THIS WEEK'S STORY
The construction industry Is hiring, but that doesn't mean you should.
A contractor called me recently because he wanted to hire two more people.
“We’re getting busier,” he told me. “I’d rather hire now before good people get harder to find.”
That sounds reasonable. Then I asked him how much of the upcoming work was actually signed and scheduled.
One project was signed. One was verbally approved. Another had already been pushed back twice.
That changes the conversation.
Construction had 305,000 job openings at the end of June, up 36% from a year earlier. The industry then added another 22,000 jobs in July.
But here’s the number I would pay more attention to: contractor backlog fell to 8.0 months in July, down 0.8 months in one month. Backlog declined across every industry, region, and company size.
Those numbers can both be true.
Companies need skilled people. But future workload is also becoming less predictable. That means you shouldn’t hire because everyone else is hiring.
Payroll starts immediately. The project may not.
Before adding another $80,000 or $100,000 of annual payroll, I want to know four things:
- How much work is actually under contract?
- When does that work really start?
- How many labor hours does the existing backlog require?
- And how efficiently is the current crew being used?
Sometimes the answer is absolutely to hire.
Other times the better answer is overtime, subcontractors, temporary capacity, better scheduling, or simply getting more production from the team you already have.
The goal isn’t to keep payroll as low as possible. The goal is to make sure payroll grows after the economics support it. Not before.
