Colorado building fewer homes as construction workers are in demand

In a past life, Susan Ohlhaber helped people as a mental health counselor. Actually, it wasn’t that long ago. It was just last year. Then the COVID-19 pandemic began and she was laid off.

Ohlhaber, who lives in Morrison, is now learning the difference between a jig saw, a circular saw and a reciprocating saw. She can make plunge cuts that will hopefully get her hired by any construction company. She’s been training for a new career at the Colorado Homebuilding Academy. She said it’s a path that fits a creative streak she never pursued and fulfills her desire to help people. 

“It seemed like this was the start if you want to be working as a homebuilder or in the field of construction. I didn’t know specifically what I had in mind and I still don’t. But I’ve learned so much in this class,” Ohlhaber said. “And I know people need housing.”

The students at the four-week boot camp are also helping the home building industry tackle a pre-pandemic problem that has existed for years in Colorado: there just aren’t enough construction workers to build houses for everyone who wants or needs one. That has pushed home prices to record highs and inventory, some say, to nothing. 

Builders, however, never stopped building. While material costs have risen and the supply chain has slowed, the industry points to an increasingly tight labor market that has been getting even tighter in recent years. The demand for more housing has not been stronger, and that’s evidenced in the rising number of building permits in Colorado. Six of the top 20 biggest months since 1988 have occurred since October.

But whether builders will get around to building all of those homes is another, well, this story. 

“We will build more than last year but we will not build what we could have,” said Patrick Hamill, founder of Denver-based Oakwood Homes, which typically builds about 1,500 homes a year in Colorado, Utah and Arizona. “Just in the Denver metro market, from what we could have done, we’ll be off about 150 homes. Now we’ll end up building those next year but the labor shortage has had a huge impact.”

Years-old issue: construction labor shortage

Hamill knows all about a tight labor market. Oakwood Homes helped start the Colorado Homebuilding Academy in north Denver in 2017 just to attract newcomers to the industry.

“We absolutely have a severe labor shortage,” he said. “Many people, especially in the skilled trades, are retiring. And as an industry we haven’t done a great job of recruiting new people, so the Academy was founded.”

Oakwood isn’t alone in cutting the number of houses it planned to build this year, said Ted Leighty, CEO of the Colorado Association of Home Builders. And that’s troublesome because the organization already did a study in 2019 that found the state was 135,500 homes short of demand, based on a FreddieMac report on the housing supply shortage.

“There have been two reasons shared with me,” Leighty said. “One is the supply chain and one is the labor supply that has forced some builders to cut down on production because they are not going to continue to presale homes if they can’t build the homes in the time that they’ve contracted to do so. And that’s just putting added pressure onto the cost of homes.”

The industry has been dealing with labor issues since recovery began from the Great Recession. After the housing bubble popped after 2007, construction workers nationwide left the business. In Colorado, the state shed 59,000 construction jobs between 2007 and 2011, according to the state Department of Labor and Employment. Many workers retired early. Some never returned. 

But there was also a lost generation of potential workers who never even considered a career in construction, said Bernard M. Markstein, chief economist with Markstein Advisors who follows construction trends.

“We’ve got a society that (thinks), ‘Mama, don’t let your children go into construction,’” Markstein said. “Construction is seen as a dirty, dangerous occupation with low pay and that’s not at all true. Construction pays higher than average. (Younger workers are) going to college and going into what we generally call white collar jobs.”

In March, Associated Builders and Contractors, a trade association representing the non-union construction industry, looked at data from the Bureau of Labor Statistics and said it needed another 430,000 craft professionals this year. For every $1 billion in new construction spending, the industry estimates it needs 5,700 new workers. And according to Markstein Advisors, construction spending is likely to reach $1.45 trillion in 2021, up 1.3% from 2020.

“Take a plumber or electrician, you can’t just put out an ad and hire the first person who walks through the door who’s eager to learn. Even if they’re knowledgeable, these jobs require special training,” said Markstein, who consults with the trade group. “There is a mismatch between (job openings and) available labor.”

In Colorado, the construction workforce took 11 years to return to its 2007 high of around 170,000 jobs. While the workforce swelled to 180,000 a year later in 2019, it dropped back to its 2007 peak in the early pandemic. 

All industries have recovered some of the jobs lost since their spring 2020 lows, but construction’s recovery has been much slower, said Ryan Gedney, a senior economist with the state Department of Labor.

“The growth rate for July for construction was a positive 1.2%. But total non-farm payroll jobs … grew 6.4%,” Gedney said. “So while construction is improving, it doesn’t change the story that it’s still lagging in recovery compared to other industries.”

(The state had previously estimated that 1,600 construction jobs were lost in July, but after ongoing revisions made in late August found an underestimate of jobs, the construction industry is now estimated to have added 4,700 jobs in July.) 

Gedney also pointed to an older construction workforce. In 2007, about 37% of the state’s construction workers were under 35, compared to 34% for all other industries, minus construction. In 2019, that number of younger construction workers dropped to 33% in Colorado, while the under-35 crowd grew to 40% of non-construction workers.

“So you have an exodus of young workers but think about the nature of work. You need young workers. There’s a structural issue there in terms of getting younger workers for physically demanding work, which most of it is,” Gedney said. “Given the nature of the work, you’re losing young workers who say, ‘You know what? I can find something else.’”

Nationwide, the industry continues to work on fixing this shortage, especially with demand now so strong. While some blame the extended federal unemployment benefits, which ended in Colorado on Saturday, others have already been finding alternative solutions. 

Traditional construction jobs are being replaced by technology, like brick-laying machines and prefab construction where key parts of a building are built in a factory and shipped to a site.

That’s the goal of Sprout Tech Homes, which is about to start building 300 zero-energy ready houses in Pueblo. The company uses structural insulated panels made in a factory that end up being the walls of a house. 

“They’re panelized so they go together very quickly. You don’t need as much skilled labor to put the home together,” said Rod Stambaugh, founder and Chief Sproutologist. “You can actually erect an entire single family home in two and a half business days … Because of that, we’re not seeing as big of an issue as other traditional builders are seeing with a shortage of skilled labor and the tremendous increase in dimensional lumber costs.”

Training the next generation

The nonprofit Colorado Homebuilding Academy trains 40 to 60 students in any given month. Interest was strong after the COVID-19 pandemic set in last year and classes filled up. They also work with area high schools to offer training programs.

“Many of them are underemployed or unemployed, they’re career shifters, they’re coming in and looking for either full-time work or more work,” said Damon DiFabio, the academy’s director. “Really, that’s what we focus on — help people on their way to a better career path.”

That would be Ohlhaber, who was cutting wood at an angle with a miter saw to build a table during a recent afternoon class. Her boot camp wrapped up Friday inside the school’s cavernous warehouse. Next to the classroom workshop, a wall looked like lumber shelves at a Home Depot and nearby, several room-sized housing-like structures sat unfinished. 

“I definitely now want to volunteer (for Habitat for Humanity) and feel like I’m capable of working on a house,” she said. “And I could actually know what they’re talking about. I can actually understand why we’re framing 16 inches…” BZZZZZZZ her words cut off by the sound of competing saws. 

Same with Job De Moraes, 37, who needed to change his career trajectory. He’d been working at a top retailer in Aspen for 12 years, most recently as a manager. But he said he has a mortgage to pay and wants to send his daughter to a good school.

“I still want time to play with her and not just work and work and work,” he said. “I like to work and sometimes I was making people happy, ‘Aww, nice jacket. You’re looking great!’ But at the same time, I did not have the energy to say the same thing to my wife. It was exhausting.”

There are apprenticeship programs statewide. Kelly Eustace, president of Heating & Plumbing Engineers in Colorado Springs, said her company offered its own apprenticeships because it needed more workers. She’s now using the Construction Industry of Colorado Training Council, which works with multiple employers and schools in the state.

“It’s a very lucrative opportunity for individuals to come into an apprenticeship program,” said Eustace, who’s also a board member of ABC’s Rocky Mountain chapter. “For example, our apprentices have full benefits. I mean, coming out of high school, where can you go work for a company where you have access to health care, 401k retirement opportunities, paid time off, holidays and you’re not incurring any debt?”

They also get paid between $16 to $18 an hour while training and that rate goes up $1 every six months as they finish a semester. 

“By the time they finish in four years, they’re in the $20s or the mid-$20s. And when they test for their journeyman license, they get elevated to between $27 and $30 an hour,” she said. “What college post secondary program offers that opportunity?”

De Moraes, who is wrapping up his training at the Academy, is counting on a lot of good construction job openings. He plans to head back to Aspen where he has “one or two connections in the valley,” he said. 

“In the valley where I live, it’s growing so much. There’s so many opportunities. It doesn’t matter what you want to do as long as you want to work,” he said.

Perks of a labor shortage

At the Academy, the construction skills crash course teaches the basics of tools, safety and construction math. There’s also secondary courses for additional training on electrical construction, concrete, carpentry and even construction management. Students also get a OSHA-10 certification on completion and a bag of tools. 

The school seems to go out of its way to work with students. During training, one staffer will connect students to child care or mental health support, bus passes or gas cards. While the value of the training experience is easily above $1,000, tuition for the bootcamp is $50 and that’s 100% reimbursed if the student pursues a job in Colorado’s construction industry.

And after they’ve trained, there is even someone to help students find a job. 

Kristin Davenport is the school’s “career coach.” She works with potential employers and the students. But she doesn’t always find out if there’s a match unless the student follows up. According to school surveys, about a dozen or more students are placed in a new job each month. 

But in recent months, Davenport has found that more students aren’t pursuing jobs. That’s not because employers don’t have jobs. They do. She estimates that employers she’s working with have “between 60 to 75” jobs right now. 

“In the last four to six months, I’ve seen a huge influx of employers reaching out, saying, ‘I don’t have candidates for my jobs. I don’t have people applying for my jobs. Can you help me?’” she said. “And on the flip side, our students at the Academy are not wanting to apply for jobs. They have 101 excuses whether it be ‘I want to take more classes at the Academy before I look for a job,’ or ‘I’m staying at home with my kids because I don’t want to put them in public school’ and ‘I’m not ready to go back to work because of COVID.’”

Davenport said one student who got an offer and accepted it, went home and crunched the numbers with her partner and realized it didn’t make sense since they’d have to put their child in daycare. So she decided it was better to remain unemployed and collect benefits.

Starting wages at entry level construction jobs — electrical apprentices, construction workers — can be a few dollars above minimum wage and are typically around $16 to $18, or about how much Amazon pays unskilled warehouse workers. But school staff point out that what they offer aren’t jobs. They’re careers, and often provide medical benefits, vacation and full-time work. 

“Yes, you can make $15 at Good Times,” said Dan Silverman, who was teaching the boot camp. “But here’s the way I explain it. If it’s a choice between $14 an hour as an apprentice electrician or $15 at Good Times, you could become a manager at Good Times but there isn’t the same level of upward mobility.”

And once you have a skill like an electrician, it’s a role that is more difficult to replace compared to a fast food worker.

“Nothing against fast food at all but this gives you an opportunity to develop a skill set,” he said. “As an electrician myself, I know that anywhere in the country at any time, I can find work, guaranteed, I will never have a problem.”

Hourly wages for an electrician in Colorado are $21.04, according to ZipRecruiter, although jobs posted on the site showed wages $16 to $30 an hour as an apprentice electrician in Aurora, $35 to $40 for a journeyman electrician in Golden (plus a $2,500 signing bonus), and $80,000 to $100,000 a year for a traveling journeyman electrician in Denver.  

Davenport said she’s now hearing employers are offering more on-the-job training and even working with job candidates to find them a more perfect job at the company. “I had one employer make up a new job that was called an assistant superintendent, which was not a role at the company,” she said. “(Applicants) just didn’t have the right skill set but they would bring in these people for this assistant superintendent role and train them knowing that you could be what we want but you’re not there yet.”

And wages can quickly increase once a new hire gets their foot in the door, Davenport added.

“I just met with an employer in Fort Collins and they’re a flooring company. They are starting at $16 an hour, but that’s just during training. Within three months, they can bump up to $18. Within six months, they’re at $20,” she said. “The advancement opportunities are so much faster than anything you’re going to see at a sandwich shop.”