Skilled Trades in America

Part 1:  The Fusion of Craftsmanship with Entrepreneurship

At Angi, we often think about home service professionals only in the context of working on the over 140 million existing homes in America. But it is important to remember there is considerable variation in what an individual tradesperson works on; between existing homes, new builds, and commercial construction, the home services trades really encompass all tradespeople.

This year, we asked tradespeople about how much time they spend working on existing homes, new homes, and commercial construction. We found that work is spaced out and more fluid than expected, with some skilled tradespeople spending less than 10% of their work on existing residential homes to some spending 90-100% of their time on existing residential homes. However, the distribution of time spent on homes across all tradespeople is relatively uniform, with roughly 60% of tradespeople spending at least half of their time working on existing homes.

More importantly, this is not static: more than 75% of skilled tradespeople shift their mix of residential homes year-to-year. Why? 60% cite changing demand, 24% cite changes in wages offered for similar work, and 12% cite changing companies as their primary reasons for adjusting their mix of work.

This is highly entrepreneurial thinking and action.

With so much of our physically constructed world being a function of this wide range of work, and knowing that earnings and wages are principal motivators, we first explore the earning and wage rates of the skilled trades, before looking at demographics and job satisfaction.

Earning and Wages in the Skilled Trades

Skilled tradespeople constantly shift their mix of work. 60% of pros cite change in market demand, which indirectly leads changes in wages. Higher and lower demand result in higher or lower wages. With increasing demand across commercial construction, new residential home construction and work on existing homes in recent years, it is no surprise to see high wages paid among the trades in part because of this tendency to shift the mix of where they are working.

Looking at a topline analysis comparing a few well-known trades – plumbers, electricians, general contractors – average annual earnings are 22%, 29%, and 53% higher than that of the general population. This means that for a sizable portion of the labor market, switching to a career in the skilled trades could mean a considerable pay bump.

While average income is an important metric, so is income growth. When surveying skilled tradespeople, we specifically looked at how earnings grow as careers progress from entry level to experienced. Home tradespeople nearly double their income from junior to experienced, with wages nearly doubling as well, rising roughly 80% depending on the different skillsets.

Demand for the work, income levels, and wage growth potential mean that in most of the country, a majority of people could earn more by considering a career in the trades.

While current statistics on earnings are important, it is also essential to get perspective on the industry, starting with the ages of people in these trades.

Entering, Aging, Retiring

Of tradespeople surveyed, 33% said they joined the trades between 16 and 20, and only 18% joined between 25 and 30. In direct contrast, this ratio is flipped for the observed ages of people entering today: 35% of people said 25-30 is the primary age when they see people entering the trades, and only 7% said they see 16- to 20-year-olds joining.

Why are people not joining the trades between ages 16 and 20? What could be the reason for delayed participation in the industry?

Job Satisfaction and Finding Meaning and Value in Work

Job satisfaction in the skilled trades is exceptionally high.

Nearly 9 out of 10 (83%) tradespeople list their job satisfaction as either very satisfied or somewhat satisfied, with fewer than 1 in 20 people saying they’re somewhat or very unsatisfied in their current line of work. This is a slight improvement from last year last year when 82% of people were either somewhat or very satisfied in their choice.

While compensation increased as the primary reason for job satisfaction, across 2020 and 2021, meaning and value in the work was still the key factor impacting overall satisfaction, with 22% of all tradespeople and 24% of the extremely satisfied citing it as the primary driver of their happiness.

This is both descriptively useful for understanding the trends in a broad sense, but also actionable advice for the industry: it is descriptively useful because it allows us to better know the strengths of the trades, and actionable because it should be a key component of the cultural shift that’s required to attract more people to the industry.

Part 2: The Labor Shortage & Recruiting Shortfalls

So how is the industry grappling with an unprecedented global pandemic, dramatic market crash, booming housing recovery, and demographic tailwinds that are driving across the board industry change?

Answer: It is a story of opportunities seized and opportunities missed. On the one hand, the trades have responded to surging demand by navigating supply shortages and filling their pipelines with projects. In other words, they saw the surge in demand as an opportunity and rose to it.

However, there is a shortage of labor. It is real, it has worsened and recruiting is missing the mark. With diversified sources of work, above average incomes, high job satisfaction, finding meaning and value in the work, and vacancies slated to open as a result of an aging workforce, skilled home trades should be able to recruit more effectively than they are now. We will explore some of the reasons for the labor shortage, why it is worsening and what the trades could do to improve recruitment.

2.1 The Labor Shortage is Real and Worsening

Yet, there is room for optimism. Looking ahead, pros are optimistic about the situation. 55% of pros think it will improve or stay the same over the next five years, only 45% think it will continue to worsen. So, despite 75% of pros recognizing a skilled labor shortage now and recognize it has gotten worse of the last five years, pros remain hopeful when thinking about the future. This optimism could be fueled by a number of things, including the connection pros feel to their work and its value and pros’ deep understanding of the market demand for their work and skills.

So, while it is true on a macro level that the perception of the shortage has worsened over the last year, what does it mean on a more localized level? How is this playing out for individual tradespeople and their businesses?

2.2 How the Labor Shortage Impacts Pros

Skilled tradespeople feel the impact of the labor shortage both in their personal lives and in their professions. When asked how the labor shortage is impacting them and their business, they note four predominant impacts: slowing growth (30.2%), less time for family and time off (30.1%), turning down jobs (29.7%), and decreasing revenue (26.7%).

This in turn is resulting in 68% of companies have struggled to hire skilled workers, with half of them (33%) saying they could not find employees to fill open positions.

Of the one-third of businesses that are either somewhat or extremely understaffed (35%), nearly half (48%) said they could not find employees to fill open positions, and 35% said the people they did find did not seem suitable.

2.4 An Unrepresentative Shortage is a Missed Opportunity

Putting these attributes in context, their value makes perfect sense, since only 3% of tradespeople say they learned all their technical expertise in school. This remarkably low figure is because 42% say they learned most of their technical expertise on the job and 41% say they learned at least 50% of their technical skills outside of trade school. This provides a clear picture of why the attributes prioritized include a desire to learn and a positive attitude so much more than credentials, connections or socioeconomic status.

2.5 Recruiting is Missing the Mark

Word-of-mouth recommendations continue to have an outsized presence as the preferred method of recruiting into the trades. Given the demographic shortages and the age of current tradespeople, this strategy is not particularly moving the needle in terms of developing a broader pipeline into the trades over time.

For example, half of pros are evenly split between saying they have seen more or fewer women entering the trades over the past five years, with the other half saying there has been no change. This static picture is exactly what one would expect from an industry that relies on word-of-mouth recommendations within a single gender.

By comparison, more than 80% of Americans use online job searches³ to find employment, and more than 99% of the Fortune 500 companies use some sort of applicant tracking software to increase the efficiency and effectiveness of their recruitment and onboarding.⁴

Positively, the share using online job postings has risen to 37% from 28% a year ago, but that is still only one-third of all tradespeople and it needs to be higher.

Trades have an opportunity to utilize more modern and engaging recruitment tools, like online job postings. But what about incentives offered as part of the recruitment process? 39% are offering flexible work schedules and a fun work environment, 35% are offering above average wages as a core incentive (consistent with what we saw earlier in this report regarding relative pay in the trades), and 33% are offering performance bonuses.

The major disconnect, however, is reflected by the incongruity behind what drives job satisfaction – meaning and value in work – and highlighting that as a benefit. Only 18% of pros highlight job satisfaction as part of their recruitment offering, making it the second least provided incentive.

A final shortcoming in recruitment efforts, following a similar disconnect, is the high percentage of pros saying that adding shop class back to schools would make a difference in improving the problem (59%) and those who say they are actually engaging with their local schoolboards to support these things (27%). In fact, 40% of tradespeople have not engaged in any form of political or policy-based advocacy for the trades. Given the country’s long history of civic engagement, the trades should take a more active role in the policies that shape the industry.

Part 3: Adapting to Work in a Time of Pandemic

As COVID-19 became a global pandemic, people around the U.S. began to spend more time at home. And with more time at home, the home became the focus. Not only did time shift to the home but also spending. This boom in consumer demand for work in existing homes in 2020 was followed by a boom in buying and selling in 2021.

All the demand for work on existing homes, and the home services activity created by a nationwide boom in buying and selling, caused a crunch in the supply chains, drove up demand for skilled labor, made hiring harder and sped up technology adoption by pros looking to be both safer and more efficient.

These dynamics, while present in other times, were kicked into overdrive during the pandemic. For skilled tradespeople, adapting was not only a necessity, but also, for those who could adapt early, a big opportunity.

3.1 Shortages – Materials and Labor

83% of skilled tradespeople faced some sort of material shortage over the last year, with the biggest issue being framing lumber and oriented strand board (OSB), commonly used for subflooring and siding in home additions and remodels. 40% of pros surveyed experienced shortages in framing lumber or OSB. 28% experienced shortages in flooring supplies, 27% in roofing materials, and a quarter (25%) in appliances, plumbing supplies and electrical supplies. These materials are all major inputs in both new home construction and remodeling. Most have lengthy supply chains, which were all susceptible to shipping backlogs at manufacturers, ports and rail yards.

These material shortages and supply chain disruptions impacted customer timelines and pros’ business funnels and pipelines. Project backlogs shrunk on average, with 53% of pros saying it was because of COVID-19. This was likely some combination of not wanting to assume committed pricing and materials risks due to the shortage issues and the confidence that the market is strong enough that more work can be easily found in the future.

3.2 Widespread Adoption of Technology

Across the board, skilled tradespeople innovated and sped up their adoption of new tools.

While the pandemic offered a strong impetus for technological change, the impact could be long lasting, both because more modern tools will help dissuade potential attitudes about the skilled trades as not being up to date with the latest technology, as well as because they allow pros more time throughout the day, shifting their focus from administrative details to the productive work of maintaining and improving our homes.

Summary

This is the most interesting time for the skilled trades in modern history both because of the pandemic and because of the “Great Resignation.”

The Great Resignation could provide great opportunities for skilled tradespeople in America. Study after study, survey after survey is tapping into the growing discontent amongst American workers. People want to feel more connected to their jobs and to their work.

That connection between the work and the meaning and value of work has always been strong with skilled trades and is now more relevant than ever before. This is the opportunity: redefine the trades as craft and begin to eat away at the challenges of perception around this essential, vibrant and important work.

The trades have a wonderful array of benefits to offer, there is a pronounced shortage of skilled labor, and opportunity abounds for the innovative entrepreneurs that can grow and scale businesses in this unique time.

While recruitment needs to be more adaptive to the shortages and tap into the current labor movement, the trades are innovating. The pandemic resulted in severe supply and labor constraints across virtually every sector; however, tradespeople have rapidly adapted to the situation with new tools, technology, payment options and planning methods.

As the economy continues to grow this decade, people will choose to spend that new wealth on the home.

All this pent-up and planned spending on the home needs a supply of available skilled tradespeople to do the work, and the opportunities are limitless for those willing to tackle the industry’s challenges in the years to come.