Even before the coronavirus pushed it into the stratosphere – setting record new highs – the housing market was experiencing one of the largest booms in the country’s history. From 2012 until the start of the COVID-19 pandemic, the U.S. housing market had risen more than 50%, continuing to drive up the values of homes across the country. Furthermore, it is not only the housing market that is experiencing unprecedented growth, but also the renovation and remodeling market. Due to pent-up demand, there is a shift towards bigger, more expensive and professional-heavy interior remodels and total spending is forecast to increase 19% in 2021: from $141 billion to $167 billion.
While industries related to housing are currently booming as a result, there are underlying issues that will begin to impact the viability of the industry’s ability to sustain long-term growth – the most critical of which being labor. While labor shortages are not a new phenomenon nor is it contained strictly to the trade community, it is clear from ongoing labor reports that there is a need across many sectors.
Given the fact that nearly every area of the economy is facing this challenge, competition will only increase when various industries all try to recruit and retain the same talent. With more tradespeople retiring than are entering, industries requiring skilled labor are at a crossroads, running the risk of not being able to attract enough talent to keep up with the growing demand for services. Therefore, from construction to remodeling, plumbing to electric, industries across the spectrum must come together to assess the problem, develop coordinated strategies and implement grassroots efforts to stop the negative momentum and resuscitate good-paying trade careers within the United States.
The Health of Building Industries Affects the Overall Economy
A shortage of skilled building trade professionals has a broader impact on the health of the economy and the housing market. For example, without skilled tradesmen, new home builds and interior remodels are going to take longer to complete. According to the latest Kitchen and Bath Market Outlook from NKBA, new housing starts from H2 2020 are only now beginning to turn into kitchen and bath orders. While this is contributing to third quarter growth within the Kitchen and Bath industry, the lack of labor will continue to impact capacity and keep new home construction completion times closer to 12 months, rather than the traditional 5–11 months, resulting in lower inventories and higher housing prices.
Additionally, as interest rates are plummeting, more institutional investors are entering the single-family rental arena and with families leaving crowded cities, the market is falling into an uneven level of supply and demand – pushing the prices of homes higher and pricing out many Americans along the way. With communities across the U.S. already facing a housing affordability crisis, unless the building industries increase the availability of homes to balance supply and demand, some consumers will continue to get squeezed out of the market.
To have the capacity to increase housing supply once other headwinds normalize, industries from construction to renovations and remodeling will need to expand their skilled workforces exponentially.
Attracting Talent Requires Awareness, Opportunity, and Collaboration
One of the greatest problems in the recruitment of the younger generations toward careers in the building trades can be boiled down to a lack of awareness, education, and opportunity. The National Kitchen & Bath Association (NKBA) recently surveyed 54 high school students about careers in the skilled trades and found a stigma associated with the occupations among the younger population. Physically intensive work, low pay, and hazardous conditions were among the most common concerns with students who participated in the survey, illustrating the mental barrier that exists when it comes to considering these well-paying jobs as a potential career. On the bright side, about half of the students surveyed by NKBA expressed interest in at least one trade career, signaling a potential willing generation that simply lacks the knowledge, skills, and opportunities to take advantage of these stable and in-demand careers.
This unfounded stigma is due in part to the fact that, for decades, grade-school students were and still are being pushed exclusively towards a college-only career path. However, with ever rising costs and life-altering amounts of student loans, more high school graduates would benefit from alternative pathways to joining the workforce, especially when those pathways lead to skilled, high-demand careers that pay more than just a living wage.
To achieve this, collaboration across industries is vital in educating youths from all walks of life. For example, the Skilled Labor Fund is a massive partnership between NKBA, National Association of Home Builders (NAHB), National Association of the Remodeling Industry (NARI), and the National Housing Endowment, with the sole focus on addressing the shortage of skilled labor entering the residential construction industry.
In addition to more awareness and education, programs that offer hands-on experience will be critical in turning the labor shortage tide. In January of 2020, NKBA launched its NextUp initiative, a program designed to reach out to high and middle school aged students to not only educate them on the different careers within the industry, but also expose them to hands on experience at a young age. The program also supports interested students by providing transportation to showcase locations to meet with industry professionals while connecting them with mentorship, internship, and apprenticeship opportunities.
With the labor shortage reaching a potentially critical level as skilled tradespeople retire at a 5 to 1 ratio to new labor entering the field, the time to act is now. Through programs such as NextUp and the Skilled Labor Fund, the industry can capitalize on a growing movement among young people who are facing rising tuition costs and an uncertain career future via the college path and encourage them to consider the skilled trades as an alternative trajectory to success and financial stability. If the problem does not get solved, it will have rippling consequences across the economy and housing market that we will feel as a country for generations.