Even in a slower economy, the demand for contractors remains strong overall, especially on projects involving public funding. However, the combination of labor shortages, pay expectations and shifts in compliance and human resource practices is adding to the challenges for contractors. Experts offer encouragement and advice.
Busy contractors rarely have time to pause and look around at bigger picture dynamics that are likely impacting their ability to successfully compete. Offering perspective, Kit Dickinson of ADP shares this summary of the interesting position contractors may be finding themselves in as they steer forward:
Construction firms are in a unique spot right now. On one hand, there’s great demand for their services even in a slowing economy. The Infrastructure Investment and Jobs Act that passed in August 2021 includes around $550 billion in new federal investment in America’s roads and bridges, water infrastructure and more. On the other hand, staffing issues, managing pay across multiple jurisdictions and at different rates, and reporting requirements for government work make managing projects and controlling costs difficult.
Given both the challenges and opportunities afloat, it’s likely an important time for contractors to attend to the inner workings of their compensation and payroll processes. Maintaining a mish mash of outdated protocols and procedures is likely to become increasingly problematic, thwart growth and even result in regulatory issues. Construction Pros share these areas for attention:
- Compensation benchmarks. Knowing what other firms and industries both locally and nationally are paying can save tremendous time in the recruiting process….Benchmarks can also help business owners retain skilled workers by helping them keep pay and benefits in line with the job market.
- Certified payroll reports. Essential for government work, certified payroll reports verify that contractors and subcontractors working on federally-funded projects are paying their employees prevailing wages and fringe benefits in accordance with the Davis-Bacon and Related Acts….
- Automation. In any given week, a construction worker may work on different jobs, governed by different unions and/or government contracts. This all impacts pay rates and benefits as well as report administration. Tracking this manually, even using spreadsheet programs, can be a major headache and major risk. Construction companies need accurate and trustworthy automation that makes tracking this information easy.
In addition to the benefits increased attention to payroll can generate in terms of efficiency, compliance and satisfied workers, contractors who double down on their payroll solutions may also be more ready to take advantage of tax credits. Dickinson provides these reminders:
Be sure any solution leveraged is capturing information for appropriate tax credits. For example, construction firms can be eligible for the federal Research & Development (R&D) Tax Credit if they have developed or improved products, processes or technologies. Another opportunity is the Work Opportunity Tax Credit (WOTC) which applies when businesses hire new employees from groups that have historically faced employment barriers. Businesses may also still take advantage of the CARES Act Employee Retention Credit (ERTC) by filing an amended tax return until 2024 and 2025. Make sure that your solution helps maintain the data necessary to calculate tax credits, support compliance and deliver process visibility in its reporting capabilities.
Bid More and Win More
Of course contractors looking to attract and retain top talent and grow their businesses also need to be prepared to bid more, and win more, and that’s where Colonial Surety can help. Bring more strategic wins your way this year with a surety line of credit in writing, speedy bonds and financial intel too: everything you need to win is right here at Colonial Surety via The Partnership Account® for Contractors.
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Hiring? Good To Know…
To put the construction labor crunch in perspective, consider this: according to Associated Builders and Contractors (ABC), in 2023 alone, in addition to “regular hiring,” 590,000 new workers are needed! As experts explain:
Over the past decade, construction workers aged 25-54 have declined 8% and older workers are retiring in large numbers. The lack of qualified skilled workers is concerning too. Low-skilled construction laborers account for more than 40% of construction workforce growth over the past decade….This means these workers must quickly acquire specialized skills. However, many other industries are also competing for this labor force.
Although hiring challenges are myriad, it is heartening to know that talented and passionate new workers are being attracted by colleges and training programs across the country. Take hope, for example in the perspective of an up and coming contractor:
Cole Shandera, a University of Nebraska student and project management intern at Hausmann Construction, said he is working on LPS Standing Bear High School in his hometown of Lincoln, Nebraska. The project finishes work in one month. The reason he’s proud of it? Not the challenging work, but rather the impact for the end users. “I enjoyed it because I get to see students come here and play sports, excel in school and overall create a community that will be here for a lifetime….”
Whatever state you are building your business forward in, don’t forget, Colonial Surety is here to help you win. The Partnership Account® gives qualified contractors a surety line of credit—in writing—and a private digital dashboard, providing daily snapshots of single and aggregate limits and bond capacity. Go ahead: update work on hand, increase the aggregate and hit the green light on your next build.
Founded in 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Let’s connect today: Colonial Surety.