Contractors Are Addressing Safety and Health Issues, but They Can Do More
Research findings released Oct. 26 indicate construction contractors continue to make progress responding to issues affecting worker safety and health, such as heat and mental health, but many areas for improvement remain.
The new study, “Safety Management in the Construction Industry 2023 SmartMarket Report,” examines occupational safety and health challenges across the industry and shines a light where more effort is needed. It was conducted by Dodge Construction Network and the Center for Construction Research and Training.
Heat
Working in extreme heat is increasingly common in construction, posing significant safety and health risks to workers. To combat this problem, 52% of contractors in the study report making changes at their company in the last three years to prevent heat-related illnesses on-site, and 66% of contractors implemented a heat-safety policy at their company.
The most common practices to address heat-related issues are providing water, rest and shade and worker training. Less common practices are monitoring the environment for heat hazards and administrative controls such as pausing work in the hottest parts of the day.
But while the data indicate progress, there are large disparities by company size. Only 21% of employers with fewere than 20 employees made changes to address heat in the last three years, and another 21% of the small contractors do not consider heat stress an issue at all.
“Employers need to provide workplaces that control recognized hazards, including heat,” said Chris Trahan Cain, CPWR’s executive director. “Many firms are showing that protecting their workers from excessive heat is good for safety and good for business, but this report shows many still are not.”
Mental Health, Suicide and Opioid Use
When asked about topics about which they want additional training and information, such as through webinars, factsheets, infographics and toolbox talks, the study revealed a high level of interest on worker well-being. Fifty-two percent of contractors wanted more resources for managing mental health, suicide and opioid use.
The next most frequently cited topic was lifting or ergonomics, safety at 34%. This is a striking finding considering that the rest of the list consists of well-known hazards that still plague the industry.
Contractors were asked whether their company provides a program for substance use or mental health, such as access to professional services. There were major differences depending on company size: 90% of large contractors (100 or more employees) offer programs for substance use or mental health, but only 29% of small companies (fewer than 20 employees) offer these programs.
Strategies like having a peer network to address substance use or mental health are relatively uncommon, but more frequent among large contractors and those that employ union craftworkers.
Pre-Project and Pre-Task Engagement
The study also examines the use and subsequent advantages of other good safety practices on the job site, including during pre-construction and pre-task planning. Both strategies show the clear benefits of engaging multiple viewpoints in these processes: 94% of contractors who engaged in most (seven or more) of these activities reported an increase in worker engagement with safety measures, 84% of those contractors reported a reduction in recordable injury rates, and 60% of those contractors saw an improvement in productivity.
The study also examined other good safety practices, including the use of right-sized PPE, online training and the use of technology. It found that one of the biggest opportunities for contractors to improve safety is to use data gathered on their projects more effectively: nearly one-quarter of the contractors who collect project safety data said they do not analyze it.
Implementation Across Companies
The study also dives into the effective implementation of safety practices among firms of different sizes, as well as ways to improve. For example, the study highlights safety measures that smaller firms could use that larger firms have already adopted. These methods include getting workers more engaged in pre-task planning and using free online tools to promote worker well-being.
“Many small companies don’t have dedicated safety managers like you would see at a larger company, so data like this is particularly valuable to help provide education about how the industry is improving worker safety, health and well-being,” says Donna Laquidara-Carr, industry insights research director at Dodge Construction Network.
Construction Sector Adds 23,000 Jobs in October as Unemployment Rate Falls to 4.0%
The construction industry added 23,000 jobs in October as unemployment rates for the sector hovered near the all-time low for the month, according to an analysis of government data the Associated General Contractors of America. Association officials said the construction industry would likely have hired even more workers to keep pace with strong demand for construction.
“Despite the fact pay for hourly craft workers in construction is rising faster than for production employees, contractors are still struggling to find enough skilled workers,” said Ken Simonson, the association’s chief economist. “Both residential and nonresidential construction employers want to hire even more workers.”
Construction employment in October totaled 8,033,000, seasonally adjusted, an increase of 23,000 or 0.3% from September. The sector has added 219,000 jobs during the past 12 months, a gain of 2.8%. Residential building and specialty trade contractors added 13,700 employees in October and 55,600 (1.7%) over 12 months. Employment at nonresidential construction firms—nonresidential building and specialty trade contractors along with heavy and civil engineering construction firms—climbed by 8,400 positions for the month and 163,300 (3.6%) since October 2022.
The unemployment rate among jobseekers with construction experience was 4.0% in October, one of the lowest October rates in the 24-year history of the data. A separate government report released earlier this week reported that there were a record-high 438,000 job openings in construction at the end of September, far exceeding the number hired that month and a further sign of contractors’ difficulty in finding qualified workers.
Average hourly earnings for production and nonsupervisory employees in construction—covering most onsite craft workers as well as many office workers—climbed by 5.4% over the year to $34.64 per hour. Construction firms in September provided a wage “premium” of nearly 19% compared to the average hourly earnings for all private-sector production employees.
Dodge Momentum Index Inches Up 1% in October
The Dodge Momentum Index, issued by Dodge Construction Network, increased 1% in October to 181.7 (2000=100) from the revised September reading of 180.3. Over the month, the commercial component of the DMI rose 2.0%, while the institutional component retreated 1.4%.
“Heightened momentum in warehouse planning activity supported the commercial side of the Index this month, while muted education planning activity slowed the institutional portion,” stated Sarah Martin, associate director of forecasting for Dodge Construction Network. “Overall levels of planning activity remain robust and will support construction spending over the next 12 to 18 months.”
Improvements in warehouse planning helped support commercial growth, but despite strong progress in September, education and healthcare activity slowed down this month. Year over year, the DMI was 8% lower than in October 2022. The commercial segment was down 14%, while the institutional segment was up 7%.
A total of 21 projects valued at $100 million or more entered planning in October. The largest commercial projects to enter planning included the $215 million Google Data Center in Kansas City, Missouri, and the $180 million Mauna Kea Beach Hotel in Waimea, Hawaii. The largest institutional projects to enter planning included the $400 million Grand Sierra Resort Arena in Reno, Nevada, and $267 million renovation to Keller Auditorium in Portland, Oregon.
The DMI is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.
Nonresidential Construction Spending Increases For the 16th Straight Month in September
National nonresidential construction spending increased 0.3% in September, according to an Associated Builders and Contractors analysis of data published Nov. 1 by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.1 trillion.
Spending was down on a monthly basis in nine of the 16 nonresidential subcategories. Private nonresidential spending increased 0.1%, while public nonresidential construction spending was up 0.5% in September.
“Nonresidential construction spending increased for the 16th straight month in September,” said ABC Chief Economist Anirban Basu. “While some private categories, including power, commercial and amusement and recreation saw healthy month-over-month increases, publicly financed construction accounted for more than 72% of September’s rise. Given increased federal infrastructure spending and exorbitant financing costs for private construction, that dynamic should remain firmly in place over the coming months.”
“Despite a small decrease in spending in September, manufacturing construction remains the nonresidential sector’s outperformer,” said Basu. “Spending in the category is up 62% over the past year and accounts for nearly 43% of the year-over-year increase in nonresidential construction put in place. With several industrial megaprojects ongoing, spending in the manufacturing segment will remain elevated for several quarters.”
Single-Family Starts Post Unexpected Gain in September as High Interest Rates Persist
Despite elevated mortgage rates averaging above 7%, single-family starts posted a solid gain in September as more buyers are turning to new homes because of a dearth of inventory in the resale market.
Overall housing starts increased 7% in September to a seasonally adjusted annual rate of 1.36 million units, according to a report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau.
The September reading of 1.36 million starts is the number of housing units builders would begin if development kept this pace for the next 12 months. Within this overall number, single-family starts increased 3.2% to a 963,000 seasonally adjusted annual rate. However, single-family starts are 12.8% lower year-to-date due to higher interest rates. The multifamily sector, which includes apartment buildings and condos, increased 17.6% to an annualized 395,000 pace.
“The uptick in single-family production was somewhat unexpected as our latest builder surveys indicate that starts are likely to weaken in the months ahead due to recent higher mortgage rates that were near 7.6% in mid-October,” said Alicia Huey, chairman of the National Association of Home Builders and a custom home builder and developer from Birmingham, Alabama. “Meanwhile, builders also continue to face persistent labor shortages, a lack of buildable lots and higher financing costs for acquisition and development loans.”
“Despite ongoing challenges in the market, the housing deficit of resale inventory continues to provide some market support for builders,” said NAHB Chief Economist Robert Dietz. “Because of a lack of existing homes in the marketplace, 31% of homes available for sale in August were new construction. This compares with a historical average in the 12-14% range. But in another sign that higher interest rates have slowed the market, the number of single-family homes under construction in September was 674,000, which is almost 15% lower than a year ago.”
On a regional and year-to-date basis, combined single-family and multifamily starts are 23.3% lower in the Northeast, 12.9% lower in the Midwest, 7.8% lower in the South and 16.9% lower in the West.
Overall permits decreased 4.4% to a 1.47 million unit annualized rate in September. Single-family permits increased 1.8% to a 965,000 unit rate. Single-family permits are down 13.4% year-to-date. Multifamily permits decreased 14.3% to an annualized 508,000 pace.
Looking at regional permit data on a year-to-date basis, permits are 22.3% lower in the Northeast, 16.6% lower in the Midwest, 12.7% lower in the South and 17.6% lower in the West.
The number of apartments under construction is near 1 million units and will be falling in the months ahead.
Construction Job Openings Increased by 56,000 in September
The construction industry had 431,000 job openings on the last day of September, according to an Associated Builders and Contractors analysis of data from the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey. JOLTS defines a job opening as any unfilled position for which an employer is actively recruiting. Industry job openings increased by 56,000 last month but are down by 35,000 from the same time last year.
“The number of open, unfilled construction positions surged in September and currently stands at the highest level since December 2022,” said ABC Chief Economist Anirban Basu. “This mirrors an increase in economy-wide job openings which, at 9.6 million, remains about 37% higher than at the start of the COVID-19 pandemic.
“There are, however, some signs of labor market improvement for contractors,” said Basu. “The rate at which construction workers are quitting their jobs has normalized, with just 1.8% leaving their employers in September. While that’s a welcome development, labor shortages remain a pressing issue for the industry. Contractors laid off or discharged just 1.9% of workers in September, down from 2.2% in August and 2.5% in September 2022. With a majority of contractors planning to increase their staffing levels over the next six months, according to ABC’s Construction Confidence Index, labor shortages will remain a pressing issue heading into 2024.”
AISI Releases October Steel Imports Data
Based on the Commerce Department’s most recent Steel Import Monitoring and Analysis data, the American Iron and Steel Institute reported that steel import permit applications for the month of October totaled 2,123,000 net tons*. This was an 8.5% decrease from the 2,319,000 permit tons recorded in September and a 3.0% decrease from the September final imports total of 2,189,000.
Import permit tonnage for finished steel in October was 1,757,000, up 11.2% from the final imports total of 1,580,000 in September. For the first ten months of 2023 (including October SIMA permits and September final imports), total and finished steel imports were 23,969,000 NT and 18,485,000 NT, down 10.0% and 14.6%, respectively, from the same period in 2022. The estimated finished steel import market share in October was 19% and is 22% year-to-date.
Steel imports with large increases in October permits versus September final imports include standard rail (up 11,752%), tin plate (up 92%), wire rods (up 70%), oil country goods (up 49%) and hot rolled bars (up 41%). Products with significant year-to-date increases versus the same period in 2022 include standard rails (up 49%) and cut length plates (up 22%).
In October, the largest steel import permit applications were for Canada (528,000 NT, down 2% from September final), Mexico (304,000 NT, down 15%), Brazil (169,000 NT, down 63%), South Korea (146,000 NT, down 56%) and Japan (134,000 NT, up 101%). Through the first 10 months of 2023, the largest suppliers were Canada (5,783,000 NT, down 1%), Mexico (3,642,000 NT, down 22%) and Brazil (3,292,000 NT, up 39%).
*Note that import permits data are counts of tonnages requested in applications for licenses to import steel products and are not actual import volumes. For a number of reasons, permit tonnages may understate or overstate actual import volumes for the month.
Stephen E. Sandherr, AGC’s CEO, Announces Retirement
Stephen E. Sandherr (above left) has announced his retirement as chief executive officer of the Associated General Contractors of America, effective March 31, 2024. Sandherr has been CEO of the association for the commercial construction industry for 27 years and has served it for 37 years in various capacities. The association also announced that its current chief operating officer, Jeffrey Shoaf (above right), will serve as the association’s next CEO.
Shoaf, who has been COO since 2017, joined AGC in 1994. He is a graduate of James Madison University and, prior to joining AGC, was a staff member for the House Transportation and Infrastructure Committee. Prior to being named to his current position, Shoaf oversaw AGC’s government relations activities.
The choice of the new CEO was made by a selection committee comprised of seven former AGC presidents and chaired by 2022 President Dan Fordice, who also serves as the vice president of Fordice Construction in Vicksburg, Mississippi.
