A construction labor shortage in British Columbia is increasing workers’ wages, but it may also slow contractors’ ability to start new projects. Regardless, the province’s construction sector is still robust, as it has been for several years, according to the BC Construction Association (BCCA).

Activity is high but slower

The Spring 2024 BCCA Construction Industry Stat Pack and BCCA’s annual BC Construction Industry Survey Report (published in April) say demand for construction projects is still high in British Columbia, with $160 billion in major projects underway. That’s a hike of $3 billion in work over the past six months and a 39% increase in activity over the past five years.

Still, it’s a lower level of activity than a year ago. In the Spring of 2023, B.C. had $221 billion in proposed construction projects—a 30% decrease from the $160 billion in current construction activity.

The shortage of skilled construction workers may be partly responsible for that gap, but other factors, including late payments for contractors and even delayed return of project liens, also seem to be squeezing growth.

Wages up and increasing

Wages are increasing for B.C. construction workers due to a labor shortage, but not as much as they should be, given mandated minimum wage pay rates. Construction wages continue to trend up as they have for years and may continue in that direction for a while.

About three-quarters (77%) of employers reported increasing wages in the past year. This ongoing trend has been a boon for workers, with the average annual wage in the province’s construction sector jumping 21% over the past five years to $74,853. Even so, the average entry-level wage for construction workers is still only $22.11/hour. However, the average wage of tradespeople with a decade or more of experience is $42.71/hour, according to the survey.

While that wage might seem rosy to some in various parts of the continental U.S. and Canada, it’s not a great wage, especially in B.C. The province’s minimum wage, while seemingly high compared to minimum wages in many U.S. states, is currently $17.40 per hour. That means the physically demanding and often emotionally straining work of construction is being remunerated at just 25% above B.C.’s minimum wage.

Even so, it’s a movement in the right direction for workers struggling to stay afloat due to low wages.

In recent years, Canada has been instituting increases in its minimum wage. So, it’s possible that increases in starting hourly rates for construction workers are moving up in relation to wages generally—i.e., wages are adjusting to a new low threshold mandated by law and might continue to adjust as the construction labor market tightens due to increasing wages and competition for workers in other sectors.

According to some sources, some construction workers in the U.S. make as little as $24,000 annually.

Prompt payment laws needed

While more than nine of ten B.C. construction employers are small businesses with less than 20 employees, industry players are messing with their money and likely impeding growth in construction.

Most contractors surveyed reported being paid late for completed work, and three-quarters said they hadn’t gotten their 10% lien holdbacks promptly. Disturbingly, 62% of contractors reported not being paid on at least one occasion for work completed in the past year.

These payment problems are resulting in contract disputes. Overall, more than a third of construction companies—17% of small, 36% of medium-sized, and 42% of large companies—said they’d been in a contract dispute in the past year.

B.C.’s small and medium-sized construction companies are worried about permitting and inspection timelines and the lack of prompt payment legislation.

The provincial government continues to fail to deliver on prompt payment legislation, BCCA said in a press release. “As BC’s contractors wait months for payment, they experience significant financial risk and take on the increased cost of debt, which can put them in danger of bankruptcy. They are put in the position of “financing” construction projects, including the housing BC desperately needs.”

“We have asked the Eby government time and time again to respect the hard-working people and small business owners of BC’s construction industry by ending payment uncertainty through Prompt Payment Legislation,” states Chris Atchison, BCCA President.

The construction industry still projects a deficit of 6,600 skilled workers by 2033, but that shortage has improved over the past five years. A decade ago, a projected shortfall of 26,100 workers was estimated for 2023.

Despite 9% growth in the number of B.C. construction companies in the past five years (28,014), the number of tradespeople in the industry has dropped by 7% (167,300). The average company size shrunk by 15% over the previous five years to an average of 5.97 skilled trade workers, the BCCA report states.