Skilled Trade Labor Shortage & Long-term Labor Risk

Labor risk and disaster recovery

In a previous blog I mentioned that labor risk, that is that labor incurs the most risk in any new job you take on. The higher percentage of labor for the job, the riskier the job is. There is a more long-term risk to labor and the recent damage caused by hurricanes have only made it worse.


Demand for electricians

The nation has been experiencing a shortage of electricians for many years now. The demand for electricians has caused the pay scales to rise and the US Bureau of Labor Statistics predicting a 14% growth for electricians between 2014 and 2024. The damage caused by hurricanes Harvey and Irma, and with more to come, have caused some to believe there will be an even higher spike in demand over the next several months or even years while Florida, Texas, and the islands rebuild.

You need to be aware of this when bidding jobs that will start over the next 12 months. The pay rates you use in your bids today, might not be enough to cover the labor for construction projects that occur during this time. You might want to factor in some potential increases in your labor rate to cover any run on labor that may occur.


Planning for the long-term

I know what you’re thinking. If you raise the rates in your estimates now, you won’t win as many jobs. Yes, that’s probably true, but consider this; When the demand for electricians are higher, the demand for electrical contracting will also increase. This means less competition for construction projects. While your competitors have bid and won numerous jobs that commit their labor force at the lower rates, if you raise your labor rates now, you’ll eventually begin to win jobs at higher rates.

If you think this is gouging, it’s not. As an electrical contractor, you must cover your costs and make decisions based on changes in industry. Raise the rates in your bids now so you can retain your workforce over the next year.

About Allan Goodwin

Allan Goodwin has been with ConEst for 28 years (or since 1989). He started out as an estimator and was thrust into the role of technical support when ConEst was first conceived. Since then, Allan spent many years as the QA director, then product manager. Allan is now the Director of Product Development/QA, ensuring the products meet the needs of the users. Allan a licensed Master Electrician in the state of New Hampshire as well as a graduate of Southern New Hampshire University with a Bachelor's Degree in Accounting and Finance. He also has an Associate Degree in Business Administration from Hesser College.