7 ms·

I had a long talk with a guy getting his general contractor's license yesterday. He told me that down in San Diego they are continually short on construction wo

by hyperion2010 9y ago

I had a long talk with a guy getting his general contractor's license yesterday. He told me that down in San Diego they are continually short on construction workers, so much that one of his friends said that there is 10 years worth of construction that needs to be done and no one to do it. Wages at ~$45/hr, and probably rising, some projects paying perdiems for commutes from Orange County. Strange.

gjem97 9y ago
I always find it a bit strange when people talk about shortages of non-price-controlled goods and services. When you say that the industry is "short on construction workers", there's an implicit "who will work for what we used to pay them." It seems to me like it's someone who hires in that industry trying to entice more talent to come help lower the price again, rather than an accurate description of the state of the world. To be sure, bona-fide shortages can occur transiently. For example when a natural disaster happens, it will take time for the local tradesmen to work through the backlog. But at a relatively steady state, it seems silly to talk about a shortage of construction workers. Pay a bit more than the next guy, and my guess is, your shortage will quickly disappear.
- sharemywin 9y ago
  You can't just raise prices and expect to win jobs.
- adventured 9y ago
  You can't just create 100,000 new construction workers in San Diego because you raise wages from $45 to $60 per hour. Labor availability + skill + time + market awareness = it takes a helluva lot longer than months or 2-3 years to meaningfully boost a skill trade. Labor availabity means: how many people - heavily influenced by the unemployment rate - are interested in putting in the time to go retrain themselves to do a new job. Many people will not kill themselves to do so, if they're making $45/hour and you tell them the upside is $60/hour. A deep level of comfort sets in for a large percentage of the population once you get to $30-$45 per hour. Skill means: it takes years to train someone to an appropriate level at being a professional anything, whether we're talking roofing or plumbing. Time means: well, it simply takes time to rotate large numbers of people into blue collar jobs. The whole process takes a lot of time, from start to finish. There's only so much that can be done to speed that process up. Market awareness: it can take years for people to believe that blue collar work demand is going to be sustained (history say otherwise, and people know that such work is often inconsistent; and they know that the downturns are brutal). It can take years to get the word out in just a mid-size city like San Diego, that there is high demand. It requires new entrants to take risk, which most people do not like doing. To be convinced to take a life change risk if someone is even remotely comfortable, the reward has to be extreme in most cases.
  - runeks 9y ago
    I believe the trick is the following: if wages increase from 45 to $60/hr, a lot of the planned constructions no longer make sense financially, and are abandoned.
    - ced 9y ago
      Plus, people from other parts of the country (or... other countries) will jump on the gold rush.
  - imtringued 9y ago
    >You can't just create 100,000 new construction workers in San Diego because you raise wages from $45 to $60 per hour. That means you're not paying enough.
- mac01021 9y ago
  If it takes 3 years to become good at construction work, there can definitely be a 3+ year shortage in qualified construction workers.
  - runeks 9y ago
    Shortage at what price? There’s always a shortage of bread for people willing to pay 1 cent per loaf, and never a shortage for people willing to pay $10. One could argue that, while you think you’re experiencing a shortage, reality is that you’re simply not willing to pay enough.
    - teej 9y ago
      There can be 10 people willing to spend $inf for a loaf of bread and only 5 loaves. Supply of skilled work isn't immediately elastic.
      - runeks 9y ago
        No. No person owns an infinite number of dollars. But I will happily bake you a loaf of bread for $10,000 each. In fact, I’d quit my day job to do that. That shortage wouldn’t last long.
        improv32 9y ago
        Which gets right to the point. Bread supply is elastic,you could quickly set up shop and produce more bread to satisfy demand whereas skilled labor is highly inelastic. Training, gathering hands-on experience, it's all a time-consuming process so there's a long time delay between when demand rises and when supply can rise to meet it
        traek 9y ago
        > there's a long time delay between when demand rises and when supply can rise to meet it Yes, exactly. The demand curve shifts right and the markets find a new equilibrium (most likely at a higher wage than the old equilibrium), but there’s no “shortage”. It’s just markets clearing at a different price level than what people are used to. Calling it a “shortage” is like saying every time Starbucks raises their prices there is a shortage of coffee — at the old price, sure, but not in absolute terms. That’s not how equilibriums work.
- zippergz 9y ago
  In my very limited personal experience, it's not that hard to get a worker to come do a job on my house. It is EXTREMELY hard to get someone who actually does quality work and is reliable. You could argue that I'd get better and more reliable people if I paid them more, but the fact is, I pay them what they ask for. I have very low confidence that just offering to pay double would make a bad worker into a good one.
  - ajross 9y ago
    Consumer services aren't really the point being made upthread, it's employers looking for supervised labor who can tolerate some spread in skills. But you can do this too: call up the elite contractors who you can't schedule because they're "too busy" and give them a big number upfront. "I need my carpets replaced, I figure this will be $30k, does that sound right?". They'll be there. But you have to do the work to know what the right wages are. Employers already know this stuff, obviously.
    - ryandrake 9y ago
      If someone called me up and said, "I've got a software development contract opportunity for you in Country X, $1000/hr, job should be about 6 months." My ass would be on a plane that afternoon. So much for the shortage of software developers.
      - GFischer 9y ago
        I would do that for $100/hr :) . However, there's quite a lot of friction hiring unknown software developers (so I guess that's why I don't get those offers - I'm not actively hunting for them).
  - alexpotato 9y ago
    I used to hire temporary workers all around the country as part of my job as GM of a small travelling pro sports league. I always found that there is some "market price" where people are decent and paying less gets you less quality and paying more tends to get you better quality. Specific example: we needed security guards for an event in Las Vegas circa 2006. * $150/day got us off duty professional guards who were fantastic * $125/day got us college kids/retired folks who were pretty good * <$100/day high school kids or people with questionable backgrounds who were usually terrible I remember Joel Spolsky saying something like "You don't always get what you pay for but it's true enough of the time to be a useful phrase"
aphextron 9y ago
Sounds terrifyingly close to 2007
myegorov 9y ago
For perspective, the going wage for a skilled (journey level) carpenter in the SF Bay area is essentially the same today as it was in 2005 (the last time I was part of the labor force). This is from a quick survey of Craigslist ads. If anything, the real wage seems to have decreased.
friendzis 9y ago
Apart from "packing donuts" type jobs, most jobs require some degree of knowledge and skill. Some jobs have higher knowledge half-life than others. While IT has notoriously short knowledge half-lifes, construction has rather long half lifes. Suppose that we train x+y construction workers a year, x work in the industry until retirement, y - retrain to different profession. This means that there are y*years dormant specialists that can be brought back to industry.
whazor 9y ago
Construction is becoming more and more specialized. There are many machines that need to be operated, together with regulations it requires high skilled people.

gjem97 9y ago

I always find it a bit strange when people talk about shortages of non-price-controlled goods and services. When you say that the industry is "short on construction workers", there's an implicit "who will work for what we used to pay them." It seems to me like it's someone who hires in that industry trying to entice more talent to come help lower the price again, rather than an accurate description of the state of the world. To be sure, bona-fide shortages can occur transiently. For example when a natural disaster happens, it will take time for the local tradesmen to work through the backlog. But at a relatively steady state, it seems silly to talk about a shortage of construction workers. Pay a bit more than the next guy, and my guess is, your shortage will quickly disappear.

sharemywin 9y ago
You can't just raise prices and expect to win jobs.
adventured 9y ago
You can't just create 100,000 new construction workers in San Diego because you raise wages from $45 to $60 per hour. Labor availability + skill + time + market awareness = it takes a helluva lot longer than months or 2-3 years to meaningfully boost a skill trade. Labor availabity means: how many people - heavily influenced by the unemployment rate - are interested in putting in the time to go retrain themselves to do a new job. Many people will not kill themselves to do so, if they're making $45/hour and you tell them the upside is $60/hour. A deep level of comfort sets in for a large percentage of the population once you get to $30-$45 per hour. Skill means: it takes years to train someone to an appropriate level at being a professional anything, whether we're talking roofing or plumbing. Time means: well, it simply takes time to rotate large numbers of people into blue collar jobs. The whole process takes a lot of time, from start to finish. There's only so much that can be done to speed that process up. Market awareness: it can take years for people to believe that blue collar work demand is going to be sustained (history say otherwise, and people know that such work is often inconsistent; and they know that the downturns are brutal). It can take years to get the word out in just a mid-size city like San Diego, that there is high demand. It requires new entrants to take risk, which most people do not like doing. To be convinced to take a life change risk if someone is even remotely comfortable, the reward has to be extreme in most cases.
- runeks 9y ago
  I believe the trick is the following: if wages increase from 45 to $60/hr, a lot of the planned constructions no longer make sense financially, and are abandoned.
  - ced 9y ago
    Plus, people from other parts of the country (or... other countries) will jump on the gold rush.
- imtringued 9y ago
  >You can't just create 100,000 new construction workers in San Diego because you raise wages from $45 to $60 per hour. That means you're not paying enough.
mac01021 9y ago
If it takes 3 years to become good at construction work, there can definitely be a 3+ year shortage in qualified construction workers.
- runeks 9y ago
  Shortage at what price? There’s always a shortage of bread for people willing to pay 1 cent per loaf, and never a shortage for people willing to pay $10. One could argue that, while you think you’re experiencing a shortage, reality is that you’re simply not willing to pay enough.
  - teej 9y ago
    There can be 10 people willing to spend $inf for a loaf of bread and only 5 loaves. Supply of skilled work isn't immediately elastic.
    - runeks 9y ago
      No. No person owns an infinite number of dollars. But I will happily bake you a loaf of bread for $10,000 each. In fact, I’d quit my day job to do that. That shortage wouldn’t last long.
      - improv32 9y ago
        Which gets right to the point. Bread supply is elastic,you could quickly set up shop and produce more bread to satisfy demand whereas skilled labor is highly inelastic. Training, gathering hands-on experience, it's all a time-consuming process so there's a long time delay between when demand rises and when supply can rise to meet it
        traek 9y ago
        > there's a long time delay between when demand rises and when supply can rise to meet it Yes, exactly. The demand curve shifts right and the markets find a new equilibrium (most likely at a higher wage than the old equilibrium), but there’s no “shortage”. It’s just markets clearing at a different price level than what people are used to. Calling it a “shortage” is like saying every time Starbucks raises their prices there is a shortage of coffee — at the old price, sure, but not in absolute terms. That’s not how equilibriums work.
zippergz 9y ago
In my very limited personal experience, it's not that hard to get a worker to come do a job on my house. It is EXTREMELY hard to get someone who actually does quality work and is reliable. You could argue that I'd get better and more reliable people if I paid them more, but the fact is, I pay them what they ask for. I have very low confidence that just offering to pay double would make a bad worker into a good one.
- ajross 9y ago
  Consumer services aren't really the point being made upthread, it's employers looking for supervised labor who can tolerate some spread in skills. But you can do this too: call up the elite contractors who you can't schedule because they're "too busy" and give them a big number upfront. "I need my carpets replaced, I figure this will be $30k, does that sound right?". They'll be there. But you have to do the work to know what the right wages are. Employers already know this stuff, obviously.
  - ryandrake 9y ago
    If someone called me up and said, "I've got a software development contract opportunity for you in Country X, $1000/hr, job should be about 6 months." My ass would be on a plane that afternoon. So much for the shortage of software developers.
    - GFischer 9y ago
      I would do that for $100/hr :) . However, there's quite a lot of friction hiring unknown software developers (so I guess that's why I don't get those offers - I'm not actively hunting for them).
- alexpotato 9y ago
  I used to hire temporary workers all around the country as part of my job as GM of a small travelling pro sports league. I always found that there is some "market price" where people are decent and paying less gets you less quality and paying more tends to get you better quality. Specific example: we needed security guards for an event in Las Vegas circa 2006. * $150/day got us off duty professional guards who were fantastic * $125/day got us college kids/retired folks who were pretty good * <$100/day high school kids or people with questionable backgrounds who were usually terrible I remember Joel Spolsky saying something like "You don't always get what you pay for but it's true enough of the time to be a useful phrase"

aphextron 9y ago

Sounds terrifyingly close to 2007

myegorov 9y ago

For perspective, the going wage for a skilled (journey level) carpenter in the SF Bay area is essentially the same today as it was in 2005 (the last time I was part of the labor force). This is from a quick survey of Craigslist ads. If anything, the real wage seems to have decreased.

friendzis 9y ago

Apart from "packing donuts" type jobs, most jobs require some degree of knowledge and skill. Some jobs have higher knowledge half-life than others. While IT has notoriously short knowledge half-lifes, construction has rather long half lifes. Suppose that we train x+y construction workers a year, x work in the industry until retirement, y - retrain to different profession. This means that there are y*years dormant specialists that can be brought back to industry.

whazor 9y ago

Construction is becoming more and more specialized. There are many machines that need to be operated, together with regulations it requires high skilled people.