Why Data Centers Are Creating a Blue-Collar Gold Rush

0:03 -I may be a little biased here, but if you're an individual that wants to build great things, there's no better time to be in the construction industry. -Everyone wants a construction worker. Who needs a construction worker right now? -The income that they're offering is almost double. Just the demand itself for skilled tradesmen and electricians in particular has definitely risen. Westin: The explosion of AI investment has led to a boom in the need for data centers, and that means the country needs more construction workers and it needs them now.

0:31 -The scale of the projects and the demand coming with projects at that mega scale continues to increase. Westin: Mark Whitson began his career as a carpenter 25 years ago. Today he's president at DPR Construction, one of the largest data center builders in the United States. -If you read in certain places, they'll tell you, you know, a hundred gigawatts is what the collective demand between now and 2030 would be. I think that's woefully understated. From what we're seeing from our partners and owners is that, you know, that could be what they're looking for in 2026 and 2027.

1:08 I think it'll be a multiple of that. The construction duration, you know, also varies from 11 to 12 to 24, 36 months, depending on the size, but as you can imagine, with the demand that's out there right now for these AI factories, everyone wants them faster and they want them less costly, and so it's a challenge and an opportunity for the industry right now. Westin: The opportunity for a company like DPR is growing to meet that ever increasing demand.

1:34 The challenge is making sure you have the people you need to keep up. Nela Richardson is a Bloomberg contributor and analyses employment data at ADP. Nela, is there a surge in construction-related employment? -There has been. Over the last 5 years, we've seen at ADP those numbers go up by 20%. That's two and a half times more than all the employees, all industries, but it's slowed recently. And that is due to demographics.

2:04 It's not just employer's demand riding construction hiring, it's the natural pacing of father time on that industry. A lot of construction workers are retiring. Westin: Labor shortages are nothing new to the construction industry, but Whitson says the expertise needed to build data centers means that this time might be different. -One of the things that make the data centers more unique is really around the pace and scale, especially today, where some of the component within the data center may not be as unique, but when you amplify that by the scale of these projects and the reduced space of these projects, it becomes different.

2:42 And it becomes the need for an additional skillset that's more specialized than some of the other-- other types of commercial construction. Westin: Data center construction requires more specialized skilled workers. The kind that typically comes with experience over years, which means there's a problem when retirement time comes around. -Well, let's take HVAC because that's where we're seeing a huge demographic hit. And it's not because young people are coming in to the industry and becoming HVAC engineers.

3:13 I wish that was the case. Older workers are leading and so is their expertise and their sophistication. So when you go back to a data center, where one or two degrees make a big difference in how much you're admitting into the atmosphere, into the environment, that level of sophistication and expertise is retiring at this moment. Westin: As in any other market, when the supply for skilled workers falls behind demand, the result shows up in prices. -It does, and wage growth has been higher.

3:44 Not only wage growth, but bonuses. We clocked bonuses for construction worker at ADP, and they're twice the amount of regular employees outside of the industry. You know, bonuses were a big deal during the great resignation, trying to get people in, but they've kind of gone by the wayside for most industries, but not construction. There's still a valuable tool in getting people in drawing workers in and drawing them away from their employer. Westin: All this creates an attractive potential opportunity for young people eager to meet the moment.

4:21 Westin: Inside an electrician's class in Germanna Community College in Virginia... -The breaker is right here. Westin:...students from all walks of life are studying to be job ready. -So I worked up north, and there's a number of job vacancies that they're seeking not just installers, not just HVAC, but electricians in particular because it impacts safety, it impacts energy, you name it. So there's just a ton of jobs around that field. So I think just long term, I'm trying to hedge my bets.

4:51 -I see job postings all the time. I am a member of a union and we get all kinds of postings. Just in my area, in Manassas, there is, I think, 3 different data centers that have sprung up just in the past couple of years that I've been there. So they're constantly hiring. -Then make sure everybody read those. -Tina Lance is the dean of the workforce development at Germanna. -Our role in the community is several, several reasons.

5:14 One of the things that we do is work with our employers to make sure that we are meeting the workforce pipeline needs. It's been really easy for students to be hired with skilled trades in the region. Absolutely. The demand far exceeds the number of labor that we have available in our market. Westin: There are currently 7 data centers actively being built near Germanna with many more in the works. -The credentials that are most in demand for data centers are electrical, HVAC, plumbing as well as data center operators.

5:46 So those are the ones that right now we are spending quite a bit of time making sure we're doing our very best to increase the pipeline. Enrollment has absolutely been increasing over the last few years for skilled trades, you have many students that are now looking at skilled trades or credentials as a way to get a skill, get a job right out of high school. There are different things that draw people to further their education in a particular area.

6:15 Many times it's passion, what they're interested in. Some times what you will see is people do it because of the money. Welding right now is in high demand, and so many of those students will graduate with their certification, immediately get hired, and we've had several of our students that within the first year or two they're in a 6-figure annual salary. So that's pretty significant when you think about somebody 20, 21 years old, with really no debt, from a student educational standpoint, with a 6-figure salary.

6:54 Westin: Beyond bringing more workers to the construction site by offering higher pay and more training, companies are also bringing work to the workers. -Now, is this all good now? -Yeah, all good. Westin: Michael Davis is a super intendent at DPA's prefabrication assembly facility. - That looks pretty good. Westin: Otherwise known as the pre-fab lab in Raleigh, North Carolina. -Labor shortages is something we are seeing in the industry. One way we're working to fix that issue is we're prefabricating a lot of products offsite and then onsite, we're using anyone who is a new hire, to skilled labor to be able to assemble the products we're shipping out and we're able to keep up and if not we reschedule.

7:37 So we're doing a very complex wall soffits, radiuses or complex geometry, and turning those into various kits or even panels in shipping in the jobs where we can use apprentices straight out of our apprenticeship or people off the street, you know, starting construction for the first time all the way to skilled labor to be able to assemble within a day or two of training. And we're doing finished products with that. Westin: Technology is the rage across all American business right now, including with data centers.

8:06 To what extent can you rely upon technology to replace some of the workers that you lack? -That's a great question, David, and I don't know that I'd frame it in the way of replacing workers that we have. It's actually allowing the workforce to do more, and to maybe do things that are more productive, more effective, more impactful, and so the technology is allowing us to help mitigate the reduction or our lack of ability in our workforce.

8:30 Westin: I think you started as a carpenter. -I did. Westin: How has the image and role of a construction worker changed over your career? -I would say that it's--it's starting to transform. I think that the reputation in the construction industry has not always been the greatest, and I think it's an unfair stigma that is put on the industry. And I think we got to continue to help change the narrative really to reality, which is much better than it was 25 years ago, when I started.

9:01 But we also got to do more to improve the construction industry so it is more attractive to more people. -I remember my industrial art class was my favorite class for a very long time. And if someone had said to me, "Hey, Nela, you don't have to be an economist, you can be a carpenter." We might be having a very different conversation right now, but no one said that to me. I didn't understand that to be field especially for women but I think that is changing, the scale demands for the economy makes it so, but it's really about getting young people excited about these blue-collar jobs as well as other places in the economy.

9:41 It's a really exciting field to produce again and to make things, make things that feed the next technological boom in the United States. Westin: AI promises us a wealth of new tricks, but to get there we need the old dog of traditional construction and the skilled labor it requires put in the question the people like the younger Nelas and Marks of this world whether to become an economist or a carpenter.