The Construction Beat: 430K construction workers needed, lumber price relief not here yet and new construction regulations targeted by Biden administration

The most important news updates from across the industry

Sam Garrett / Buildertrend

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This week, we’ve got updates for you on the extent of America’s construction employment crisis, how long before the lumber market corrects and what new federal labor rules may be coming for builders.

 

Employment crisis: Short-handed construction crews scramble to keep up

Employment woes continue to plague the construction industry. Builders across the nation are facing a massive labor shortage in the face of surging demand. From May to June, construction employment declined by 7,000 workers and remained well below the pre-pandemic employment level. Ali Wolf, an economist at Zonda, reports that 67% of builders are experiencing some form of labor disruption, up from 42% at the start of the year.

Associated Builders and Contractors projected construction businesses will need to hire 430,000 workers over the next year and 1 million workers over the next two years to keep up with demand.

Some contractors blame the labor shortage on the availability of unemployment  bvbenefits. Stephen E. Sandherr, the CEO of the Association of General Contractors, offered one solution: “Ending a program that is basically paying people not to work will help (the construction industry).” Dozens of states have already taken steps to end federal unemployment relief. As a result, these states have seen an increase in the number of workers looking for employment.

While weekly unemployment benefits remain available, it’s likely employment problems will continue to affect the industry. But a positive sign for employers came from President Biden, who last month stated he supports allowing the weekly unemployment benefits to expire in early September.

 

Lumber prices fall but market not yet caught up

Lumber prices have fallen more than 50% since May. But prices paid by builders have yet to decrease proportionately. Why?

The answer lies in the inherent structure of lumber supply chains. Lumber is typically manufactured at sawmills. The sawmills then sell to wholesalers who distribute to builders. The wholesalers have one primary goal: purchase lumber from sawmills at the lowest price and sell lumber to builders at the highest price. With increased demand, sawmills have increased their prices to wholesalers, who have then increased their prices for builders. Since wholesalers want to maintain the largest margins possible, builders rarely, if ever, purchase lumber at its market price.

Builders won’t see decreased lumber prices for some time. In order for that to happen, the market prices for lumber must stabilize at lower levels for an extended period of time. A significant decrease in market prices alone, as we’ve seen recently, will not be sufficient. Instead, prices must stay low just long enough to lower the wholesaler’s costs. Thus, it may take weeks or months for builders to see price relief on lumber.

 

Labor Department eyes new construction industry regulations

The U.S. Department of Labor’s spring regulatory agenda lists various regulations it will target over the rest of 2021. Several of them will have an immediate impact on the construction industry.

One main regulation the DOL will focus on is heat illness prevention. With rising global temperatures, and many workers performing strenuous outdoor tasks, construction workers are at high-risk for heat-related injuries and illnesses. In response, the Occupational Safety and Health Administration may require employers to monitor outdoor temperatures and humidity levels, which could impact scheduling and timing for contractors.

Another possible regulation focuses on personal protective equipment. In response to COVID, OSHA is exploring possibly requiring those working in close conditions, such as construction workers on job sites, to wear PPE. The hope is that such a rule will minimize the spread of the virus on job sites, particularly as the Delta variant begins to surge in the US.

The final regulation will be enhanced workplace injury and illness tracking. The Biden Administration will be reverting to the 2016 version of this rule, which the Trump Administration changed in 2018. This new rule includes anti-retaliation provisions against post-incident drug testing and workplace safety incentive programs. If the rule passes, proposed changes would require businesses with at least 250 employees to provide electronic submissions of injury and illness data with Forms 300 and 301.

 

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About the Author

sam garrett - law clerk at buildertrend
Sam Garrett

Sam Garrett is a law clerk at Buildertrend

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