While my office accommodations would be considered modest by most standards, the building affords two remarkably clear views of events of the world both near and far.
One view looks out upon the relatively quiet street lined with a mix of homes and businesses. Across the street, kitty-corner from my building, stands an empty behemoth of a building, which formerly housed the main state unemployment office for Reno, Nev.
Seen on the streetAlthough the agency moved its operations to another location years ago, a relatively steady stream of jobless individuals continues to show up at its main door seeking assistance. Several months back, the stream had seemed to taper off to a slight trickle. However, in recent months the volume has picked up again, signaling a tightening in the local job market.
My other view of the world confirms this observation. My high-speed connection to the Internet provides instant access to news feeds, government reports and statistics. With scant effort, I can hone in on Department of Labor bulletins that herald a tightening in the nation's job market. Over the past eight months, the nation's unemployment rate has crept up half a percentage point to 4.4 percent from its 30-year low of 3.9 percent last fall.
From a human standpoint, the news is disheartening, as each 10th of a percentage point increase in unemployment represents some 125,000 individuals whose lives have been disrupted by job loss. Since October of last year, some 633,000 people have been added to our nation's unemployment rolls (through May).
But from an economic standpoint, the news is viewed by some as welcome relief from an untenable high level of employment that threatens our nation's well-being. The basis for that view is keyed to the "non-accelerating inflation rate of unemployment" (NAIRU), an ambiguous, although essential, component of economic policy. If unemployment falls below the NAIRU for a prolonged period, inflation will result.
Unfortunately, the NAIRU is a indefinable number. At best, its optimum value can only be determined with hindsight, although some economists conjecture the number currently lies somewhere between an unemployment rate of 4.5 and 5.5 percent. Regardless of which is the correct assessment, many economists feel the low level of unemployment over the past three years has built up a great deal of inflationary pressure. The rising level of unemployment should help vent some of that pressure, but only time will tell if the relief comes soon enough to ward off inflation.
Deeper poolFor business owners, the rise in unemployment brings about a more immediate benefit, as it represents a significant increase in the available labor pool-a pool that has been all too shallow in recent years. Whereas unemployment has inched up a mere half-percentage point since October, the number of unemployed has increased by nearly 11.5 percent. Assuming that a certain percentage of that group can be considered unemployable, the increase in available labor is even greater.
The benefit to contractors in our industry, however, may not be as readily apparent. Throughout most of the past decade, the shortage of skilled trades has been a primary concern for contractors, and indications are that it will remain a key concern through the next decade. The physically demanding aspects of construction work, coupled with the cyclical nature of construction activity, serves not only to deter the young people from entering the building trades, but, to a lesser extent, it hastens the departure of some workers from the industry.
Where are the workers?During our nation's record period of economic expansion, the construction industry placed considerable stresses on labor resources. According to U.S. Census Data, through the mid-to-late 1990s, employment in the construction industry grew at a pace double that of the national average. It should be no surprise that, as construction remains one of the few positive sectors in the national economy, contractors still have difficulty finding capable workers, even as the nation's unemployment rate increases.
In the near-term, continuing increases in the nation's unemployment may add more workers to the construction industry pool, particularly those who left the industry during the last construction slowdown in the early '90s. However, wall and ceiling contractors will still encounter difficulties finding tradesman outside the ranks of the trade, as more than 97 percent of plasterers and drywall installers already work in construction. The only economic condition that could introduce more tradesmen to the labor pool would be a slowdown in construction activity.
Over the next 10 years, the pace of construction is expected to cool off, but the industry's employment needs will continue to grow by more than 9 percent. Given the rise in demand for tradesmen, contractors will be pressured to focus more on retention and recruitment to maintain a capable workforce.
New employees are most likely to be found in the ranks of the young and up-and-coming recent graduates of high schools, vocational schools and colleges, with little or no experience. While many in these ranks may still require a significant amount of training to become valuable employees, the investment can pay dividends over the long term.
While they're young
Contractors who hope to maintain a recruiting edge should try to connect with young prospects early on, while they're still in school. Job fairs, career days and workplace "shadowing" all provide opportunities for employers to connect with young people and sell them on the benefits of a career in construction. According to Bureau of Labor Statistics, construction workers enjoy better pay and greater opportunities for self-employment than workers in other industries, with wages averaging more than 30 percent above those of all other production workers.
As for retention, it's critical that employers understand their employees' motivations for working. Surprisingly, employees are more concerned about opportunity, honesty and fairness than they are about wages.
According to a recent survey conducted by Advanced Concepts Teams of Las Vegas on behalf of Nevada Business Journal, workers ranked "career development, growth and promotion" as the number-one factor affecting their job satisfaction. Trust in management, good working relationships and a sense of "partnership" with their employers also topped the list. Coming in at number five was better pay.
Contractors who focus on maintaining a positive, cooperative work environment can expect to doubly benefit. While maintaining high employee job satisfaction is the key to retaining skilled workers, it can also lead to increased productivity, which, in turn, will ultimately reduce the demand for new employees.