Alleged Contruction Worker Shortage Might Be Due To Wages

Wall Street Journal (WSJ) put out an article on 04 August 2014 discussing the perception that there is a shortage of skilled labor in the Construction Sector. While on the one hand the National Association of Home Builders (NAHB) purports there to be a problem, WSJ like myself, are not sold on this. What I mean is that while there may be a statistical issue, the causation of the problem might be more related to precisely that which is happening in the Mortgage Field Services Industry — The greed and fraud has become so obscene that the middlemen (Order Mills in our Industry) have ran most of skilled workers off.

Recent survey data from NAHB show that shortages of labor and subcontractors have become substantially more widespread since 2013. The incidence of reported shortages is now surprisingly high relative to the current state of new home construction, which has only very partially recovered from its 2008 downturn. The shortages are also particularly acute for workers with basic skills like carpentry, who are needed in substantial numbers for the construction of any home.

The Mortgage Field Services Industry has always had plenty of Craigslist Crackheads to pour through until recently. As demonstrated by Michael Breese, the HomeStar Property Solutions (HomeStar) Chief UnExecutive Officer (CEO) Hack, the reality is that the Fraud Fest is rapidly coming to an end for reasons not dissimilar to that in the Construction Sector. Both our Industry and the Construction Sector are finding it more and more difficult to locate, let alone hire, skilled workers. Pricing is an obvious factor. In our Industry, Companies like SEAS LLC are demanding that lawns be mowed; presented with photo albums and a score of paperwork, and then Contractors risk being back billed for tens of thousands of dollars. The price of these grass cuts? Twenty dollars and less in most cases. The reality is that when a Contractor has to provide equipment, labor and materials, fuel, insurance, telecommunications, handle all administrative tasks ad nauseum, most Contractors today simply are either refusing to do it or diversifying their business. An example of this is Foreclosurepedia was recently hired to prepare and submit a Request For Qualifications on a US Department of Defense (DoD) Contract for the US Air Force (USAF). The Return on Investment (ROI) for this small, several man job will eclipse a thousand fold that which they are making in months with folks like HomeStar or SEAS LLC. Additionally, they do not have the worries of cesspools like Altisource and their well documented examples of hiring Vendors whom have bankruptcies and whom screw Contractors Coast-to-Coast. Not surprising really when we discovered that Moody’s downgraded Ocwen Financial today and cited Altisource issues as part of the reason. Further downgrades are expected.

While I am sure that the prolific fraud associated with the Mortgage Field Services Industry is not as heightened in the Construction Sector, the reality is that when you begin to loose skilled labor in any segment, the end result is sub standard products being delivered. In an economy wherein Consumer is King, that translates into both limited profit margins and higher scrutiny by Regulatory Bodies — both of which are cataclysmic to any Industry.

NAHB relates that “…that subcontracting accounts for such a large share of the work in residential construction. According to NAHB’s latest (2012) survey on the topic, single-family builders on average employ 25 different subcontractors when building a home. Over half of builders subcontract out at least 75 percent of the construction work. Over 95 percent of builders always subcontract some jobs[.]” Even more so the numbers with respect to Sub Contractors in our Industry are disappearing in the droves. As a former Union Contractor, at least in the Construction Industry I knew where to lay my hands on people if I didn’t get paid; we had a Union as well to pick up the slack. The Industry? Hell, chances are your money has already gone up someone’s nose!

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