A rising tide lifts all boats. And so goes the thinking around infrastructure investment headed for construction projects, which have recently seen an imbalance favoring residential work as commercial jobs slowed during the pandemic.
The Infrastructure Investment and Jobs Act will result in a five-year net new investment of $550 billion, which alone won’t create equilibrium, but we expect it will lead to less hesitancy about jobs in the nonresidential space. This includes the harder-hit hospitality and office sectors, as these public infrastructure projects with secured funding help reduce competition in other nonresidential works. We expect backlogs to fill and contractors to expand their service offerings.
The big picture
The new legislation offers construction a sustained capital infusion over the next five to seven years that will provide longer-term opportunities for growth while helping to shore up America’s aging infrastructure.
But to capitalize on the windfall, the industry must find ways to offset a shrinking labor pool. Contractors must find innovative ways to attract talent—whether through vocational partnerships, in-house training, higher wages or other incentives. And amid increasing pressure to offset climate change, the industry will need to moderate its own practices and move toward lessening its impact on the environment.
In the short term
Every $1 billion of infrastructure investment requires 3,000 construction workers. That’s a tall order for an industry already facing a prolonged labor shortage worsened by the pandemic. There were 344,000 open U.S. construction jobs in August—the most recent month of available government data—38% more than the five-year average of 249,000 monthly openings.
The labor shortage could be further exacerbated by federal government vaccine mandates as construction worker vaccine rates continue to remain low; only slightly more than half of the construction workers have their shots, compared to about 80% in occupations overall, data from the Construction Center for Research and Training shows. Meanwhile, supply chains and material prices remain volatile, with steel, copper and fabricated metals all currently inflated. Pricing volatility makes it difficult to bid on jobs.