Is OSB the New Bitcoin?
These images are both very funny and scary as a result of the current state of the industry. On their own, they should be rather disheartening as their messages are ringing very true. Costs are increasing daily for raw materials, manufactured goods, freight, and labor. While little is being done to remedy the sorrowing prices of lumber, there is also a growing concern for the cost of labor. There have been varying factors over the last year that have contributed to the rise in labor costs. Amidst a Pandemic, the labor market has seen its fair share of changes. At the onset, there were layoffs and furloughs in an attempt for companies to fare well in the unforeseen future. However, as we have seen the housing market surge, it has been a wild ride to keep up with the demand. With backlogs full, it is no wonder that the construction industry is hiring at such a large rate. Unfortunately, the labor market has not been able to keep up with such a demand. The labor pool has dwindled as potential candidates see the benefits of unemployment and stimulus packages. Although helpful to many households during this crisis, there is also a negative impact on the nation’s workforce. It has not been a lack of qualified candidates but rather a lack of candidates at all that has the skilled trade positions vacant. As a result, businesses are having to raise starting wages by 20-50% to outpace the stimulus package, and entice candidates to get up and go to work.
This can be seen in other industries, such as the Fast Food industry. Some fast-food franchises have raised their starting wages to $15 per hour. This is good in the short run for these individuals, but in the long run, there is cause for concern. As the cost of labor grows, the cost of goods will follow. The wage of $15 an hour may very well buy less than the $12 an hour rate did before all of the cost increases settle out, leaving us all in a very precarious position. Another example of this is the cost of fuel. Fuel as we all have seen is on the rise and I have heard by those in the fuel industry we may see regular gas cost over $5 per gallon by the end of 2021.
On the bright side, both the nation and the world are seeing fewer COVID cases and loss of life. We are seeing the hospitality industry resurge. The construction industry is growing at a staggering rate and our kids are back at school! At this point, I feel we all have weathered this storm fairly well considering all that has happened, and the losses some have endured. The question now is: are we as an industry able to build at the rates we are being asked to from our residential and commercial clients? If the labor market were to be resolved, I think we could. We at ICG are optimistic that this period in our lives and industry will lead to better businesses and home lives. That we will all learn and hopefully carry forward a new outlook on how we all operate. We are excited that the industry we are a part of is keeping the US economy stable and vibrant. We continually want to thank you all for the support and partnerships we have. We look forward to the rest of this year with you.