The custom homes that Bill Taylor builds in Anchorage can now take a full year to complete, twice as long as they once did, because workers are hard to find amid a labor shortage that’s predicted to get worse.
There aren’t enough framers to erect walls, so concrete foundations can sit untouched for months on end in a “painful waiting game,” Taylor said. Electricians, plumbers, sheetrockers, roofers and others are in high demand, too, so labor costs are higher.
“It’s been going on aggressively since COVID,” said Taylor, who owns Colony Builders with his wife, Tami. “And costs have risen dramatically as well because there’s only a small pool of qualified laborers to do our subcontract work. That’s another ugly aspect.”
The lack of construction workers, skilled laborers and even architects and engineers is a problem across the economy, including nationally. But it’s raising unique concerns in Alaska’s construction industry.
Billions of dollars in federal projects have begun flooding into the state from the $1.2 trillion infrastructure measure and other bills, observers say. Major oil field investments, such as ConocoPhillips’ Willow prospect, could bring billions more in investments to the state.
But with workers in short supply, many economic observers are wondering if the state will get the full economic benefit of those dollars.
Some Alaska jobs will end up going to people who live outside the state and work remotely or fly in for long stints, reducing the flow of money in the state, said Bill Popp, head of the Anchorage Economic Development Corp.
“We’ll have billions of dollars invested in our state, which is fantastic, but will we get all of the construction jobs and operational jobs related to those investments?” he asked.
He’s concerned that a lack of workers will hamper economic growth in Alaska for years.
“This is probably the biggest threat our state faces,” he said.
Strong competition for workers
The labor shortage has impacted all kinds of businesses across the U.S. and Alaska as more people retire post-pandemic, take on part-time work or run a household, experts say. Meanwhile, hiring remains strong.
But years of population loss adds to the problem in Alaska, after many workers left for better economic prospects in the Lower 48, Popp said.
With other states also seeing increased federal investment, there’s a fierce national competition for workers.
But wages in Anchorage haven’t kept up. They rose 9% in 2022, to just over $68,000. But they’ve fallen below the national average in recent years, he said.
Patrick Taylor, an architectural designer who works for his parents at Colony Builders, said many of his friends and fellow 2012 graduates from South Anchorage High School have moved away to the Lower 48.
They don’t plan to return, he said. They can make about the same as they do in Alaska, but the cost of living is cheaper, he said.
“Our winters are hard for a lot of people, and you’re not getting rewarded for living up here as much as you used to,” he said.
Competition for employees is tight locally, too, he said.
Colony Builders keeps a longtime crew of core employees. But other companies have been able to nab some of the subcontractors who work for the company.
The company has had some subcontractors “get up and go because their phone rang and they got 20% higher offers,” he said. “Framers are getting top dollar for their work.”
Marco Zaccaro, who owns Z Architects in Girdwood, said he has raised wages and supported more remote working after other firms “poached” some of his employees in the last couple of years, offering them jobs in Anchorage so they don’t have to commute 45 minutes to Girdwood.
Architects are still hard to find, but he’s no longer losing workers to competitors, he said.
But now it’s difficult to find the structural engineers who make sure houses and buildings are properly designed and built, he said.
That shortage is causing delays of around six months on some projects collectively worth several million dollars, he said.
The shortage of engineers began when the 2018 Anchorage earthquake boosted demand for their services, he said. But their numbers shrank to critically low levels when many retired during the pandemic, Zaccaro said.
Engineering firms are making the best of the situation, he said.
“But we can’t get them to look at our project for months on end, or they are just really overworked, so then it’s hard for them to do as thorough a job as maybe they once did,” he said.
Work going to Outside firms
John Thornley, senior geotechnical engineer with WSP USA in Anchorage, said a shortage of engineers means work for some Alaska projects will be carried out in the Lower 48.
Companies prefer Alaskan engineers to work on Alaska projects because of the unique challenges of project design in cold regions.
But so much work is coming into Alaska from the infrastructure development bill that some clients, such as developers or government agencies, are talking about looking Outside to find engineers to complete projects, he said.
“What you’re starting to hear from certain clients is they are more and more open to Outside firms providing that assistance,” he said.
Greg Latreille, a principal with BBFM structural engineering firm in Anchorage, said the company recently needed eight months to fill a single position, far more time than it once took.
“We extended two other offers to prospective engineers that interviewed with us, they were generous offers, and they were both turned down for other competing firms in Anchorage,” he said.
BBFM’s workload includes water and wastewater improvements in rural Alaska tied to the pandemic-era stimulus bill known as the CARES Act, he said.
More work is on the horizon and it’d be nice to take on more projects, he said. But the tight market for engineers has made the company extremely selective in the jobs it pursues, he said.
It can’t easily add engineers, and it doesn’t want to overwork existing staff or limit attention to detail.
“Mistakes in our industry aren’t acceptable,” Latreille said.
More people working out of state
Anchorage’s labor shortage is expected to continue growing in the next few years as workers age out of the workforce, Popp told Anchorage business leaders at a luncheon last week where he released the Anchorage Economic Development Corp.’s three-year forecast.
By 2026, the city will have lost 10% of its working age population since 2013, representing a reduction of 21,500 workers, he said.
The impacts in Anchorage have contributed to several years of low permitting activity needed to build projects, Popp said. Single-family construction in the city has also fallen to its lowest level in decade, with just 180 units built last year. That contributes to high costs for homes and rentals that have priced some Anchorage residents out of the market, and creates a disincentive for workers that might move here. Other factors beyond labor costs, such as higher prices for materials and home loans, and permitting complexities, also contribute to low construction activity, he said.
Popp said the number of people employed in Anchorage but living out of state, and either working remotely or flying in for multi-week shifts, has grown and stands at 13%. “This will likely only increase in coming years,” he said.
Some industries in Alaska, such as oil and gas, have always had significant Outside workforces, he said. But that situation has spread to other sectors such as accounting, health care, legal and construction.
“These are good-paying jobs with those paychecks no longer landing in the economy,” he said.
Unions and employers increase apprenticeships
Labor unions and employers are racing to train young Alaskans for the work that’s coming, said Joelle Hall, president of the Alaska AFL-CIO federation of labor unions.
Money is arriving in Alaska to improve ports and bridges, and to bring broadband across the state. Plans include $600 million to build the nation’s first deepwater Arctic port in Nome.
The number of construction workers in Alaska began dwindling several years ago as state capital budgets shrank, leaving only road projects, she said. Many people left for Lower 48 jobs and brighter economic prospects.
“Now all of a sudden everyone is scrambling to find workers,” she said. “It’s not just construction, it’s health care, it’s the restaurant industry, it’s all of the above. But we’re all in competition for the same person.”
Many unions in Alaska have roughly doubled their apprenticeship classes. She said the programs will turn out electricians and other skilled laborers. Some will make $80,000 or more annually starting out. It will take a few years to fully train them, but they’re also paid during that training.
“If you’re a kid who wants to delay going to college, this is 10 years of steady work and good high-paying jobs, and you can still go to college later,” Hall said. “This is a challenge we’re thrilled to have because this is an opportunity to put so many Alaskans to work and have that generational shift in the construction industry.”