Demographic shifts are impacting the construction industry in a myriad of ways.
RISK REPORT: CONSTRUCTION
Boom Risk and Opportunity
An ongoing shortage
labor threatens the
on multiple fronts.
By Gregory DL Morris
In September, the City Council of New York voted unanimously to approve a bill requiring workers on most construction projects to participate in at least 40 hours of safety training. A building boom in the nation’s largest city was accompanied by a rise in the number of fatalities: eight so far this year; 12 in each of the two previous
years, but only eight total in 2014.
Across the country there are calls for large infrastructure projects. But builders,
along with their brokers and underwriters, are worried about several troubling
trends. Fewer young people are entering the building trades as the industry grays.
Diversity also is a stubborn challenge. The new law in New York is one large step
— among many efforts across the country — to address the issues.
“We are glad these questions are being asked,” said Gary S. Kaplan, president
of North America Construction at XL Catlin. “We have been asking these
questions for years, and I am just starting to feel a little better about the answers,
at least what we hear from the larger contractors. We are seeing fewer claims that
are related to traditional safety issues.”
Kaplan has written extensively on demographics, recruiting, safety and training,
including an essay on his firm’s website. Older workers, despite their expertise and
safety training, face an increased likelihood of injury, he said.
“Ask any actuary,” Kaplan wrote. “Older workers are more prone to injury than
younger ones. It’s just a biological fact. They’re especially susceptible to soft-tissue
injury. Worse, the older the worker, the longer soft-tissue injuries can take to
The other risk is less obvious, but it’s every bit as debilitating for the industry,
said Kaplan. It’s part of a massive shift in the demographics of the construction
industry and the U.S. economy: retirement.
“While an injury might never happen — retirement will.”
BENEFITS OF DIVERSITY
According to the Social Security Administration and Pew Research, Baby
Boomers are reaching retirement age at the rate of nearly 10,000 per day.
Construction occupations make up roughly 10 percent of the total labor force in
the U.S. If representation is proportional, that means about 1,000 construction
workers reach retirement age every day.
Diversity is part of the answer, said William B. Noonan, executive vice
president and industry leader for North American construction at brokerage
Willis Towers Watson.
“Diversity is tied to the talent shortage. The more diverse your recruiting, the
better you are able to recruit from across the whole talent pool,” said Noonan.
Workforce management and talent optimization was one of the megatrend
challenges identified in the white paper “Deconstructing Risk,” the Willis Towers
Watson 2017 Construction Risk Index.
It also matters in winning contracts. “Before you can put people to work, you
have to win work,” Noonan added.
“Proposals will only get you an interview
with an owner to present your ideas and
answer questions. You have to show up
for those looking as diverse as the clients
The same is true in insurance. “For
most lines of coverage, underwriters
are going to be looking at your past
performance,” said Noonan.
“They are going to look at your
loss metrics, but you are going to
have to tell your story in person. I was
“Equal opportunity is not
sufficient. You have to push.
It’s more than just wanting
it. The better companies are
stepping forward, but there is
a long way to go.”
— Gary S. Kaplan, president, North America
Construction, XL Catlin
• The construction industry is not
attracting enough labor to meet
• Inexperienced workers are more
prone to injury, but so are older
• Labor shortages can compromise
quality and increase liability.