The U.S. construction industry is expected to require significantly fewer new workers in 2026 compared with recent years, though labor shortages remain a pressing concern, according to new data from Associated Builders and Contractors.
ABC estimates the industry will need to attract 349,000 net new workers in 2026 to meet demand. While sizable, the figure represents a notable decline from earlier projections, including 439,000 workers forecast for 2025 and more than 500,000 annually in the two years prior. Looking ahead, ABC projects workforce needs will rise again to 456,000 workers in 2027 as construction spending growth resumes.
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Despite the lower estimate, failing to meet hiring needs could still strain contractors across the country. Labor shortfalls, particularly in specific regions and skilled trades, may push costs higher and slow project delivery.
Failing to bring in the needed workers, “will worsen labor shortages, especially in certain occupations and regions, placing further upward pressure on labor costs,” said Anirban Basu, chief economist for ABC, in the release.
Basu attributed the narrowing labor gap in part to modest construction spending growth forecasts for both 2026 and 2027. However, he cautioned that those projections could underestimate actual demand if economic or political conditions shift.
That would likely arise if “project financing costs decline unexpectedly or if lingering policy uncertainty resolves itself quickly and favorably,” Basu said. He also pointed to recent hiring strength in specific sectors, noting that nonresidential specialty trade contractors have added 95,000 jobs since August 2024, “demonstrating that certain sectors of nonresidential construction hiring are going strong.”
At the same time, contractors continue to face mounting demographic challenges. A large share of experienced workers are nearing retirement age, limiting the industry’s ability to replace skilled labor quickly. Political and economic uncertainty further complicates workforce planning, according to industry leaders.
But contractors may find themselves strapped to hire staff due to experienced workers nearing the end of their careers, as well as ongoing political and economic uncertainty, said Mike Bellaman, ABC president and CEO, in the release.
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“Given current assumptions regarding prospective industry growth, a majority of new worker demand in 2026 will be attributable to retirement rather than increased demand for construction services, despite the ongoing boom in artificial intelligence infrastructure buildout,” Basu said.
The aging workforce has been a long-standing issue for construction, with the median worker older than the broader U.S. labor force. Still, industry groups see some optimism in younger generations. Gen Z workers, those born between 1997 and 2012, are showing greater interest in construction careers, according to data from the National Association of Home Builders.
Immigration policy also remains a key variable shaping labor availability. Basu described it as a “potential wildcard for the industry’s labor force dynamics.” While the scale of undocumented worker departures remains unclear, he said data shows “the flow of undocumented workers into the country fell precipitously in 2025 while voluntary deportations accelerated.”
Even with reduced overall demand estimates, industry leaders say the challenge of finding skilled workers has not eased.
“The construction industry does not have to fall off the workforce shortage cliff,” Bellaman said. “To avoid this outcome and shore up the talent pipeline, now is the time for action—not complacency—to reaffirm that the construction industry offers careers of choice in today’s complex job market.”
Originally reported by Zachary Phillips, Editor in Construction Dive.
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