We asked our partners and business owners in the construction industry for their opinions on the likelihood of a recession, how to prepare, and how (if at all) supply on the labor market is changing in 2023.
On the Likelihood of A Recession & How to Prepare:
I facilitate peer groups for commercial roofing contractors. This has been discussed in all the groups and their opinions vary. My opinion is that we are entering a recession. The opinions of my members seem to be somewhat related to their annual revenue. Generally, the bigger contractors have no concerns about a recession impacting them in 2023. The smaller contractors are more concerned. In most cases, many of these contractors are sitting on record backlogs, so their lack of concern could be influenced by that a bit.
In terms of workforce, if there is a recession, contractors should assume that wage increase demands will decrease, which would be a welcome relief for most, I am sure. The more important thing, though, is this is an opportunity. There will be talent available that isn't available now and contractors would be wise to try to hire people that can help them grow their business. (Yes, I am advocating hiring talent when your revenue is falling, because, strategically it is the ideal time to do so).
— Greg Hayne, Hayne Coaching Group
The recession is a genuine concern, and it's coming, especially for industries like construction, which is the industry we serve. Considering how high interest rates are, people can't afford the homes they could a year ago. I know home prices have fallen, but reducing a $900,000 home to $800,000 doesn't reduce the monthly payment; it increases it.
— Derrik Shakespear, busybusy.com
I believe there will be a softening in the overall economy but construction continues to look strong. We are seeing the same strength in roofing, especially with commercial and residential restoration or re-roof projects. For the roofing industry, there is an opportunity to recruit labor from other sectors that may soften. It is critical for companies to know their numbers, have a plan for employee retention, and (if necessary) know how to cut back without losing key talent.
— Heidi J. Ellsworth, RoofersCoffeeShop
There are a lot of US and World economic conditions out there that have us teetering on recession. If for no other reason, recessions (just like economic booms) are cyclable, and we are due. It will likely happen in the middle or end of 2023 and last into or through 2024. A recession does not mean economic collapse; a contractor can and should be prepared for them whenever they come. Labor is one of the biggest challenges in construction, and you don’t want to lose any of your crew members to a recession downturn because you and your company were not prepared. What can you do? Be a “hawkish leader.” Acknowledge the downturn conditions and evaluate your business processes to make them more productive so that you’ll be in an excellent position to move quickly when the recovery growth cycle returns.
— John Kenney, Cotney Consulting Group
On the Labor Shortage & Its Implications for 2023:
There continues to be more jobs than people to fill them. The roofing industry, as a whole, is lagging behind other industries in finding new, better & more innovative ways to recruit, hire & retain employees. I know a contractor that early in 2022 had a waiting list of people wanting to come to work for them, both in the office and in the field. So, the problem the industry is facing isn't really that people won't come to work for them, so much as it is they don't know how to attract the people that will. Contractors need to understand that recruiting is a marketing challenge, not an HR or hiring challenge. You need to sell people on why they should come to work for you. The contractor I mentioned knows how to do that.
— Greg Hayne, Hayne Coaching Group
I believe there will be a migration of labor between industries and sectors. The roofing industry may be able to recruit from other industries that are seeing layoffs, or that are not offering the level of pay and culture that the workforce is looking for in their jobs. For strong talent, it will continue to be a candidate's market, but overall there seems to be a balancing out of the market for wages and benefits. The Gen X workforce will be a huge influencer on what will be demanded by employees.
— Heidi J. Ellsworth, RoofersCoffeeShop
I think it will be a “candidate’s market” for years to come. We cannot possibly lose 60% of our workforce due to retirement and rebound quickly. It will take time. Twenty years ago, we knew this was going to be an issue. There are many organizations that are working tirelessly to change the climate of the skilled trades, reduce the stigma and encourage the parents and educators to promote the skilled trades as a viable option and not just a second choice.
— Nancy O'Hare-Zika, Yellow Dog Creative
For more on this topic, see what the rest of our partners had to say about current recession fears, or see how things are looking for the landscaping industry.
