The home building industry is under attack from the deepening labor crisis gripping the United States. This could have dire consequences for the booming data center industry. Without swift and significant action, by 2033, the nation will be short 1.9 million manufacturing workers, a prediction that has sent shudders through industry leaders. As a result, the National Association of Manufacturers has said that the labor shortage is an “economic and national security issue.” Here, they highlight the need for action in their own title.
“As George Carrillo, the CEO of the Hispanic Construction Council, put it there are billions of dollars up at stake. “These projects represent trillions in investment but require more than steel and concrete,” said Carrillo. He cautioned that the ongoing worker shortage is already hampering data center deployment. Consequently, the industry will be hard-pressed to keep up with increasing demand.”
Moreover, the construction sector is already set to experience a shortfall of 3.2 million workers by 2030. Meanwhile, the construction unemployment rate has dropped dramatically to 3.2% as of August. This figure is tied for the historic low, emphasizing the dire deficit in the industry. This drop mirrors the overall tightness of our current labor market, making recruitment for both continuing and soon-to-begin projects an ongoing challenge.
CBRE Pat Lynch, executive managing director and global lead of CBRE’s Global Data Center Solutions, took note of the permanence of most of the under-construction jobs. These appointments can last anywhere from three years to ten years, providing lasting and stable jobs for workers. With the health care demand upending the industry, the already-stretched workforce won’t be able to meet growing needs.
Mr. Dan Roberts, co-CEO of Iren, said that the industry is not prepared to meet the future demand. We are unable to keep up with the demand at this accelerated pace,” he said, adding the intense squeeze on construction firms, many of whom are working to build their own capacity in an already stretched market.
Industry expert Anirban Basu similarly focused on the uncertainty and challenges presented by this new environment. He noted that when big projects come to the U.S., they usually go over budget and take much longer than expected. The very complexity that is inherent to data centers creates additional hurdles. On top of that, you add a layer of complexity that requires a laser focus on precision. That need does not happen in a normal multifamily building or commercial building,” he said. Do we have the workforce to do that? Well, not in spades, that’s for sure.
The effect of retirements combined with restrictive immigration policies have made adding to or even maintaining the labor pool an acute challenge. Carrillo pointed to a huge danger—data centers could become “stranded assets.” These billion-dollar buildings might remain offline just because the lack of a workforce won’t allow for them to be staffed.
In spite of these hurdles, there is much to be optimistic about in the sector. Industry leaders are hopeful that hyperscale companies will place big bets in clearing these hurdles. For Basu, the more pressing issue was how much financial power these hyperscalers will have. To catch up with some of their professional shortage in their quest for superiority in the artificial intelligence and cloud computing industries.
Looking forward, the U.S. construction industry needs to change in order to meet these demands. This capacity will be tremendously important as we seek to support the booming demand for data centers. American manufacturers and construction firms have trillions at stake. So, they need to get serious about tackling the workforce shortage and the need to upskill the existing workforce.