A study released by the Midwest Economic Policy Institute (MEPI) raised the question, “What if construction is the next manufacturing?”
New technology has raised efficiency and reduced cost in manufacturing, but with the consequence of displacing workers with machines. The study predicted the same trends may enter construction, but local leaders in the industry are leery of the claims.
The report was a theoretical assessment of the potential impacts of a highly automated construction industry, claiming by 2059, 2.7 million workers nationwide could lose their jobs. Predictions for the Midwest were broken up across five states: Illinois, Indiana, Iowa, Minnesota and Wisconsin. No numbers were given for the state of Michigan.
Predictions were based on analysis of a decades-long decline of blue-collar labor as a total share of construction costs and the growing share of capital, which includes machinery, equipment and other technologies. According to the data, between 1997 and 2015, capital increased in the construction industry by 5.2 percent each year, while labor only grew 3.9 percent each year.
The study also stated approximately 49 percent of construction tasks can be automated, which could affect 35 percent of the total labor force, including 50 percent of carpenters, 42 percent of electricians, 50 percent of plumbers and 88 percent of operating engineers.
Consequently, worker displacement could reduce labor income by $31.5 billion as former workers are forced to find labor in lower-paying positions like transportation, production, installation and food service.
State-by-state, Illinois could see a loss of 55,000 existing jobs, with a loss of $6.5 billion in labor income; Indiana could see 24,000 displaced jobs, with a loss of $3.35 billion; in Iowa, 17,000 jobs and $1.7 billion; in Minnesota, 38,000 jobs and $3.04 billion and in Wisconsin, 31,000 jobs and $2.73 billion.
Industry professionals in West Michigan, however, are suspicious of these predictions. John Wheeler, director of business development for Orion Construction and president of Orion Real Estate Solutions, considered it unwise to compare construction to manufacturing.
“Labor is a mass critical part of all of our construction, as it takes place in the real world environment, not a factory,” he said.
Wheeler argued, while new technology is changing the field of construction, the displacement numbers are overblown.
“I have been at this for 42 years full time, and I must say that not much has changed when it comes to building buildings in the real world,” he said. “I know technology is playing a bigger role, but I don’t see this business changing to fully automated robots pouring concrete, laying block and brick, hanging drywall and hooking up light fixtures.”
MEPI made a few public policy recommendations in the report, first stating apprenticeship programs in the building trades should be utilized and adapted to train new workers and re-skill employees as specific trades become more automated. Lawmakers also should be discouraged from repealing state prevailing wage laws that fund training programs.
Norm Brady, president of the Associated Builders and Contractors/West Michigan Chapter (ABC/WMC) disagreed with the proposal, saying there is no connection between the training programs and the prevailing wage law.
“These programs are funded by the apprenticeship training fund,” he said.
MEPI also proposed taxing capital owned by contractors and investing the proceeds into young and displaced workers. Brady argued against the proposal, saying raising taxes on capital would raise the cost of construction and hamper further development.
“When construction gets more expensive, you get less of it,” he added. “Change is inevitable in every industry. We shouldn’t fight it. We need to find ways to embrace it.”
Brady said the response to automation should be to restructure training programs to accommodate changes. Automation may remove some current positions, but it could also lead to new positions in programming and maintenance.
He gave the example, “Right now, the training might be around blueprint reading and layout. Through automation, if we have a layout that we can place on the floor, it can trace the lines, but we will need people trained in those instruments to program them and repair them.”
Wheeler echoed a similar sentiment, saying automation may perform certain tasks in less time with less money, but it will never fully replace the need for human labor.
“It may be just that added technology will shorten the time it takes,” he said, “but equipment is expensive, it breaks, and it doesn’t work well at 20 below zero either. Just like our men in the field, its tough out there.”