Utah Construction Is Booming. But With High Demand And Not Enough Workers, Competition Is Fierce.
LEHI — It’s become a familiar sight in many parts of Utah: Cranes. Bulldozers. Bright orange vests.
That’s because it’s boomtime in the construction industry. With 24,241 housing permits issued across the state in 2018 — the most in 12 years — the state led the nation in homebuilding.
For builders like John Hadfield, the opportunities are seemingly endless. Hadfield runs Hadco Construction, an excavating and pipeline company based in Lehi. He has 67 crews spread out across the Wasatch Front, but to avoid attracting unwanted competition, he declined to say the number of ongoing projects his company has.
On a recent Monday, one of his crews of about 25 laborers was hard at work, building a foundation for a multi-family housing complex in Lehi. Looking out over the horizon above Interstate 15, with the wind blowing and dust billowing, Hadfield surveyed a barren plot of land the size of a football field.
“We’ve come in and put in all the infrastructure — the pipe, curb and gutter,” he said. “And [then we’ll] get things cleaned up so we can get ready to start building some houses.”
Beyond the site, it’s easy to see how his operation is only a small piece of a much larger picture. What was once just a vast, open grassland is now dotted with bulldozers trailed by clouds of rising dust. And just beyond, rows and rows of brand new houses.
“Four years ago, none of this was even here,” Hadfield said. “If you want a sense of accomplishment it’s knowing you were part of building something.”
There’s so much work, Hadfield has had to turn projects down because he doesn’t have the capacity. He’s not alone. The industry is struggling to keep up with demand from a growing population. And while there is a confluence of factors involved, much of the challenge has to due with a shortage of workers.
“You could put it in the historical low category,” said Dejan Eskic, a research associate at the Kem C. Gardner Policy Institute.
During the recession, there was a mass migration away from the industry as building slowed and contracts dried up, Eskic said. At its peak in 2007, Utah’s construction industry had 104,612 jobs. But by 2011, at the depths of the recession, that number fell to 66,383, a loss of 36.5%.
And while the number of workers has since climbed back up to 105,534 — just over those pre-recession levels — the sheer amount of building projects — from countless house remodels to several major projects like the Salt Lake City Airport expansion — has far outgrown it.
For contractors like Hadfield, that’s meant a constant scramble to hold on to employees. He recently had a five-man crew poached by a rival contractor, who had stopped by a job site several days in a row with ever-increasing offers.
“It went from being one more dollar an hour what they were making to three or four dollars an hour,” he said. “And then they gave them a signing bonus if they'd leave the next day, so the whole crew walked off.”
The move delayed the project a month, forcing Hadfield to shuffle crews around to make up for the loss and face an angry client.
To keep it from happening again, he said he’s had to give all 550 of his employees multiple raises this year. Some of his crews have already received three, on top of healthcare and a retirement plan, which can be rare in the construction world.
““I mean, my largest cost is labor,” he said. “Not machines or fuel, it's labor. So it's a big deal to us.”
The Upside For Workers
Eric Hronek, an electrician with Hunt Electric, is on the other side of the struggle. As an experienced electrician, he’s in high demand.
He said that even though Hunt has practically tripled in size over the last few years, they’re stretched thin. He often works overtime and is asked to help out on other job sites. While he said he is happy at the company, he gets offers to jump ship all the time.
“They’ll poach me just because they see my truck out parked in front of my house, knock on my door and ask me if I want to work for them,” he said.
He said he is also receiving a steady stream of offers through recruiters on Facebook or LinkedIn. He and other employees have even been asked by Hunt to reach out to friends or others for jobs, offering $1,500 bonuses for any new employee who signs on.
While driving up wages for employees, the labor shortage is causing a bottleneck in building, especially when coupled with rising costs for land and materials, the Gardner Institute’s Eskic said. Even though more than 60% of all new construction projects in Utah was housing in 2018, the state still faces a shortage of about 54,000 units, according to the Salt Lake Chamber of Commerce.
That ultimately translates into higher housing prices for Utahns on the Wasatch Front. In Salt Lake County, the median sales price of a new home in 2018 was $418,376, up 61% from 2010.
“What I like to tell people is we have a lot of water in our boat and we just dumped out our first cup,” Eskic said. “The market is still undersupplied heavily and that’s why you’re seeing so much construction going on.”
Quantity And Quality: A Balancing Act
Apart from increasing housing costs, the labor shortage — which affects just about every position in the industry — is also sparking concerns over building safety.
Les Koch, the building services manager for Salt Lake City, said that while he’s confident that every project inspected by his office is safe and built according to the latest building codes, it’s difficult to determine if and when projects slip under the radar.
“I wouldn’t be surprised if there’s a lot of work we just don’t know about,” he said.
Koch said that with so many inexperienced contractors flocking to the industry, many don’t know the building codes or might try to skirt the inspection process altogether, potentially leaving building owners with problems down the line.
The extent of the problem, however, is almost impossible to quantify. With 17 inspectors and close to 250 inspections on the docket each day, Koch’s office does not have the ability to stop by every job site in the city.
“I am concerned about it,” he said. “But I am not staffed to do anything about it.”
It’s yet another reason why Rich Thorn, president and CEO of the Associated General Contractors of Utah, said one of the organization’s biggest priorities right now is recruiting new talent. He said the industry needs to do a better job of communicating what it can do for people.
“If we can convince more people, that the construction industry is a career industry, not just a job, you're going to see more people wanting to be involved in this industry,” he said.
It’s a hard sell, though, as construction work is physically demanding and subject to seasonal shifts, especially as winter rolls through. Plus, he’s not alone.
“We’re all competing for the same commodity and that is bodies,” he said. “If you had this interview with the manufacturing industry, they would say they need people too. If you have this conversation with the healthcare industry, they need people too.”
But John Hadfield said its nothing the construction industry can’t handle. It just might take some time.
“Every problem has a head and walks on two feet. And every solution has a head and walks on two feet,” he said. “People are your problems and your solutions, so take care of them.”
This story originally misspelled the name of Eric Hronek. It has been corrected.