On August 11, the Arizona Chapter of NAIOP hosted an educational program on one of the most pressing issues facing the commercial real estate industry – the shortage of labor.
Brandon Milligan of StrataTech Education Group, Kevin Major of CBRE, Danielle Feroleto of Small Giants, and Mike Bontrager of Alston Construction and Build Your Future Arizona shared their insights and expertise in a panel moderated by James Murphy of Willmeng Construction. The group discussed some causes of the workforce shortage as well as solutions to attracting and retaining talent.
Major, who is a Senior Director of Client Strategy Consulting at CBRE, provided important data on how the labor market has changed since the onset of the COVID pandemic.
“Pre-COVID, we had low unemployment, which made it hard to find workers,” according to Major. “Then the pandemic raised unemployment to 15%. Growth and retraction kept occurring due to COVID’s ebb and flow which has created a rapidly changing labor environment. Locally, Phoenix is poised to benefit from in-migration during the pandemic and has done a better job of retaining graduates from state universities which should provide a strong labor base as employers look to meet increased labor demand in the future.”
The demand for labor in all market sectors is creating fierce competition to attract employees. For the construction industry in particular, labor costs are just a part of the equation that companies are trying to solve to remain profitable.
“What’s good for the pro forma, is good for us,” Murphy noted. “Conversely, pressure on the pro forma, such as rising costs (material or labor) is what we work really hard to help mitigate.”
Due to the transition to remote working, entry level workers are getting as much as $30 per hour working from home which makes it difficult to attract people into manual labor.
“Those potential employees who would go into the skilled trades in the past are being courted by trucking, manufacturing, warehousing, even IT and cyber security,” Bontrager noted. “Companies are willing to take these high school graduates and put them through two years of training for an employment contract. They are not having to go to college to do that, so we have a lot of competition.”
Build Your Future Arizona (BYFAZ), which is housed in the Phoenix Chamber Foundation, is working to create a sustainable and skilled craft workforce by increasing awareness of high paying construction careers and training opportunities.
According to Bontrager who chairs the BYFAZ Steering Committee, Arizona could face a shortage of 240,000 skilled trades workers by 2030. BYFAZ is coordinating a campaign on multiple fronts, including working with students and their parents as well as high school counselors, to improve the image of the skilled trades as a career.
Both Bontrager and Milligan discussed the importance of hiring bonuses as well as employers investing in their employees’ careers long term to improve retention.
“Signing bonuses, those are very attractive to people coming out of school,” Milligan said. “And, being very transparent about what their path is.”
Feroleto, Principal and Owner of Small Giants, who has placed around 200 professionals in positions that align with their long-term career goals agrees with Milligan that “Career pathing helps retention.”
“Business leaders should take the time to talk to their employees about what they want out of their career in the future.,” according to Feroleto. “Open discussion with feedback as well as a solid benefits package can go a long way in retaining top talent.”
StrataTech, which locally owns the Refrigeration School, Inc. (RSI), offers training in high-demand careers such as HVAC, electrical engineering technologies and welding. Students can complete the programs in 7 to 9 months, making them a very affordable option. Ninety percent (90%) of graduates gain immediate employment. According to Milligan, StrataTech is also working directly with employers to develop customized training programs.
James Murphy, CEO at Willmeng, summed up the value of communication when trying to keep employees on your team. “Not everybody has the courage to come forward with what’s on their mind. If you’re not knocking on their door, you’re going to watch them leave before you ever even knew what you were dealing with.”
He encouraged the audience to support employees who have struggled through COVID and to look into effective programs such as BYFAZ and the training programs offered by StrataTech.