The construction industry will need to attract approximately 439,000 new workers in 2025 to meet the projected demand for construction services, according to a proprietary model developed by Associated Builders and Contractors (ABC). In 2026, this number is expected to rise to 499,000 as spending increases due to anticipated lower interest rates.
“Although the construction workforce has become younger and more abundant in recent years, the industry still needs to bring in 439,000 new workers in 2025 to keep up with demand,” said ABC Chief Economist Anirban Basu. “Failure to do so could lead to rising labor costs across the industry, further escalating already high construction costs and limiting the amount of work that can be completed affordably. Over the past year, average hourly earnings in the sector have increased by 4.4%, outpacing overall wage growth across all industries.”
ABC’s model uses historical data linking inflation-adjusted construction spending and payroll employment data to predict future workforce needs. This model calculates that every additional billion dollars in construction spending requires around 3,550 new workers. It also factors in current job openings, unemployment rates, and projected retirements and industry exits.
“This indicates a slight improvement in labor availability compared to recent years,” Basu noted. “Two key factors are contributing to this. First, construction spending is projected to grow at its slowest rate in years, particularly in sectors like homebuilding that are sensitive to interest rates. With rates expected to remain high in 2025 but likely decrease the following year, this could limit demand. Second, the workforce is younger than it’s been in recent years, with the median age now under 42 for the first time since 2011, which will slow the pace of retirements.”
Despite these improvements, Basu warned that contractors will still face challenges in filling positions, especially in areas with major manufacturing and data center projects. “Manufacturing alone accounts for over 20% of nonresidential construction spending, and those projects are absorbing a large portion of the labor force in their regions,” he said.
Michael Bellaman, ABC’s president and CEO, emphasized that the industry’s efforts to recruit workers gained momentum in 2024, but there is still work to be done to strengthen the talent pipeline. “The growing interest in construction careers among young people shows that utilizing practical technology and innovation in educational programs and job sites is crucial to boosting workforce productivity and efficiency,” he said. “ABC’s comprehensive workforce development strategy is focused on attracting new workers and upskilling them through apprenticeship programs, both industry-driven and government-registered.”
Basu also noted that the model could be conservative, predicting more severe worker shortages than anticipated for 2025. “While construction spending is expected to increase by less than 3% in 2025, the forecasts have consistently underestimated growth over the past three years,” he said. “If inflation subsides and borrowing costs decrease, construction volumes could rise more than expected. Additionally, immigration has bolstered the labor supply in recent years, and any changes to immigration policy could further impact worker availability.”
Bellaman added that a market-based, merit-based visa system could help alleviate the shortage. “ABC advocates for a visa system that enables individuals who want to work in construction legally to do so,” he said. “With the right policies, the industry can address workforce needs and continue rebuilding America’s infrastructure. The construction sector thrives when all 8.3 million workers have the chance to contribute to the country’s growth without unnecessary barriers.”
Bellaman also emphasized the potential impact of legislative action: “The Trump administration and Congress have a significant opportunity to pass policies that promote free enterprise, reduce regulatory burdens, and expand workforce development, benefiting all construction workers, regardless of union affiliation. Legislation like the Tax Cuts and Jobs Act, the Employee Rights Act, the Fair and Open Competition Act, and permitting reform could help create the conditions needed for the industry to grow and support America’s infrastructure development.”
Reference
Associated Builders and Contractors. (2025) Construction Industry Must Attract 439,000 Workers in 2025. January 24.