The final (fourth) part of our coronavirus survey looks at the affect the coronavirus pandemic has had on the workforce for contractors.
Whenever the construction industry takes an economic hit, employees are the first to suffer the consequences. Most contractors work exceptionally hard to keep on the employees they have and, even in good times, are reluctant to overstock. During the last few years of labor shortages, it would seem contractors would be in good position to save jobs even during a downturn. But when the national unemployment rate has soared to 13% and some economists predict it will more than double, even the most careful contractors face the difficult task of laying off employees.
Economic downturns hurt workers first, and the same is true with the downturn related to the coronavirus threat
We conducted the first survey from Monday, March 30 through Thursday, April 2, and 336 people responded. We broke our report into four areas:
- Audience characteristics
- Overall attitude
- Revenue changes
- Project and employee changes
The Project and Employee Changes section is below. Follow links on the sidebar to see the other sections.
We plan to do this survey every other week. If you have questions or would like to provide feedback, please contact Paul Deffenbaugh, editorial director, pdeffenbaugh@moderntrade.com
Project and Employee Changes
To see project and employee changes from the April 13 survey, click here.
(Note: Click on plus sign to enlarge images.)
Nationally, about half of the contractors we surveyed reported they had shut down jobs as a result of the coronavirus pandemic. As reported in the Introduction to this survey, the most significant hardship is falling in the East region. There, 80.7% report closing down jobs while in the South, the percentage of contractors reporting shutdowns is only 41.7%. As the coronavirus spreads across the country and more states issue shelter-in-place regulations, it will be interesting to see how these numbers change.
We asked contractors who have shut down jobs, what percentage of the jobs they were working on that they had shut down. Not one of the 336 respondents said they had completely shut down every job, but many, especially in the East had shuttered a noticeable percentage. In fact, 53.6% of contractors based in the East had shut down between 75% and 100% of their projects. To this date, slightly more than a third (36.5%) of contractors who had closed jobs had shut down fewer than 10% of them. Note: Red lines indicate national averages.
In terms of layoffs, again contractors in the East lead the pack with 58.1% having laid off field employees and 38.7% laying off office staff. Contractors in the South were far less likely to have laid off staff, with only 17% letting field workers go and a mere 6.7% letting office staff go. Nationally, slightly more than a third of our contractor respondents have laid off field staff and a quarter have laid off office staff.
Will those layoffs be permanent? Will this downturn have lasting, long-term effects on the industry? At this point, contractors say a resounding “no.” Across the board, more than 90% of contractors say layoffs they have made will not be permanent. Even among eastern contractors, this variation is slight. This is another good question to track going forward.
Far and away, the biggest affect the coronavirus pandemic has had is material lead times. In our Top Metal Builder report, coming in the May issue, this same issue was a significant one among contractors for 2019. It appears the recent economic difficulties are only exasperating and existing problem. Nationally, 14.1% of contractors report price gouging as an issue, although 24.7% identify rising prices as a problem.
As you would expect, the challenges in finding skilled labor have eased as unemployment has increased. Currently, national unemployment is at 13% with expectations it will potentially double that. Labor scarcity, the biggest issue in the industry over the last several years, is no longer a problem. Contractors in the East, who are facing the biggest problems are the least likely to report labor shortages.
People selecting other cited employee fear of working, delays in permitting, and delays to work caused by the transition to work-at-home staff for the contractors, their consultants, suppliers and subcontractors.
