The skilled labor shortage in construction can be attributed to two factors: 1) the changing building technology and 2) the construction knowledge base aging out faster than apprentices can replace them. Surely, this can’t be the first time in human history that technology has shaken the labor market. What about industrialization? Or ancient Egypt?
In the second part of a four-part series on the intersection between ConTech and traditional trades, we draw some lessons from the past, including events in labor history when new technologies initiated fundamental change such that the labor market was transformed forever. In the end, we realize that today’s construction labor market may be experiencing a phenomenon that’s only occurred a few times in millennia.
The Ancient Labor Market
Millennia? Sure, why not. After all, there is evidence that free labor (as opposed to slave labor) existed in the world’s first major civilizations in Mesopotamia, the Nile River Valley, and the Indus River Valley. As long as 4500 years ago, plumbers were installing copper pipe for in-wall and underground waste management. So clearly, someone needed to initiate the training paradigm to upskill the clay pipe installers and transition them to copper.
From Ancient Egypt and Rome to Dynastic China, skilled labor has gifted us structural treasures that amaze to this day. Of course, many of these laborers were coerced into working (as slaves or compensated with non-salary services, such as protection from foreign invaders), but some were actually paid a wage to go to work. As demand for labor changed due to technological innovation, the labor supply would be forced to pivot and learn a new skill. This shift was gradual, but ultimately, inevitable.
What lessons can ConTech learn from the past when it comes to managing a shortage in skilled labor?
Back when the Ming dynasty started construction on Beijing’s historic Forbidden City in 1402, over a million laborers were “hired” (many of whom were coerced) to make it happen. They spent 14 years assembling what still remains in much of its original form more than 600 years later. The Palace Museum, as it’s known to tourists today, is an awe-inspiring sight. Despite the number of skilled hands behind the project, there were numerous challenges to overcome prior to completion. One challenge, in particular, is worthy of note:
Huge stone blocks weighing up to 100 tons had to be transported from quarries located miles outside of Beijing to create the palace’s grand terraces and archways. These materials were too large to be transported by conventional techniques. Be it the power of the Ming Emperor Yongle, or the creativity of the Emperor’s architect, Vietnam-born, Nguyễn An, a technological solution was presented. Wells were dug along the roads from the quarries to Beijing. Water from the wells was poured onto the roads in deep winter, and the ice track that was formed served as a means to drag the stones into Beijing.
In this case, new technology was introduced with little impact on the labor market. The new tech (or technique rather) required little to no training, therefore, the labor supply was able to meet the new demand.
Fast forward about 340 years to 1760s England…
Technology and the Labor Market Lesson #1
The phenomenon of industrialization taking place in mid 18th century England marks a pivotal point for labor when technology was introduced to increase productivity, as opposed to the ingenuity used by the Ming to drag 100-ton stones across a man-made ice track. The means of production, the workflow, and the worker’s daily experience transformed dramatically with the machinery and equipment found in the new factories of London.
According to a paper published by the London School of Economics, however, this innovation in production did not immediately result in increased productivity. In fact, 18th century England experienced slow TFP (Total Factor Productivity) growth despite the new tech.
Flat productivity growth aside, 18th century industrialization’s new technology transformed the way people worked. But as academics acknowledge, what was fundamental about this change was “the knowledge revolution.” The existing labor force was able to access the skills required to work with the new technology.
So far, we haven’t yet seen ConTech grasp the significance of disseminating knowledge to the labor force. For the most part, we are seeing a corporate class of innovators and managers astutely rethinking the capital input that seems to assume a new labor force will be built from scratch. ConTech firms haven’t yet figured out how to begin training existing tradespeople. Some are attempting to run experienced tradespeople through pre-apprentice classes and others want to start with people who have little to no experience in the trades at all. While probably not a bad idea to start from scratch, ConTech might consider the lessons taken from 18th century England – start with the existing workforce and productivity growth will come more naturally.
According to this paper, increased productivity eventually resulted in the late 19th century. But by then, the cities were swollen with residents and city-life became unbearable for the poor and working classes.
Labor Studies Is Born
Some of history’s greatest social thinkers were born out of the misery that industrialization brought to 19th century Europe. Like us, these were individuals trying to make sense of the technological changes taking place and the impact these changes had on the quality of life. Today, the conversation regarding the role of labor is a global one, and labor studies occupies its own vast field in academia.
When we speak today of a labor shortage or lack of supply, we are speaking the language of thinkers like Karl Marx and Karl Polanyi. A labor supply has the capacity to meet a demand for labor and, therefore, a market exists where the two are brought together. Polanyi argues a labor market exists if workers are:
· Free to change their economic activity and/or their location; and are
· Paid something for their labor productivity to indicate to them which kind of work to choose
So, according to well-known economists and social thinkers, if you have slaves, or coerced labor, you don’t have labor market. We can advance this idea further to imply that if workers are restricted from changing jobs or careers, and can’t cross international borders in the way that capital can, the market may be “free,” but the labor market is not. So what lessons does this offer ConTech aside from engaging the traditional trades in collaborating to build out an upskilling paradigm? Let’s take a look at unions.
Technology and the Labor Market Lesson #2
Around the time that 19th century social thinkers began asking tough questions about labor conditions, the first major labor movement was well underway calling for a right to organize, and an eight-hour workday. One of the key components to any labor movement has been the system of apprenticeship, an education and safety program built into the identity of work itself to ensure best practices and productive work conditions.
In 1885 Chicago, another major milestone at the intersection of technology and labor took place – this one, about 100 years after industrialization in England. The Home Insurance Building was erected as the world’s first “skyscraper” - the first structure built of steel framing. The building industry received a shock not unlike the shock we are seeing today with ConTech.
In the US, building trade unions existed in the late 1800s, but they were highly compartmentalized and divided by various parameters, such as trade discipline and ethnicity. With steel replacing wood and stone as primary materials, regional and national contracting companies were entering the business. George A Fuller, who built Chicago’s 1889 skyscraper, the Tacoma, and eventually moved to NYC, was considered to be a “new type of contractor.”
Lessons for ConTech HERE
By his death in 1900, general contractors were playing major roles in the industry: financing projects, purchasing and assembling, hiring the craftsman, and supervising the project from beginning to end. They felt it was prudent to reorganize the whole supply chain, in order to “control expenses and increase profits through careful administration.”
“New contractors,” like Fuller, soon learned how new technology impacts the labor market.
One might say the impact looked like a skilled labor shortage at first, but perhaps, there was more to it. Disputes between unions arose over who would install the new materials. As the industry moved from wood to metal doors and windows, the jobsites became grounds for confrontation:
“Would carpenters install these new units or should the metal workers be given the job?”
As new disciplines were created to better match the new technology, there was still overlap with the existing trades. Hoisting engineers, electricians and elevator constructors fought over who would wire, install and handle elevators. Reinforced concrete materials stirred the ire of bricklayers who argued concrete was unstable (albeit, cheaper than brick).
For loyal trade unionists, it was a confusing time. Should the carpenters support their brothers and sisters of an established trade like plumbing, or should they stand by the recently organized Steam Fitters? (Plumbers argued steam fitting was an auxiliary trade.)
Cooler heads attempted to prevail. Organizations like the National Trades Building Council (NTBC) was established in 1897 to keep everyone talking and reduce the antagonism. The AFL opposed the NTBC, however, and it eventually shutdown in 1903. Over the last century, labor unionism and activism has been successful in playing a critical role in the evolution of the work culture we enjoy today.
ConTech will undoubtedly play a critical role in shaping the future of our building trades. What lessons can ConTech take from the past? Labor needs to move freely and have constant access to education. Assuming our market leaders have begun to grasp this, we shouldn’t have to worry about a skilled labor shortage for too much longer.
To learn more about the intersection of ConTech and the Traditional Trades, contact Adam directly.
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