US shipbuilders offer equity, big pay hikes to fix labor crunch
A critical shortage of maritime workers is forcing US defense contractors and startups to deploy Silicon Valley-style equity and historic wage hikes to rebuild the naval industrial base.
The United States needs up to 250,000 new maritime workers over the next decade, a deficit that is now dictating compensation strategies across the defense sector. Companies and government agencies are pouring money into wage increases and benefits to rebuild an industrial base that largely shifted to Asia decades ago.
The financial intervention is a direct response to unsustainable attrition. Turnover at shipyards historically sits between 20% and 22%, spiking above 30% for high-demand skilled trades. That compares poorly to the national voluntary turnover rate of 13.0%.
“There is no way to improve the condition of the shipbuilding industrial base with attrition rates that high,” said Eric Labs, the Congressional Budget Office’s senior analyst for naval forces and weapons.
Labor costs are rising as a result. Huntington Ingalls Industries, the largest US military shipbuilder, recently secured a deal giving unionized workers an 18% minimum base-wage increase, with total pay projected to jump 35% to 47% over five years. The US Navy also committed $50 million in 2024 for hiring bonuses, housing, and transportation assistance.
Private capital is adjusting to the new labor reality. JPMorgan Chase announced a $24 million investment last week to support a submarine facility at the Philadelphia Navy Yard. Meanwhile, defense startup Saronic is building a $3.2 billion shipyard in Texas that will support roughly 10,000 jobs.
To staff its Port Alpha facility, the $9.25 billion company plans to offer production workers the same benefits packages as software engineers, including equity compensation. The strategy mirrors tactics used by SpaceX, where equity grants have turned factory workers into millionaires.
JPMorgan CEO Jamie Dimon recently pointed to shipbuilding as a modern path to six-figure salaries. However, former Navy Secretary John Phelan noted that workers can earn similar wages at Amazon or Buc-ee’s gas stations without enduring extreme heat, cold, and rain. “I think this is really an issue of wages, to be honest, when I look at it across states,” Phelan said.
The hiring push extends beyond the yard to logistics, marine engineering, and vessel operations. Yet, the fundamental bottleneck remains awareness. “As a country or as a region, if we really start to invest in shipbuilding,” said Pat O’Donnell, CEO of nonprofit Ridgeline, “there will be so many more jobs that are going to need a pipeline that currently we’re not actually building at scale.”
