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Could the shortage of skilled workers in electrical construction, voice/data/video (VDV) and integrated building systems (IBS) hit sooner than you think? As reported in the June and August issues of ELECTRICAL CONTRACTOR, a shortage seems virtually certain for 2008-2010.
An educated guess says a shortage in selected pieces of the market (geographically and/or by work type) could well hit in 2004.
Outside of residential and healthcare, construction has not had a great year, overall, in 2003. Yet it is not one of the worst (See Table 1).
Does this data prove anything? Not as much as one would hope. A link between electricians employed in 2000 (or any year) and new construction dollar volume by specific market niches has not even been tentatively established.
However, in the immortal words of Yogi Berra, we can “see a lot by looking.” The residential, healthcare and public construction markets are up. What’s the impact of those?
Residential does not absorb a lot of electricians. According to U.S. government data, 865,500 residential dwelling unit starts were recorded in this year’s first half—up 7.4 percent from 2000.
One can make the argument that today’s houses need more wiring work, thanks to home networking. However, such a big gain in residential electrical employment can’t be attributed to that.
Public construction’s 6.7 percent inflation-adjusted gain has more of an impact; this type of work does require numerous electricians (excluding road/highway work). The 50 percent gain in healthcare construction is amazing, but dollars spent in the first half of 2003 (less than $15 billion) cannot account for consumption of a significant number of additional workers in any trade.
In contrast, there are gaping holes in sectors that did account for a lot of electricians, datacomm technicians and integrated systems workers in 2000:
• Manufacturing is down two-thirds in dollars (adjusted for inflation) in three years.
• Office building and hotel/motel construction is down more than 40 percent in dollars.
• “Other commercial,” which includes retail stores, is down almost 15 percent.
NAICS adds workers
Recently, the Bureau of Labor Statistics (BLS) changed reporting methods. Electrical contractors, formerly in SIC 1731, are now in NAICS 23821—electrical contractors. SIC stands for Standard Industrial Classification; NAICS for North American Industry Classification System.
“Conversion” from SIC to NAICS produced a shock. For 2002, the old system said our industry employed 644,600 field workers (on average). Under the new system, that swelled to 705,600. For March 2003—the final month under the old system—SIC 1731 had 619,800 workers. Transition to NAICS increased that to 660,700!
According to BLS, 99.3 percent of workers tracked under SIC 1731 are included in NAICS 23821. But those workers comprise only 89.6 percent of NAICS 23821. From where did new workers come? BLS says 10.4 percent of workers now counted under “electrical contracting” came from SIC 1711—plumbing, heating and air conditioning. See Table 2 for NAICS numbers.
Bottom line: the average monthly employment of field people in electrical construction is down just 8.6 percent in the first half of 2003 vs. three years ago.
What’s everybody doing?
When the Census Bureau releases 2002 Economic Census data, we will have definitive info on electrical contracting. Unfortunately, it takes the Census a while to get sufficient responses and more time to complete the report. These data might not be out for nine months.
Until then, we have the 1997 data on SIC 1731. Those data are summarized in Table Three. What does this tell you?
Residential work isn’t much for electrical contractors. A market that represented 15 percent of the industry’s sales in 1997 probably would not account for more than 20 percent of its workers.
Combining the 1997 office, hotel/motel, “other” commercial and manufacturing markets, we get 45 percent of electrical contractor sales. In, 2000, fast-track data center construction and other unique events—equipment-heavy installations—might have meant this section did not use 45 percent of our field’s workers. Certainly, however, the number would be close—perhaps 35 or 40 percent. New construction in those four market sectors is down a combined 37.5 percent (in inflation-adjusted dollars) from 2000 to 2003.
Given these facts, one might reasonably have expected a sharp decline in electrical contracting employment from 2000 to 2003. Sectors with big losses are those in which our industry thrives; sectors that are up a great deal can’t make up for possible employment losses elsewhere.
So why is electrical construction employment down only 8 percent compared with three years ago?
Data in Table 1, on new construction spending, do not take into account any maintenance and not much VDV volume. Certainly, datacomm, telecomm, other VDV, security work and IBS are a part of electrical construction. Yet, they are not reflected in Table 1.
Table 2’s numbers probably include VDV and IBS workers. While employees of AT&T, Verizon and even WorldCom are probably not in NAICS 23821, those working for subsidiaries of electrical contracting firms that do telecomm installs, building systems rehabs and Category 6 network upgrades probably are.
Then there is Table 3—see the revenue breakdown between new construction, modernization and maintenance/repair. An educated guess: The maintenance percentage (16 percent as of 1997) accounted for a somewhat higher share of workers employed than that, and new construction (53 percent) a relatively lower figure.
Why? Revenue figures include contractor-purchased items for installation (switchgear, lighting equipment, etc.). Maintenance and repair does not consume nearly as much material as does new construction.
The mystery of why employment has not decreased significantly years might have an answer in “ancillary” areas. Moreover, if that is part or most of the answer, the worker shortage might be worse than commonly thought—and perhaps hit sooner.
Tails wag the dog
Let’s leave dollars alone. Pretend one can analyze this industry in terms of what employees are doing every day. There’s no scientific way of so doing, but one might guess that a fair number of electricians, technicians and installers are doing:
• Building maintenance;
• VDV and IBS installations;
• VDV and IBS troubleshooting;
• Security work;
• Renovations to existing buildings; and
• Whatever it is those plumbing, heating and air-conditioning people reassigned to our NAICS were doing.
Little or none of this shows up in “new construction spending.” Collectively, in an “average” year—should we ever have one—those six special areas might account for more than half of this industry’s workers.
If that is the case, it would explain why employment has not declined more sharply in electrical construction. Also, it suggests that the worker shortage might well hit harder than estimates indicate. Industry employment analyses performed by the Construction Labor Research Council could not take much of this into account; reliable data do not exist. Worse, this opens the possibility that the worker shortage could hit much sooner than the 2008-10 time period previously indicated. As noted in the sidebar below, the economic recovery, should it last, is likely to include increases in available work on at least the VDV/IBS end of this market. EC
SALIMANDO is a Vienna, Va.-based freelance writer and frequent contributor to ELECTRICAL CONTRACTOR. He can be reached at [email protected].