The lessons of our construction workforce reckoning

"Our most valuable asset is our employees" has become an overused cliché in the American business lexicon.

As our nation has transitioned from pandemic-related hyperinflation and a "Great Resignation" to a steadier growth trajectory and historic levels of infrastructure investment, just about every economic sector is struggling with attracting and retaining skilled workers.

Nowhere is this challenge more acute than in the construction industry, where trillions of dollars have been allocated for road, bridge, school, housing, power, water, broadband and advanced manufacturing projects. These jobs pay well, yet some are sounding alarms about an "extreme labor shortage" exceeding half a million workers.

While there's no doubt that construction faces high demand, to suggest a tight labor market is hitting all aspects of the industry equally is a fundamental misreading of the problem.

Here's why.

On one side of the industry, signatory employers partner with trade unions. They negotiate market-competitive wages, benefits, working conditions, and training investments - creating a steady pipeline of new apprentices eager to build careers as others reach retirement.

The nonunion side of the industry operates differently. In Illinois, wages are nearly 50% lower on average, health and retirement benefits are less common, more workers rely on food stamps, safety problems on jobsites are more frequent, and training investments are "voluntary." Indeed, contractors often forgo critical long-term training investments in efforts to win short-term project bids.

Researchers have closely examined these two models and found no difference in overall projects costs. Put simply, you get what you pay for. The union side offsets higher wages and better training with superior safety and productivity outcomes.

There is, however, a critical difference on the availability of skilled workers. The union construction industry produces three-quarters of America's newly trained skilled workers, and graduates 98% of all construction apprentices in Illinois. It provides most of the funding for registered apprenticeship programs, delivers competitive earnings that rival other types of workers with bachelor's degrees and is having greater success in expanding the labor supply pool to include more women, veterans, and people of color.

These are all reasons why an analysis of surveys from the Associated General Contractors of America found that nonunion contractors struggle more to meet their labor force needs. Specifically, nonunion contractors are 16% more likely to report difficulty filling open roles, 21% more likely to see labor shortages delay project completion, and 13% more likely to lose craft workers to other industries.

As recently as the mid-1950s, over half of America's construction workforce was unionized. In the decades since, well-funded special interests successfully passed laws that took away collective bargaining rights and repealed prevailing wage laws.

Research has linked these choices with an erosion of job quality and weaker construction training institutions. As a result, today's construction labor shortages are at least partly due to the now-outsized market share of the side of the industry that has deprioritized investment in workers and workforce training. By failing to connect Americans with middle-class careers, it is struggling to recruit and retain talent.

To its credit, Illinois has followed a different path. It passed the Workers' Rights Amendment last fall, has one of the nation's strongest prevailing wage laws, makes regular use of Project Labor Agreements, and has taken legislative actions to improve job quality across every sector - all while becoming a $1 trillion economy.

But more can and must be done. The hard work of transforming our energy system, connecting more communities to the internet, and modernizing our infrastructure demands an industrywide commitment to the mantra of "employees being our most valuable asset."

It means wages and benefits need to rise faster than the cost of living. It means we need to expose more kids to debt-free construction career pathways while they're still in high school. And it means more employers should consider partnerships with trade unions, who continue to deliver the biggest bang for the industry's workforce development dollar.

• Frank Manzo IV, MPP is an economist at the nonpartisan Illinois Economic Policy Institute