The construction industry will need to recruit approximately 439,000 new workers in 2025 to meet the growing demand for construction services, according to a proprietary model released today by Associated Builders and Contractors (ABC). Looking ahead to 2026, the need will rise further to 499,000 new workers as construction spending is expected to ramp up in response to presumed lower interest rates.

“While the construction workforce has become younger and more plentiful in recent years, the industry still must attract 439,000 new workers in 2025 to balance demand and supply,” said ABC Chief Economist Anirban Basu. “If it fails to do so, industrywide labor cost escalation will accelerate, exacerbating already high construction costs and reducing the volume of work that is financially feasible. Average hourly earnings throughout the industry are up 4.4 percent over the past 12 months, significantly outpacing earnings growth across all industries.”

ABC’s proprietary model, which analyzes the historical relationship between inflation-adjusted construction spending growth and payroll construction employment, estimates that for every additional billion dollars in construction spending, approximately 3,550 new jobs will be needed. The model also incorporates job openings, unemployment rates, and projected retirements and exits from the industry.

“This represents improved labor availability relative to recent years,” said Basu. “The improvement can be traced to two primary factors. First, construction spending is expected to grow at its slowest pace in years throughout 2025, especially in interest rate-sensitive segments like homebuilding. Interest rates will remain elevated in 2025 before likely beginning to dip next year. Second, the industrywide workforce has become significantly younger over the past several quarters, with the median construction worker now younger than 42 for the first time since 2011. As a result, the pace of retirements is expected to slow this year.”

Despite these improvements, Basu cautioned that contractors will continue to face challenges in filling open positions. “This will be especially true in areas where manufacturing and data center megaprojects are underway. More than $1 in every $5 spent on nonresidential construction currently goes toward manufacturing projects, and those projects are absorbing a significant share of the labor force in their respective regions.”

Hiring Efforts Accelerate but Challenges Remain

“The U.S. construction industry’s efforts to hire more workers to replace retirees and meet the demand for new construction projects gained momentum in 2024,” said Michael Bellaman, ABC President and CEO. “That is fantastic news, but we still have a long way to go to shore up the talent pipeline. The data on the number of young people choosing a career in construction suggests that employing practical technology and innovation in educational programs and on jobsites helps maximize the productivity and efficiency of the construction workforce. ABC’s all-of-the-above workforce development strategy is working to draw new entrants into the industry through hundreds of entry points and upskill them through both industry-driven and government-registered apprenticeship programs.”

Basu also noted potential risks to the model's projections. “There are factors that could render this model overly conservative, meaning worker shortages could be more severe than predicted in 2025,” he said. “While the consensus forecast has construction spending increasing by less than 3 percent in 2025, that same forecast has underestimated growth by a significant margin during each of the past three years. If inflation dissipates in coming months, borrowing costs will subside and construction volumes will increase. Faster-than-expected immigration over the past few years has also bolstered labor supply, and potential changes to immigration policy will likely constrain worker availability.”

Exploring Immigration Solutions

To address the worker shortage, Bellaman suggested a merit-based, market-driven visa system could help alleviate the pressure. “ABC’s goal is to work with the Trump administration and Congress to create a visa system that allows people who want to contribute to society and work legally in the construction industry to do so.”

Bellaman also stressed the importance of regulatory reforms to support the construction workforce. “President Trump and the 119th Congress have a significant opportunity to advance policies and regulations that protect free enterprise, reduce regulatory burdens, expand workforce development, and create a fair and level playing field for all construction workers, regardless of their labor affiliation,” said Bellaman. “Legislation like the Tax Cuts and Jobs Act, the Employee Rights Act, the Fair and Open Competition Act, and permitting reform can create the conditions for the construction workforce to rebuild America’s infrastructure. The construction industry thrives when all 8.3 million workers are given the opportunity to build America with fewer obstacles.”

Originally reported by American Recycler.