There is no doubt that the U.S. economy is driven by supply and demand. When there is a shortage in something, prices will ultimately increase and when the demand for something is no longer there, prices will drop. To put it simply, there are four basic principals of supply and demand:
1. When demand increases and supply remains the same, this leads to higher price and higher quantity;
2. When demand decreases and supply remains the same, this leads to lower price and lower quantity;
3. When supply increases and demand remains the same, this leads to lower price and higher quantity; and
4. When supply decreases and demand remains the same, this leads to higher price and lower quantity.
This last principal can be better understood by taking a look at the current shortage in tradespersons. In fact, the current demand (which remains the same) for electricians, plumbers, landscapers, handymen, and the like is so much greater than the supply (which has decreased,) that prices are skyrocketing.
With the retirement of many Baby Boomers, who occupy much of U.S. skilled trade jobs, there is a growing need for vocational careers. In fact, according to Adecco, a global staffing and HR solutions agency, 62 percent of firms are struggling to fill important skilled trade positions, the majority of which are in construction and extraction occupations (5.08 million). According to the Associated General Contractors of America (AGC), 70 percent of construction companies are struggling to find qualified workers.
Impact on Trade Industries
The results of a 2017 survey, conducted by the ACG evidenced the extreme power of supply-and-demand. The ACG polled over 1,600 respondents, finding that half of construction firms report they have increased base pay rates for workers in an effort to recruit and retain more people. Additionally, 43 percent of firms report that they have increased pay to attract salaried employees. Despite the educational value of higher education, the financial return from a bachelor’s degree is softening – even as the average student debt increases.
When compared with the vast majority of U.S. college graduates, who are drowning in college debt, tradespersons today are commonly getting paid better than those with degrees. Unfortunately, this isn’t too surprising considering that the situation is compounded by the current state of national student debt, which has now reached $1.5 trillion.
In many ways, the demand for tradespersons is greatly impacting those who are in need of them. Individuals are waiting longer periods of time – even months – for simple home fixes since contractors are so busy. Due to the current shortage in trade jobs, firms are doing their best to adjust their operations in the hopes of achieving more with fewer workers. The ACG reports that 47 percent of firms say that they are increasing overtime hours, while 46 percent are currently doing more in-house training and 41 percent are increasing the number of subcontractors that they utilize.
Ultimately, in any market with transactions between sellers and buyers, the prices are determined by supply and demand. Though supply and demand can at times have a
negative impact on your business, if you are able to manipulate the law of supply and demand, you can greatly increase your revenue and subsequently, your profit.
Calculating Destiny, LLC Can Help
At Calculating Destiny, LLC, we are a team of knowledgeable and experienced professionals that is dedicated to helping improve your business process – no matter what you are selling.
We work both on location and remotely, integrating into your existing team. Our ability to accurately and compliantly run your business allows you and your team to have a clear understanding of the challenges that may present themselves, how to overcome them, and how to set and achieve tangible goals. Through internal audits, process manuals, operations, and training & education, our number one goal is to help your company grow – even if that means outgrowing our services.
To learn more about how we can help to put your business back on track for financial success, schedule a free consultation by visiting us online or calling us at 215-674-3430 today!