Why The CRE Labor Shortage Could Get Worse
Several sectors of the commercial real estate industry could face a deepening labor shortage in coming years due to proposed immigration policies.
If enacted, policies restricting legal immigration could make it increasingly difficult to fill various positions, according to a recent Cushman & Wakefield report.
Under the proposed RAISE Act, the government would do three things: limit the number of refugees entering the country each year to 50,000, reduce legal immigration over the next decade and change how immigrants are prioritized and granted access to the U.S.
Companies are already struggling with ways to bulk up the labor force as baby boomers retire and younger workers lack an interest and at times the talent to fill the gap. That is where foreign workers have stepped in.
There are 27.5 million foreign-born workers in the U.S. — nearly 70% of whom are between the ages of 25 and 64. Only 60% of U.S. residents are within that same age range. Beginning in 2019, the number of U.S.-born residents of working age will decrease and the labor force will lose 2.1 million people by 2028, according to the report.
“It’s a challenge to find good, skilled workers no matter what and this could … make it even more of a challenge,” Cushman & Wakefield Senior Director of Occupier Research in the Americas David Smith said.
A Numeric Breakdown
While foreign-born workers account for 17% of the U.S. labor force, they make up a larger proportion of CRE-related jobs. Just over 30% of building and grounds cleaning and maintenance jobs are filled by foreign-born workers. These workers also make up 25% of construction jobs.
More than 3.5 million foreign-born workers hold management and building leadership roles in this country, while another 2.5 million work in office and administration, according to the report. Another 3.1 million work in installation, repair and production jobs, while healthcare employs 2.5 million foreign-born workers. This industry in particular is already strapped for talent in nursing and home care. Research shows the food service segment also would be impacted.
While significant changes to the H-1B visa program have only been discussed, any revisions could impact tech and services firms. California, New York, Texas, New Jersey and Illinois, which employed about half of the 540,000 H-1B recipients in 2015, could experience the greatest impact.
Computer systems analysts, software developers and computer programmers are the top three fields to employ H-1B visa holders. U.S. colleges and universities are producing fewer computer and information tech graduates, making these tech industries even more reliant on foreign-born workers.
How Did We Get Here?
The economy became more reliant on foreign-born workers starting in the early 1990s when U.S. immigration policies were loosened and the country received a significant bump in new immigrants, according to Smith. The foreign-born labor force has since grown and immigrants will soon make up roughly half of the U.S. population growth in 2017, according to the report.
“Immigration has always been a part of who we are as a country,” Smith said. “It has driven population and job growth and [foreign-born workers’] participation in the workforce has increased.”
Immigrant populations have grown the most in gateway cities such as New York City, Los Angeles and Chicago, which have a combined 15 million foreign-born residents. These gateway cities tend to offer more economic opportunities and have established communities where immigrants overwhelmingly reside, according to Smith. More than 60% of foreign-born U.S. residents live in 10 gateway cities.
Attracting U.S.-Born Workers
Many companies have already been planning for the labor shortage across multiple industries regardless of current immigration policies due to the tight labor market. While many baby boomers are working longer before retiring, there are still 10,000 baby boomers reaching the retirement age of 65 every day. By 2030, baby boomers over 65 will make up 20% of the U.S. population.
“More people are hitting 65 than hitting 25, and that could lead to negative employment growth in the supply of American-born workers available,” Smith said.
While a tightening of legal immigration could have a positive impact on wage growth because there would be fewer employees competing for wages, it does not mean the jobs will be filled by U.S.-born workers without additional training, Smith said. Many companies are coming up with ways to train U.S.-born workers to use technology to fill in the gaps.
In Georgia, companies are looking into public-private partnerships to work with municipalities and states to identify what skills need training, Smith said. Companies are partnering with universities and technical schools to provide the right training.
“If we’re going to fill those jobs with people here in the U.S. with foreign-born or American workers, cities need a holistic solution,” Smith said.