lawmakers, luring skilled workers back to the area is not the only solution to the labor shortfall. There should also be an emphasis, they said, on locally run skilled-labor training programs.

Slapp lauded skilled-labor programs at SCTI intended to teach marketable skills.

“Folks are going to be leery about going into the construction industry after the recession,” Slapp said. “But skilled tradesmen will never be out of work. We need to emphasize the importance of learning a skill and being a good worker.”

Robinson added that programs such as a proposed local hiring initiative and the Suncoast Workforce project facilitate linking contractors to workers, allowing for a more efficient use of the existing labor force.

Sutter, whose company recently secured contracts to do the roofing renovations at the Sarasota County Courthouse and the new Macy’s being built at the Mall at University Town Center, said the labor shortage hasn’t forced him to turn down any projects — for now.

“Our biggest concern used to be securing financing and keeping our workers employed,” Sutter said. “Now it's trying to find enough workers to get all our new projects off the ground.”

Construction jobs
By the numbers:
32,200: Sarasota construction industry workforce, July 2006
15,600: Sarasota construction industry workforce, July 2013
7%: Current estimated unemployment rate for Sarasota County
7.1%: Current estimated Florida unemployment rate
7.3%: Current national unemployment rate
320,000: Number of construction workers who dropped out of the national workforce during the Great Recession
$27,220: Median annual construction worker salary in Florida
$49,350: Median annual construction worker salary in New York