Daniels professor Eric Holt and graduate student Bill Ray found a lack of workers is adding time and money to residential projects
The residential construction industry is facing a workforce crisis, and recent research from the Daniels College of Business has quantified just how bad things have become.
The study estimates that the annual economic impact of the current skilled labor shortage amounts to $10.8 billion per year, due primarily to the increased time it takes to complete construction work.
Eric Holt, an associate professor of the practice at the Franklin L. Burns School of Real Estate and Construction Management, and graduate student Bill Ray worked with the Home Builders Institute (HBI) and National Association of Home Builders (NAHB) to release the groundbreaking study.
In addition to the yearly economic impact, there was a reduction of nearly 19,000 single-family homes built in 2024 because of workforce shortages. And construction times increased an average of 1.98 months, with smaller builders seeing even greater delays.
“We’ve talked about labor being the number one problem in the [construction] industry since the recession at the start of 2006. So, this is not anything new,” Holt said. “What was groundbreaking was actually putting some dollar figures to it. [We’re reporting] the impact of how many billions [of dollars], how many homes, how much this has really affected.”
Holt and Ray spoke with builders across the nation for this research, looking to understand their pain points and how much the current workforce shortage is impacting them. In total, they conducted more than 30 hours of interviews, which is where Ray came in.
Holt recruited his student to join the research project, partly due to his expertise in coding and AI. Ray wrote Python code that used OpenAI’s API to process transcripts of the interviews, extracting answers to a set of questions based on the interview parameters, grouping them by topic, and organizing responses by builder size. He also used the API to compare responses by segment and built a system to scan for quantitative statements.
Holt said Ray’s work was crucial to the success of this research.
“He is truly the mad scientist behind the computer,” Holt said with a laugh.
Ray is grateful for the opportunity, as it helped him learn important things about research and apply some of his computer science skills to the construction industry.
“I learned a lot about homebuilder strategy by listening to the interviews and gained valuable experience conducting research outside of computer science,” he said. “Unlike the experiment-focused work I was used to, this process was centered on interacting with people and sharing knowledge through conversations.”
This summer, Ray has been applying the lessons he learned in homebuilding strategy as part of the consulting team at John Burns Research and Consulting. He’s one of many Daniels students that works with faculty on research, learning about the process and leaving with a highlight for their portfolio.
This research has gained immediate traction in the industry, featuring prominently in news publications because it has finally put numbers to an issue builders were keenly aware of.
“This study underscores the urgent need for strategic interventions to address the skilled labor shortage,” stated Robert Dietz, NAHB chief economist, in a press release. “The economic implications are vast, affecting not only the home building industry but also the broader economy.”
Holt isn’t certain what’s next for the industry and how this gap can be closed but is certain that the Burns School and Daniels will do what they can.
“We’re doing our part. We’re training students for the industry,” he said. “We’re working with workforce development people to get more students in the industry, but it is such a huge exasperation across the nation.”