System Dynamics Modeling for Investigating the Retention of Skilled Labor in the Construction Market

Limited skilled labor has been one of the greatest challenges facing the construction industry, especially after COVID. In 2019, around 80% of contractors in the US reported problems in hiring enough skilled workers. Labor retention has been one of the major contributors to skilled labor shortages in construction. The goal of this paper is to study the impact of key construction industry characteristics and economic conditions on skilled labor shortages. This goal is achieved by simulating the flow of skilled workers throughout the construction industry. To this end, a system dynamics (SD) model was developed to represent skilled labor and analyze factors that impact their retention in the industry. After various validity and behavioral tests, the results of the SD simulation were shown to be consistent with the actual collected dataset. This proves the model's ability to portray the current status of the construction labor market, and thus test various scenarios including economic policies and labor retention regulations on the construction labor market level. This assists industry practitioners and government agencies gain insights into the reasons behind the current shortage of skilled labor in the construction industry and the economic conditions that impact the labor market dynamics in the industry.