3 Questions to Prepare Construction Employers for Increased Hiring Trends
Between the Infrastructure Investment and Jobs Act and the Davis-Bacon Act, employers need to think strategically about the amount of work to be done and the number of workers on board to do it — plus the solutions to make the uptick in hiring smooth and manageable.
The construction industry trends for 2024 and beyond are dominated by an accelerated need for recruitment that will likely compound resourcing, wage and cost issues for many construction companies.
One contributing factor is that the 2021 Infrastructure Investment and Jobs Act (IIJA) is hitting its stride. Employers are focused on hiring the people needed to finish the projects funded by the act. Another element at play is employers' compliance with the prevailing wage requirements of the Davis-Bacon Act, which was updated in 2023.
To take on these headwinds, ADP Industry Executive Kit Dickinson advises construction employers to anticipate what they will need to do to keep up with hiring and compliance in a changing landscape. By exploring some key questions, you can adjust your HR policies and adopt systems and solutions that help you attract and accommodate the workers you'll need while ensuring you're meeting the requirements of your different contracts.
1. How can employers adapt to payroll and compliance complexity?
In 2023 alone, private employers in the construction industry added 365,000 jobs according to ADP's National Employment Report. The drive behind this hiring trend in part is to fulfill the labor needs for projects paid for by the IIJA, also known as the Bipartisan Infrastructure Law. At the start of 2024, the deal was about 40 percent of the way through its authorization period, a clear indicator that much more recruitment will be needed in the coming years.
As new projects accelerate across the United States, construction companies' payroll systems will be challenged to calculate prevailing wages, fringe benefits and union wages, particularly for projects spanning multiple jurisdictions.
"It introduces significant complexities around managing different wages and benefits and ensuring that the right tax withholdings are being applied," Dickinson notes, adding that mistakes can be costly.
Employers will want to consider what solutions can be implemented to help them now so that they aren't scrambling later.
Streamlining this work using construction-focused human capital management (HCM) software can help manage the trend, Dickinson says. The right systems can apply pay and tax rates for government projects and projects staffed with union workers across different jurisdictions. This results in an automated, accurate payroll, saving the back office from manually referencing ever-changing contract wages and tax tables. These HCM systems built for the construction industry can also create Certified Payroll and union reports and track time and attendance in real time for employees working on multiple jobs who perform different roles.
2. How can a company easily determine prevailing wages?
The updates to the Davis-Bacon Act changed how construction employers determine workers' pay on government-funded jobs. Companies are often now required to pay a more precise prevailing wage for a jurisdiction instead of the previous practice of an average wage on government-funded projects.
"While it's an enticement to the workers, it's an additional burden to the employer," Dickinson says, "who now has to become more versed in what the changes mean and to have systems that can help enforce those changes with more that are expected to come."
3. What insights can be gained about competitive wages and benefits?
As construction industry trends drive hiring, it's important to realize that today's construction worker is looking for the best overall compensation package wherever they work. Having a strong understanding of what your competitors are offering locally and in the regions where you're exploring new work is crucial to attracting and retaining workers, Dickinson says.
An HCM solution that includes compensation benchmarking can lead employers to learn about what workers are earning for wages and benefits (which are becoming increasingly important to construction workers). With a capable system, you can see how employee pay and benefits vary across industry, geography and role. This level of analysis can help reveal what services and perks employees value most in addition to a competitive wage.
For example, health care coverage tends to be a top priority for most workers, but, Dickinson points out, having the opportunity and resources to take care of mental health challenges is a growing construction industry need. Construction jobs are among the occupations with the highest suicide rates and need for substance abuse treatment. "Having mental health coverage as part of the overall benefit offering is huge and something that is becoming the norm, as it should be, for this industry," Dickinson says.
Another key benefit to compare competitively across the industry is retirement savings and financial planning services. About 73% of construction employees enroll in retirement plans, but many of these participants are older workers. As the hiring boon in construction develops, a challenge may be to help younger workers realize the value of this particular benefit and enhance it by offering additional financial education resources.
Analytic tools empower strategic thinking
The IIJA has provided more work than the construction industry can handle. On top of it, the updated requirements of the Davis-Bacon Act are bringing more complexity to back-office operations. Employers need to strategize how best to attract talent to fill the gap between the amount of work to be done and the number of people needed to do it. By thinking ahead to solutions, employers can identify what they need to tackle payroll compliance, wage calculations and competitive benefit offerings for their up-and-coming workforce.
Learn more
Staying ahead of the curve in the construction industry depends on how quickly you can adapt and respond to challenges. Download our guide to learn about five challenges you may encounter, along with tips and tools to overcome them: Five key challenges shaping the construction industry and how to handle them
ADP can help with the complexities of expanding your construction business. ADP Workforce Now® for Construction has tools for everything from talent attraction and onboarding to payroll and compliance.
