With a remarkably low regional unemployment rate, businesses throughout Central Texas are struggling to find the labor they need — including the construction companies literally building Austin up.
But the ramifications of a construction labor shortage go well beyond hard-hat areas, affecting developers' timetables, loan repayment schedules and even the quality of the buildings reaching skyward.
That was the takeaway from a June 26 Urban Land Institute event featuring construction, architecture and legal expertise.
David Stauch, the principal of Capital Project Management, said the Great Recession strained the construction labor pool by pushing workers "to the oil fields [that] never came back." He added that construction workers increasingly cannot afford to live in Austin, where the median home price hit $407,400 in May.
"It's the toughest [labor] market I've seen in 35 years," Stauch said. "We've got a shrinking subcontractor labor pool and we've got premiums on delivery to market .... This affects lenders. This affects developers. This affects everybody."
Almost 80 percent of Texas construction firms in a 2018 Associated General Contractors of America survey said they were having a hard time filling some or all of their open positions.
But Joe Basham, managing partner of Allensworth & Porter LLP, said the Austin-area labor gap is much broader than a shortage of trade talent.
"It's shortages at every level of every project from the developer, the lender, the geo-technical engineer, the civil engineer, the structural engineer, the architects, the lawyers, the contractors [and] the subcontractors," said Basham, whose law firm focuses on construction. "They're causing delays at every level."
Sheri Blattel, an associate principal with CTA Architects Engineers' Austin office, said they're also feeling the pinch of people who left the design industry permanently during the last recession.
"We have great talent coming out of the universities, but we do not have that mid-level talent," she said. "So it takes a little bit of a longer time to mentor and ramp up those folks coming out of the pipeline."
'Papering over a lot of problems'
Justin Huling, the director of pre-construction with American Constructors, said he feels that projects are generally taking longer to complete.
"A lot of that has to do with the shortage of manpower," Huling said. "In the past, you've been able to accelerate projects in one way or another. A lot of times you would just work overtime, add more manpower [or] work multiple shifts. But right now the labor pool is not there to do that.
"So you can ask a subcontractor to put in extra hours or add manpower to the project. But it's just not there. They can't even go and hire the workforce to be able to do that."
That means more subcontractors from outside the market looking for work in Austin, as well as local subcontractors being "able to be very selective on the projects they want to bid," Huling said.
"It's got to be attractive to them, on the project side, the owner side and [to] us as a general contractor," Huling said. "So if you burn bridges with those guys in the past, they may not want to work for you when they can pick and choose."
"And, with that, there's kind of an inherent increase in pricing," he added.
With project timelines growing and price tags increasing, Basham questioned when project quality begins to suffer from the region's labor struggles.
"[If] there's not enough trades to do the work or the trades that are coming in are not skilled, that's going to have repercussions," he said.
Basham mentioned a contractor who often finds construction site workers performing water proofing without the background for it, suggesting forensic engineers could anticipate what buildings they'll be getting calls about "at some point in time."
"My sense is that the economy, the velocity of money in this market right now, is papering over a lot of problems," he said. "Maybe one day those problems will manifest themselves or maybe they won't. But I think that's a very difficult challenge."
'The solution is everything'
Blattel said her firm has tried to build relationships with universities across the country, including the University of Texas, to build up their talent pipeline.
"We're getting in there earlier," she said. "It helps forward that track."
Huling said building those connections should begin earlier in high school and even in middle school.
Basham said hands-on training, legal immigration and mentorship will be critical tools in addressing the region's workforce problems, adding colleges "have, in some cases, made things more difficult."
"There's a lot of trades, a lot of skills, that people would be better served picking up in an apprenticeship program, learning from people who do it on a day-to-day basis rather than sitting in a classroom," Basham said. "The solution is everything. We have to do everything."
Blattel added that municipal governments play a role in easing the effects of a tight labor market through improved permitting processes. A 2015 report blasted how Austin handled construction permitting and although there have been some improvements since then, many in the real estate community still complain about long waits.
"All of those things also add a burden to projects, so if we can help the city somehow solve that challenge, that will also take a metric off the table," Blattel said.
