Connecting state and local government leaders
With federal dollars pouring into state and local governments for infrastructure, there’s one huge challenge: Who will do all the work?
For decades, the lack of progress in maintaining old and building new infrastructure in states and localities has been top of the list of concerns for the future. Over the years, we’ve asked scores of government leaders about this issue, and they’ve almost universally told us that the problem was simple: Not enough money.
Now, with the federal government pouring cascades of cash into state and local coffers, a new problem is on the horizon. Though this isn’t widely recognized yet, all the money in the world won’t make much of a difference if there aren’t enough people, in and out of government, to spend the money effectively and in a timely way.
Even before the current employee shortage that bedevils state and local governments, there weren’t enough people to build, renovate and maintain public sector infrastructure. With today’s growing list of new projects, this problem is substantially more pressing. “The workforce shortage is a huge dilemma, made even more so by the opportunities for infrastructure provided by the recent Congress,” says Emily Brock, director of the Government Finance Officers Association’s Federal Liaison Center.
The problem here is two-fold.
First, there’s a shortage of jobs in the public sector to deal with infrastructure. As Joshua Franzel, managing director of MissionSquare Research Institute points out, “If you look at the major categories that would be impacted by infrastructure spending, almost all are below the levels in 2019, and the problem is particularly acute in rural areas, which are having a hard time recruiting people."
Second, the workforce is aging and the number of retirements is cascading. That produces “a lot of outflows and you don’t have adequate inflows,” says Franzel. “According to the Bureau of Labor Statistics, there were 93,000 state jobs in architecture and engineering in 2019 and that number was down to 89,500 in 2021. There are similar trends elsewhere.”
Stipulations on federal dollars limit the amount that can be spent on public-sector employees, but even the jobs that exist have been very difficult to fill. Says Christin Webb, administrator of purchasing for Shelby County, Tennessee, “I had a retiree, who was our principal buyer, and she retired in June 2022 after 42 years with the county. I’m still trying to fill the position. I had two great candidates who could have hit the ground running and both turned us down because I couldn’t give them enough money to leave their current jobs.
“I’ve been telling my team this is coming, and it’s clear that we’re going to need the staff to spend the money that’s coming in,” she says.
Adds Penny Owens, the purchasing agent for Knoxville, Tennessee, “I’m worried about the contract management side. Our competitive spending went from $80 million last year to $120 million this year, and for the most part the difference was in federal money. But I’m concerned that we may be dropping the ball. I don’t have the staff to track every contract and make sure we’re paying on that contract. And I don’t have the staff to watch the subcontractors.”
While the need for more jobs, and the people to fill them, in the public sector is abundantly clear, an even larger problem may be the shortages in the construction industry itself.
“Younger people are reticent to come into the construction trades, civil engineering and the transportation profession. We’ve got a lot on our plates and fewer men and women to do the actual work,” says Roger Millar, secretary of transportation in Washington state and president of The American Association of State Highway and Transportation Officials.
Some of the reasons young people are reluctant to enter these fields, a 2017 article in Builder Magazine found, include a lack of understanding about the pay levels available there, the feeling among many that they’re not interested in physical labor and the belief that these are difficult jobs.
According to a 2022 report by McKinsey & Company, the U.S. construction industry had roughly 400,000 job openings in April—the highest level recorded since industry-level jobs data were collected. “This prompts the question,” says the report, “Who will fill the hundreds of thousands of additional jobs we estimate the Bipartisan Infrastructure Bill will create each year (peaking above 300,000 in 2027 and 2028) across the construction value chain in the next decade?”
This issue—which will likely lead to cost overruns and delays—can’t be discounted by state and local leaders as a private-sector problem. Elected officials are the ones making the promises to the public about a golden age of infrastructure. Says Garo Hovnanian, author of the McKinsey report, “There’s a difference between the people whose fault it is and whose problem it is. Project delays could be the contractor’s fault six ways to Sunday, but it’s the public-sector leader’s problem if a project doesn’t get done, or citizens wind up sitting in traffic in a construction project for six months.”
This shortage of construction workers isn’t just going to make it difficult for states, cities and counties to get the infrastructure work done, it’s making things more expensive. That’s because without enough workers available fewer firms are inclined to bid on projects, and, with less competition, costs go up.
“We like to joke that contractors don’t have ‘no’ in their vocabulary. But they’re not going to bid on a project they can’t deliver if they want to get more jobs in the future,” says Brian Turmail, vice president of public affairs and strategic initiatives for Associated General Contractors of America, the trade association for the commercial construction industry. “As a result, the bids will come in higher and the schedule to get work done will be slower than historically expected.”
In Knoxville, for example, “We put out a bid for a renovation of a fire station,” says Owens. “We got only one bid on that, which is unusual. With a fire station renovation, you’d think we’d have quite a few bidders out there. And it came in at almost twice the budgeted figure. Now it won’t go through this fiscal year. We’ve asked for additional capital funds in the budget and hope to get the project started in the fall.”
The shortage of construction workers is due in no small part to the fact that in recent decades there’s been an emphasis on college education as the ultimate goal for successful people, and construction work doesn’t require a college degree. “Either you went to college, or you were a failure,” says Eric Fisher, director of talent development for Indiana Constructors, Inc., a trade association for Indiana’s infrastructure construction industry.
A growing number of states, including Arizona, Indiana, Texas and Washington have been trying to address this problem by removing the stigma, pointing out that construction jobs can pay even better than entry level jobs for people with liberal arts diplomas. Under Fisher’s leadership, Indiana has developed the Civil Construction Pathways Program, which has been approved as a high school curriculum by the state.
Supported by private-sector construction firms like Caterpillar, this effort is expanding to a growing number of high schools in the state, which provide a three-year career pathway to construction, including one year of introductory content followed by two years in which students study materials, construction methodology, construction inspection, blueprint reading and so on. In their senior year, they are free to move into an internship with a local company in need of staff.
“The kids graduate on a Saturday night and are on the job site on Monday,” says Fisher.
Even after the federal money has been spent, there’s still going to be pressure to keep up the ranks of people, inside and outside of government, who are able to deal with all the new infrastructure that’s been put into place.
Says John Bartle, dean of the college of public affairs and community service at the University of Nebraska-Omaha and co-author of the 2022 book Innovative Infrastructure Finance: A Guide for State and Local Governments, “Even beyond the planning and the building, sufficient personnel are going to be necessary to make sure the money hasn’t been wasted. Trained personnel isn’t just necessary to plan for the new assets, but also to take into consideration the ongoing maintenance and operating costs that will be required. Without this kind of financial savvy, the money spent will not result in a sustainable future for infrastructure.”
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