Labor shortage may cast a cloud over Duluth’s ambitious construction schedule

This construction site on London Road at South 18th Avenue East is one of many in Duluth this summer.

Duluth has an ambitious construction schedule laid out for 2019 and beyond. 

Not only will the downtown medical district see multi-million dollar investments made by Essentia Health and St. Luke’s towards new and existing facilities, but the anticipated overhaul of Superior Street has begun as well.

Meanwhile, a $70 million downtown high-rise apartment building is currently being proposed, as city planners play catch-up with housing needs. 

While the construction boom in itself is seen as a sign of prosperity, industry leaders are concerned about the effects the labor shortage will have on these plans.

“There is still a significant shortage in skilled laborers in the apprenticeship programs. It remains one of the biggest challenges for our contractors at this point: to supply enough workers to get the job done,” said Craig Olson, president of the Duluth Building and Construction Trades Council.

The causes of the labor shortage are well known. The current labor force is aging and newcomers are not moving up in the numbers that are needed. 

This, some believe, is largely due to the fact that, years ago, when school budgets were being cut, the industrial arts programs, meaning shop and welding classes, were the first to vanish from the curriculum, leaving a whole generation underexposed to the possibilities of trade jobs.  

“The unions and the industry are making an effort to educate people and to let them know there are good jobs in the construction industry with benefits, health insurance and retirement. We are getting the word out, but it’s slow to come back,” said Olson.

He also points to the impact the humongous building projects can have on the region’s smaller assignments.

“Demand for the huge projects is going to affect everybody else,” he said. “We currently do have members at the building exchange who are busy and maybe not bidding new work because they don’t have the workforce to do the work that’s out there.”

Project Build Minnesota is one initiative aiming to spark interest for the trades among young people. Launched in 2017, the campaign introduces various professions, lays out career pathways and explains what education is needed. Its website includes scholarship information as well as a job portal.

What’s more, one of the co-founding organizations of Project Build, the Builders Association of the Twin Cities, has introduced two new legislative bills in January urging lawmakers to assist in recruiting young people to the construction industry.

The first bill aims to educate school counselors on the types of vacant construction jobs and their future growth in demand.

“We have to get the counselors and the parents on board so they understand the careers available to students who don’t want to pursue a four-year degree,” said David Seigel, executive director of the Builders Association of the Twin Cities.

The second bill introduced would allow teenagers to work at construction sites during summer break.

Currently, Minnesota law prohibits minors from working at construction sites due to perceived safety risks. But Seigel maintains that with the right supervision, the experience youth could gain from these summer jobs is invaluable. 

“We’re obviously not going to have them operating power equipment,” he said.

Industry leaders are hoping these summer jobs convince high schoolers to pick up a trade after they graduate.

One convincing factor is, of course, money. According to Project Build, construction workers earn an average salary of $63,231 annually. That’s, on average, $9,835 more than a recent college graduate.

It further predicts that over the next five years construction jobs will grow 11.5 percent, faster than any other major segment in Minnesota.

These figures are mirrored in statistics released by the Minnesota Department of Employment and Economic Development (MN DEED). A January 2019 analysis reported, since the beginning of this year, 8,941 construction jobs were added statewide. That represents an 8.7 percent job growth rate, which is higher than the national growth average of 5.6 percent.

Meanwhile, the Association of General Contractors reported in an August 2018 study that 80 percent of contractors experience difficulty finding qualified workers. 

The study revealed that while technology can bridge some off the existing gaps, the labor market conditions remain tight, prompting businesses to change the way they compensate their workers.

In the study over half of the participating firms reported they increased their base rate of pay for craft workers. A quarter of the companies stated they improved their benefits packages and provided incentives and bonuses to attract workers.

Despite these efforts, some industry leaders maintain the difficulty finding skilled workers persists, even though construction pay exceeds the average for the overall economy.

They urge government officials to increase funding for career and technical education and enact immigration reforms that would enable employers to bring in foreign workers when there are not enough locally available.

Others argue the construction industry needs to target demographics that have been traditionally underrepresented. According to the latest available OSHA analysis, only 9 percent of U.S. construction workers are women, which is a relatively small percentage compared to other industries.

So while the labor shortage presents a dire situation for contractors, Assistant Director of the Labor Market Information Office of MN DEED, Oriane Casale, provides the following perspective: “If they want to continue hiring people, they’re simply going to have to hire a more diverse labor force because that’s the population out there to be hired.”