As Boston’s Construction Labor Shortage Worsens, Firms Look To New Solutions

Boston’s construction industry has faced a shortage of labor even as development activity has slowed over the last two years.

Now, with interest rates coming down and the state pouring billions into housing projects, construction activity is expected to ramp up, putting even more pressure on the already strained labor pool. Attempting to ease this pressure, construction firms are looking at new ways to grow the workforce by mentoring smaller firms and making jobs more efficient with technology.

"There's a problem with the labor shortage, and by the way, it's probably going to get worse," said Patrick Lucey, Northeast division manager of Suffolk, the state's largest general contractor. 

Unemployment data shows Massachusetts’ construction labor market is the tightest it has been in years. The state had a 2.5% construction unemployment rate in June, according to an Associated Builders and Contractors analysis of federal data, the lowest of any June in at least 17 years. It was never below 4% before 2022.

Massachusetts construction unemployment rate was the 17th lowest in the country and below the national average of 3.3%. A healthy unemployment rate is typically between 3% and 5%, according to the U.S. Chamber of Commerce, and when it falls below that, businesses have a hard time finding qualified candidates to fill their job openings. 

Lucey said he has seen the construction workforce becoming older. The number of construction workers over 50 years old has more than doubled, he said, and the number of workers 25 years and younger has dropped dramatically.

"Although there's a recent influx of younger people entering the industry, it's still an aging industry with an aging workforce," Lucey said. 

This labor shortage has persisted even as more construction projects have been put on hold due to high interest rates and rising costs.

Nationally, public and private construction projects saw an 11% increase in abandonments this year through July, and private projects alone were up 47%, according to Construct Connect's Project Stress Index. One of the biggest projects in Massachusetts, HYM Investment Group's 10,000-unit apartment project at Suffolk Downs, was put on indefinite hold in July to rework its financing.

But now, as interest rates come down, the industry’s sentiment around closing deals has become more positive, and signs show activity may soon pick up.

The state permitted 1,561 private housing units to be built in August, up from 1,117 in the same month last year and 1,083 in 2022, according to Federal Reserve Bank of St. Louis data.

Massachusetts housing production is also expected to ramp up due to new state policies and funding that incentivize production, like the MBTA Communities Law and the $5B housing bond bill that passed this summer, said Jonathan Garland, founder of development firm J Garland Enterprises.

"If developers are coming out and proposing projects and getting approvals and creating this massive backlog of work that just needs to get built, I think a market for construction will reappear," Garland said.

"With the reducing of interest rates that just recently went out, I'm really hopeful," he added. "I think a lot of folks are hopeful that that will have a positive trickle effect on some of the local work."

But as work rises, more pressure will be put on the labor market, and Garland said the industry is already facing burnout due to the worker shortage. Contractors are keeping costs low to stay competitive, taking on longer hours, tripling workers’ duties and sometimes lowering wages to stay afloat, he said.

He said this stress is particularly hard on minority-owned businesses, as many projects are required to include diversity, but those companies are already spread thin. 

"We're kind of scratching our heads, like 'Who would you go out and talk to that's not already overwhelmed or not already triple booked and is available to give that attention?'" Garland said.

To address this, some local construction companies are taking minority-owned firms under their wings to help them grow and be able to compete for more projects.

Last month, Bridgewater-based Callahan Construction Managers began a strategic partnership with Velney Construction, a veteran and minority-owned firm out of Somerville. The partnership was put in place to help support disadvantaged, smaller minority-owned businesses and give them the tools and resources necessary to get contracts in key construction sectors, including affordable housing.

Velney Construction founder Josue Velney said the partnership has become an integral part of growing his business. He said more partnerships like this will be needed to educate the next generation of workers. 

“I feel that [these partnerships] will keep happening, and it should keep happening because we still need buildings, we still need construction, and construction is only becoming more complex, and with that is, education is important, partnership is important.”

“Sometimes you have to learn from somebody that has been there, that has done that, that has that knowledge, that institutional knowledge of how to really build, because I think that's what we're really missing right now in our generation,” Velney added.

Lucey said Suffolk has also been mentoring smaller firms through its Build With Us program, which works with primarily minority-, women- and veteran-owned small businesses.

"We've diversified the portfolio or broadened the number of companies that we can go out to within the market because a lot of the individuals we've worked with there have really begun to grow, upsize and upscale with some of the skills that they've developed on their own, and then obviously we've been able to support," Lucey said. "That's a huge area for us."

Supporting construction tech is also key to making the industry more efficient, Lucey said.

Suffolk's technology arm, Suffolk Technologies, runs a program called Boost – what Lucey pinned as a "shark tank for construction" – to support and invest in startup construction tech companies. The firm has heavily invested in technology as another way to alleviate some of the pressures from the labor shortage.

“When you have a shortage in the labor force, the existing labor on our project sites or in the market needs to be as efficient as possible," he said, adding that their investments in technology are helping boost efficiency.

For many builders and construction companies, the biggest component of the labor shortage has been the shallow pipeline of young talent coming into the field.

ACE Mentoring of Greater Boston began in 2017 with a group of 30 students interested in going into the trades, including construction and engineering. Seven years later, the nonprofit saw a graduate class of over 140 students from all backgrounds.

"We definitely saw that there was a demand, very much an increased demand for construction in tradesmen over the last few years," ACE Executive Director Kristen Hurley said.

The types of students coming into the program are also sparking a new, more diverse generation of workers interested in joining the industry.

The mentoring program reaches over 10,000 students annually across the country, with 70% of them identifying as people of color and 40% as young women, according to its website. Thu Ngan Han, president of the board of directors for ACE and landscape architect at Stantec, said it is important that these students see the diversity that's represented in their classes in the field.

"Students are very visual, so when they have mentors of color come and talk to them about the work that they do, that's very impactful," Han said. "We try to not only reach a diverse student body, we're also trying to reach a diverse mentor group as well so that there is some connection there."

As Boston-area firms try to increase the pool of younger workers joining the industry, the market could also benefit from larger firms outside of Boston expanding into the city for work. Garland said these firms see an opportunity to grow in the area because it has a tight construction labor market and a large pipeline of projects.

In November, Atlanta-based construction firm H.J. Russell expanded to New England and hired Derrick Chery as its director of operations. The firm secured a contract on Boston Global Investors' 10 World Trade Center and was part of the joint venture awarded the first phase of the Mary Ellen McCormack Redevelopment.

While there has been a slowdown in construction, Chery said it is more important than ever for firms to reassess their approach to staffing.

"It is now crucial for companies to invest more in their people by strategically aligning staffing needs with high-potential talent, rather than focusing solely on specific skill sets," Chery said in a statement to Bisnow. "Furthermore, investing in training and conducting work style assessments for younger employees has shown to yield excellent results in preparing the next generation of the workforce for future leadership roles."