Reading time: 3 minutes
The COVID-19 pandemic has created new and unexpected challenges for many Los Angeles and Orange County businesses. The fallout from the forced business closures, stay at home orders and concern about virus transmission have significantly altered demand for products and services. While retail stores, restaurants, and movie theaters have experienced significant setbacks, other industries, including construction, have not been spared. In fact, Los Angeles recently reported a 45% reduction in new building permit applications. There has also been a 15% decrease in inspections and a 31% decrease in plan checks. These declines reveal just how hard the pandemic has impacted local construction companies. Despite these numbers, many California companies are having difficulty filling hourly craft and skilled positions. According to the Associated General Contractors 2020 Workforce Survey, 48% of respondents are having difficulty filling skilled positions and while 38% are experiencing challenges filling hourly craft openings. These findings reveal that hiring challenges are still occurring within the industry. To help clients, prospects, and others, JLK Rosenberger has summarized the key findings below.
About the Survey
The survey was conducted online between August 4th and 26th, with over 2,000 firms participating nationwide, including 104 companies from across California. Participants included businesses from a broad cross-section of the industry, including 66% in building construction, 42% in utility infrastructure, 38% in federal and heavy construction, 37% in highway, and transportation, with the remaining classified as “other.”
Key Survey Findings
- Changes in Demand – Not surprisingly, many companies reported the delay or cancellation of projects. It was found that 62% of respondents have had projects halted, postponed, or canceled, 57% scheduled projects postponed or canceled, 35% projects underway stopped, while 15% have experienced no impact on demand due to COVID-19. The impact of these delays can be seen in cost and delivery. 41% of respondents reported experiencing longer than expected project timelines, while 39% have higher costs than originally estimated.
- Headcount Changes – Given the current circumstances, it is reasonable to expect significant declines in headcount, but the survey found otherwise. It was reported that 45% of respondents reduced headcount, while 30% increased headcount over the same period. It was also found that 25% of respondents made no changes in headcount.
- Current Hiring Situation – Despite the current conditions, many reported having trouble filling open positions. For craft positions, 48% of respondents indicated having a hard time filling hourly craft positions while 38% identified the same for salaried positions. This is in stark contrast to the 24% of respondents having no difficulties hiring hourly craft and 28% hiring salaried positions.
- Salaried Positions – Since there are challenges filling salaried positions, the survey wanted to identify what roles are presenting the greatest challenges. According to the survey, 78% are having difficulties hiring Project managers/supervisors, 27% engineers, 20% quality control personnel, 14% safety managers and 8% BIM and IT professionals.
- Craft Positions – The same insights were sought for hourly craft positions as well. It was discovered that 31% of respondents are having difficulty hiring carpenters, 29% laborers, 24% equipment operators, 15% cement masons, 13% concrete workers and 11% electricians.
- Pay/Benefit Increases –. To attract new workers, businesses will often increase pay, benefits, or incentives to entice a change. It was found that 35% of respondents increased base pay rates, 14% offered incentives and bonuses, 6% increased employer portion of benefit contributions and 58% have made no changes.
- Pandemic Impact on Safety – The survey also wanted to understand how the pandemic has impacted worker health and safety programs. It was found that 16% of respondents reported more injuries and illnesses, 10% more jobsite hazards (physical and behavioral) and 2% reported an increase in worker compensation claims. In stark contrast, 64% reported no change in safety or health programs.
Although COVID-19 had adversely impacted California construction companies, it is clear that many are still working through hiring challenges. Concurrently, the estimated costs and timelines for new projects will continue to increase as conditions persist. If you have questions about the information outlined above or need assistance with a tax or accounting issue, JLK Rosenberger can help. For additional information, call us at 949-860-9890 or click here to contact us. We look forward to speaking with you soon.