Last week we told you about how the cost of building a new high school in Rawlins is running millions of dollars more than was expected. Costs are up because construction companies can’t find enough workers in Wyoming. And it isn’t easy to bring them in from out of state.
Jeremy Smith is the Business Manager for Sheridan’s School District One in Ranchester. I met him on a beautiful morning in Northern Wyoming, and he’s excited to show me the new Tongue River Elementary school--or at least the the rolling pasture where the school should be.
The school was supposed to be under construction by now. But last month, State School Construction said they didn’t have the money.
“I think we did everything right in this case,” says Smith. “We didn’t redesign a whole new school. We went and found one that had been built twice already in the state.”
Smith is referring to the school’s design, which is borrowed from a school that was constructed last year in buffalo.
“That school Was built for 211 dollars a square foot. When we opened bids on the same school it was 280.”
In other words, the new Tongue River would cost twenty five percent more than the same school design did last year, just thirty miles away.
It’s a problem of supply and demand: this year there is about as much construction work in Wyoming as there was in 2008. But back then, the state had about 30,000 people working in construction. Now, there are only about 22,000.
“Usually there are people waiting and willing to come to work. I’ve been with the business since ‘99, and it is the worst I’ve seen.”
Ron Kaiser is the Vice President of Mike’s Electric, one of the contractors that bid high on the new Tongue River school. He’s so busy I had to catch up with him at a job site: a Veteran’s Association treatment plant just outside of Sheridan. He says he’s had to raise benefits to attract enough workers.
“What’s really strange is you go into an interview and they are actually interviewing you instead of you interviewing them,” Kaiser says. “You’re telling them what you have to offer to see if they’ll come to work for you.”
Mike Sullivan’s also scouting the VA job. He works for the general contractor Betance Enterprises.
Sullivan says if you are drug free and can pass a background check there’s a fifty hour a week construction job waiting for you. But for now, if you want to get something built, he can only offer this advice.
“Wait! Your turn will come. Every project is suffering right now. Every project is suffering.”
There isn’t really anywhere that Wyoming contractors can draw employees from right now, says Wyoming Construction Coalition President Josh Carnahan. He says that, during the state’s last construction boom in 2008, it wasn’t difficult to convince workers in struggling states like Michigan to relocate here. But a lot of those workers left Wyoming when construction work dried up in 2010.
Carnahan says that now, with the nation’s economy much better, its tough to get those workers to move back.
“The only way we can draw employees right now is to pay better wages pay better benefits. That translates directly into higher bidding costs for projects.”
Carnahan says the long term solution is getting more Wyoming kids into apprenticeships, although that will take time.
But that’s not the only problem.
Public projects in the state like schools are subject to what’s called in-state preference: contractors that are based in Wyoming are favored over out of state contractors even if their bid is up to five percent higher.
“They also have to meet the seventy/thirty rule,” says Jim Chaput, who works for the state’s construction management division. “Which means at least seventy percent of their subcontractors have to be resident subcontractors.”
That means that contractors like Ron Kaiser and Mike Sullivan need to look for employees here in Wyoming to maintain a competitive edge in bidding on public projects. It also means that out-of-state contractors are discouraged from making bids in the state, says Chaput.
“They’re not coming in and bidding work because they’re already five percent behind before they start.”
So why not just get rid of in state preference? Or suspend it until the current construction boom is over? The policy is set by the legislature, so I called Senate Floor Leader Phil Nicholas, who has worked on in-state preference for years.
“It's a pendulum that moves back and forth. Protectionism vs. eliminating any preferences.”
Nicholas says he sympathizes with those that are frustrated with in-state preference right now--public projects are a big portion of the current construction boom. But, he says, making sure Wyoming has a healthy construction industry, in boom times and in bust, is ultimately a higher priority than alleviating the current labor shortage.
“If there are no Wyoming contractors available for the [Tongue River] school you may have to wait a year. But are you better off to wait a year and keep those people employed, or are you better off to say ‘well we are going to go find somebody out of state,’ bring them in, they’ll bring in their temporary labor, then they’ll be gone?”
In Ranchester Jeremy Smith looks over the fields where he hopes his school will be. He says he isn’t mad. Just... frustrated.
“We got a ton of kids in a really small school. And we are kind of stuck right now.”
Smith says the plan now is to go over the school design and try and whittle away any cost they can. They’ll open Tongue River Elementary up to bids again in the fall.