Could labor shortage stymie billions in new Minnesota infrastructure work?
The roughly $6.5 billion Minnesota can expect to receive won’t hit the economy’s bloodstream right away, though contractor surveys show many are having trouble finding skilled labor.
ST. PAUL — Minnesota is set to receive billions of federal dollars in coming years from an infrastructure bill signed into law by President Joe Biden this month. But the massive influx of money for projects comes as the pandemic has put the squeeze on an already tight construction labor market.
According to an August survey of nearly 300 construction firms across the nine-state area covered by the Federal Reserve Bank of Minneapolis, 76% said labor conditions were “very tight,” climbing from 62% reported in a May survey.
Difficulties in Minnesota and the Dakotas reflect national trends. In September, a U.S. Chamber of Commerce report found more than half of U.S. construction firms had “high difficulty” finding skilled workers. Firms and economists widely agree that a skilled labor shortage that existed before the pandemic has worsened.
“Before COVID, we were seeing a lot of tightness among skilled trades. That has gotten worse,” said Ron Wirtz, regional outreach director for the Federal Reserve Bank of Minneapolis. “We’re seeing firms react to that by raising wages, trying to be a bit more flexible in terms of schedule.”
Still, while labor is tight, there’s no telling exactly what the picture will be once the trillion-dollar infrastructure spending bill starts feeding projects across the country. The roughly $6.5 billion Minnesota can expect to receive won’t hit the economy’s bloodstream right away. The state legislature must first decide how to spend the money, then projects go through a bidding process.
Firms, labor groups, the state transportation department and Wirtz all warn it’s too early to say what labor supply trouble could mean for Minnesota’s infrastructure projects, but if existing conditions continued into coming years, it could mean a bottleneck — especially if supply chain issues continue.
“Firms are very busy right now and that’s good. They’re also busy in part because projects aren’t getting done as fast as they were because of supply chain problems,” Wirtz said. “If we’re going to pile on more projects, more available dollars to do more projects, I think they are unlikely to get into the pipeline ... as quickly as they otherwise would."
Wirtz said he could see supply chain issues eventually correcting themselves, but it’s hard to say what the future holds as the pandemic has thrown the economic climate into disarray.
Tom Dicklich, executive director of the Minnesota Building & Construction Trades Council said despite concerns about skilled labor shortages, Minnesota often has workers on standby for projects.
Dicklich, whose group advocates for 16 union affiliates representing 70,000 Minnesota workers including carpenters, electricians, and heavy equipment operators, said one big concern is that skilled trades will overrecruit and have too many workers.
“It’s not like all these trades have shortages right now, there’s people sitting on the bench, especially as summer projects close up,” he said. “Something we don’t want to do is bring in a bunch of people ... and they all come in and there’s no work.”
It likely won’t be until the Minnesota Legislature convenes in early 2022 and decides exactly which projects it will spend money on that the trades know exactly how they will approach recruiting people for apprenticeship programs in Minnesota.
“I think we’ll know more after the first year and we see how these jobs and how the projects spread out over time,” Dicklich said.
Northland Constructors, a Duluth-based heavy construction contractor, has made it a priority to retain its current workforce and is partnering with local labor groups to ensure a stream of new workers, according to Project Development Manager Annie Harala.
With more projects anticipated soon, the company is offering on-site training to workers new to the industry. Newer workers can pick up skills from the more experienced ones who might be on their way out.
“There’s a lot of finesse that comes with being an operator,” Harala said of operating heavy equipment such as excavators.
Regardless of any potential labor hurdles, Northland Constructors, which just completed a project on Highway 61 in the Arrowhead, and is part of the major Essentia Health medical campus expansion project in Duluth, is looking ahead to what more than $6.5 billion for projects could mean for the state. Roughly $4.5 billion of that is for road and bridge projects, something Northland specializes in.
“We’re really excited about this bill that’s come through,” Harala said. “It’s a great way to give our local economies a shot in the arm.”
The Minneapolis Fed plans to present its next construction sector survey report on Dec. 3.