Florida’s Construction Labor Shortage: What’s Causing It?

by Clayton Park published on July 19, 2023 by The Daytona Beach News Journal

For years, economic boosters have claimed that “1,000 people per day” move to the Sunshine State. Last year, Florida lived up to that claim and then some, drawing over 1,140 residents a day to become the nation’s fastest-growing state for the first time since 1957.

That growth has translated into a greater need for new homesapartmentsrestaurantsstoreshospitals and public works projects. And that greater need is translating into a growing headache: Florida’s construction industry is reeling from a severe labor shortage that has no end in sight, builders and economists say.

“Just because you see a lot of construction projects going up, it doesn’t mean they don’t have a labor shortage problem. I guarantee you that they do,” said Anthony Viscomi, co-owner of Viscomi Construction in Ormond Beach.

Indeed. According to those same builders and economists, Florida’s long-running construction industry labor shortage is not only bad, but likely to get worse in coming years.

Beginnings of construction labor crisis date back more than a decade

Ron Hetrick, a senior economist with national analytics firm, Lightcast, has been tracking the labor market since the early 1990s when he worked for the U.S. Bureau of Labor Statistics. He said the beginnings of the construction industry labor shortage can be traced back to the end of the Great Recession in 2009. Even though the economy was starting to recover, many of the workers laid off during the downturn wound up choosing to not return to their old jobs.

“A lot went on to get degrees (in other fields) and got themselves a better life,” he said.

That was especially true for Florida, where many unemployed construction workers moved to other states where jobs were more plentiful.

In the meantime, Florida’s population continued to grow, drawing transplants from throughout the country. So, when the Sunshine State’s labor force did begin to grow again, it was already playing catch up. And it hasn’t been able to keep pace with the demand for more housing and services led by the large influx of aging Baby Boomers.

Ken Simonson, chief economist at the Associated General Contractors of America (AGC) in Arlington, Va., calls it a construction industry “Baby Bust” as an increasing number of workers age out of the workforce.

“Because construction tends to be more physically demanding than other professions, workers tend to retire at an earlier age,” Simonson added. “Some may not actually retire, but may find a job in another field that is less physically demanding.”

COVID, hurricanes made it harder to find, hold onto workers

The onset of the COVID-19 pandemic in early 2020 accelerated that trend, Simonson said.

And last year’s back-to-back hurricanes — Ian and Nicole — turned the construction industry’s already bad labor shortage in Florida into a situation that Hetrick describes as “ludicrous.” The storms’ wind and water caused damage in more than a dozen Florida counties, from Lee to Palm Beach to Volusia.

As a result, builders and subcontractors are stretched evermore thin, trying to juggle the need for repairing damaged homes and condos with the need for new construction projects, he said.

“The construction trades are just decimated in terms of the need for more workers. And while the work orders are plentiful, the money’s not in rebuilds. In Florida, you have an expanding population which means demand is increasing for new homes. Construction companies are still dying for workers,” said Hetrick.

Anthony Viscomi, who runs Viscomi Construction with his brother Paul, said the Volusia County luxury home-building company has all the work it can handle, and then some.

“We could do more jobs if we had the workers,” he said. “A home that currently takes us a year to build could be done in seven to eight months.”

And as bad as it is for his company, Viscomi said the labor shortage is worse for subcontractors.

“The (construction) trades that are out there are working long hours and they have less staff,” he said. “I’m talking about your A/C companies, your plumbers, your electricians, your masons.”

Exacerbating the problem, Viscomi says, is fewer young people electing to work in the construction industry.

“For me, when I came out of my college, my father said, ‘Go to work,’ so I did,” said Viscomi, adding that he initially only earned minimum wage. “It’s different now.”

Higher wages aren’t enough to fix the problem

When fast-food chains are offering starting pay as high as $17 an hour, construction firms have no choice but to increase starting pay for new hires, even if they lack skills and are in need of training, said Viscomi.

The AGC’s Simonson confirmed that overall wages in the construction industry are up 6.7% year-over-year compared to up 5% for the total private sector. Construction companies in Florida especially need to be able to offer premium wages “to get people to work outdoors in the heat and humidity,” he added.

But raising wages alone won’t solve the issue.

“We also need a more robust career-training and education system that lets young people know there are good careers to be had in the construction industry,” he said.

Too much demand: Even a recession won’t end the labor shortage

Some economists have been sounding the warning bell of a possible looming recession because of high inflation and soaring interest rates.

Hetrick isn’t one of them.

For one thing, unemployment continues to decline, falling in May to 3.7% nationally and 2.6% in Florida. Both just above the all-time lows of 2.5% for the nation, set in May 1953, and 2.4% for the Sunshine State, recorded in January 2006.

“People are spending money,” Hetrick said. “This is not indicative of an economy heading into a recession. Perceptions are not matching consumers’ actions at all.

“If you look at how many houses there are to buy, supply is still so much lower than demand that prices are continuing to rise even if the gains may be slowing. If demand is outpacing supply, then guess what: you cannot recess.

“A recession is not just consecutive quarters of declining GDP. Unemployment also has to rise. Even if GDP contracts, and it needs to, unemployment is not going up.”

Hetrick predicts the labor shortage will get worse before it gets better, and that it might not taper off until the early 2030s.

“We’re America. We expect to grow,” he said. “But what if you can’t grow? In the future, success will be based on your ability to not contract as much as everyone else.”

X-factor: Florida’s controversial new immigration law isn’t helping

Industry leaders and economists agree there is one thing that could help bring an earlier end to the labor shortage: loosen U.S. immigration laws to make it easier for foreign-born workers to become employed, as well as speeding up the process for them to become American citizens.

“We need to allow more employment-based immigration for employers who show they are not able to otherwise fill jobs,” said the AGC’s Simonson.

But, Hetrick said, the nation, and Florida in particular appear to be doing the exact opposite of what’s needed.

State lawmakers in this year’s Legislative session passed SB 1718, a sweeping anti-immigration bill that Gov. Ron DeSantis signed into law in May and took effect on July 1. It imposes some of the toughest penalties and restrictions in the country on employers, forcing hospitals that accept Medicaid to ask patients about their citizenship and appropriating $12 million from the state’s General Revenue Fund for the governor’s “unauthorized alien transport program.”

“The notion of immigrants taking Americans’ jobs: that’s a relic from the past. It’s a dated mindset,” Hetrick said. “We should be admitting much higher levels of immigrants than we are. Allowing more immigration is really the only path forward to solving the labor shortage. If they don’t take the (unfilled) jobs, we’re not going to see growth: no new homes and no new hotels because we can’t find the workers needed to staff them.

“We need a radical change in the rhetoric in our country,” he added.

A 2020 Census Bureau report estimated that immigrants accounted for 37% of all construction workers in Florida. In 2021, foreign-born workers accounted for 4.38 million of the Sunshine State’s overall labor force, including an estimated 481,800 in the construction industry, according to the bureau’s most recent population estimates program report.

Daytona Beach immigration attorney David Vedder said his law firm has “a huge Hispanic demographic that comes to our practice for assistance.”

“You know what they want? They want to work,” Vedder said. “What’s keeping the U.S. growing is immigration. From what I see they want to work and are willing to do the kinds of jobs that American-born workers seem to be turning their noses at.”

Vedder said he did not know how many undocumented immigrants there are in Volusia County, but said, “from what I see, there’s a huge workforce out there that’s not eligible to work.”

SB 1718, in Vedder’s view, is “redundant” with existing federal immigration laws. “It’s not designed to be a substantive cure.

“Employers are scrambling to find a way to fill jobs, but these people (illegal immigrants) are frightened,” he said. “The number of new inquiries we’ve had since the passage of SB 1718 is up 200 to 300 percent … They’re the ones washing dishes (in restaurants), mowing yards and nailing up wallboard (in new homes). They’re doing the work.”