The labor shortage in construction continues to challenge businesses across the industry, and for small to mid-size homebuilders, the impact can be particularly significant. With skilled trades like electricians, framers, and general laborers in high demand, many homebuilders are struggling to keep projects on track and within budget. However, unlike larger firms with vast resources, small to mid-size companies must find practical, cost-effective solutions to these labor challenges. By leveraging strategic hiring practices and embracing productivity-enhancing tools, mid-size homebuilders can thrive despite the tightening labor market.

Understanding the Labor Challenge for Mid-Size Builders

The labor shortage isn’t just about a lack of workers—it’s about the scarcity of qualified workers. For small to mid-size homebuilders, this gap often leads to project delays, increased costs, and difficulties maintaining quality standards.

Key statistics highlight the severity of this issue:

• For every successful hire in a skilled trade, there are 20 additional job openings left unfilled.
• Wage inflation has driven construction wages up by more than 20% since 2020, further increasing labor costs.
• More funds from the $1.2 trillion Infrastructure Investment and Jobs Act are entering the market, intensifying competition for skilled labor.

Practical Productivity Solutions for Builders

While larger companies may turn to expensive automation or robots to solve their labor shortages, small to mid-size homebuilders can focus on improving productivity through more accessible and affordable methods.

• Embrace Simple Digital Tools: Implement project management software or cloud-based tools like BuilderTrend or Procore to streamline operations, reducing administrative time and improving team communication.
• Invest in Training for Current Employees: Offer certifications or specialized training to enhance skills in areas like 3D modeling and project scheduling, boosting productivity without the high cost of new technology.
• Strengthen Vendor and Subcontractor Relationships: Cultivate strong partnerships with trusted subcontractors to reduce delays and maintain project quality, even when labor shortages occur.
• Use Pre-Fabrication and Modular Construction: Leverage pre-fabricated components or modular techniques to minimize labor needs on-site and shorten project timelines.

Navigating a Shifting Housing Market

The construction job market is evolving, and small to mid-size builders must stay agile. Residential construction has slowed due to rising interest rates, while commercial projects, particularly in renewable energy and infrastructure, are still driving demand for skilled labor.

Key trends include:

• Slowdown in Residential Construction: Residential job openings dropped by 19% in mid-2024 due to rising mortgage rates.
• Commercial Construction Resilience: Projects in data centers, renewable energy, and infrastructure are still demanding skilled labor, creating opportunities for builders to diversify into light commercial work.

Strategic Hiring and Retention for Builders

Small to mid-size builders can’t afford the luxury of high turnover. To attract top talent and retain your best workers, here are a few strategies that can make a big difference:

• Offer Competitive Benefits: Focus on health insurance, retirement plans, and flexible work schedules rather than inflating wages.
• Develop Apprenticeship Programs: Build a talent pipeline by creating apprenticeship or internship programs that shape future skilled workers.
• Create a Positive Work Environment: Foster a collaborative work culture and offer career development opportunities to retain your skilled employees.

The SBGP Advantage: A Customized Approach for You

To navigate these challenges, small to mid-size homebuilders need more than just a quick fix. That’s where Small Business Growth Partners (SBGP) can help. Through your state homebuilding association, you can access SBGP’s exclusive Business Diagnostic & Plan of Action (BPA), valued at over $4,200.

The BPA provides:

• Insights to identify workforce gaps and strategies to fill them.
• Tools to streamline project management and enhance team communication.
• Affordable, scalable solutions tailored specifically for mid-size businesses.

Take advantage of this opportunity and set your business up for success. With SBGP’s BPA, you’ll have the tools you need to navigate the evolving construction landscape and meet the challenges ahead.