Labor Shortage & Construction Tech Startup Models
Solving construction Labor shortage is one of the most significant global opportunities for startups.
In the US itself, According to Associated Builders and Contractors (ABC), The construction industry will need to attract nearly 650,000 additional workers on top of the normal pace of hiring in 2022 to meet the demand for labor.
What’s driving the labor shortage globally?
The labor shortage has multiple root causes; some are short-term disruptions, and many are structural issues.
Key factors:
1.Covid-19 impact
2. Lack of attractiveness for Blue collar jobs in Millenials and Gen Z due to stress and low wage
3. Immigration disruptions
4. Demographic headwinds due to population decline
5. Skill gap
We see there are four different strategies or models that startups can employ to solve the labor shortage.
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1. Aggregators
2. Marketplace
3. Marketplace with enabled-middlemen and
4. Disruptive products/Automation
Selecting the most suited model for any market for the biggest market size depends on understanding the following fundamental driving forces.
1. What’s driving: Is it a mismatch in Demand & Supply or a disconnect between Demand & Supply?
2. Type of Labor startup wants to focus on (Skilled Vs. Unskilled) — Detrimental of if supply can be commoditized.
3. Labor Market (Union Vs. Non-Union)
4. Source of Demand (GC/Sub/Developers vs. Individual Homeowners)
5. Level of fragmentation of the market
6. Regional or Cross-Country oriented
We hypothesize that all the above four models or strategies complement and compete with each other for market share to solve the labor shortage. The market size for each model or strategy depends on the above-mentioned fundamental driving forces.
