New York State’s construction industry still hasn’t fully bounced back from the pandemic’s impact — and New York City is largely to blame, according to a new report.

A study released Thursday by state Comptroller Tom DiNapoli’s office shows the Empire State has 16,300 fewer construction jobs than it did before the COVID-19 shutdowns — a 4% drop that puts New York’s recovery near the bottom nationally.

“Spending on residential construction has rebounded since the pandemic, but nonresidential construction spending, especially in New York City, remains below 2019 levels and could continue to lag in the near future,” DiNapoli said.

In the city alone, construction employment was still down 11.3% last year — 18,200 fewer jobs than in 2019.

“Non residential construction has improved but continues to be impacted by remote work policies,” the report said.

A big factor is the continuing slump in demand for new office buildings as hybrid work reshapes downtowns. Nonresidential construction dropped 43% during 2020 and hasn’t fully recovered, according to the New York Building Congress.

Meanwhile, the number of construction firms in the state fell by 3% last year — the first decline since 2011.

DiNapoli’s report also points to workforce challenges linked to immigration policies. In 2023, immigrants held 61% of construction jobs in New York City — far above the state and national average. The report warns that stricter immigration enforcement under President Trump could further squeeze the city’s labor supply for building projects.

Key takeaway

Remote work’s ripple effect

‍The shift to hybrid work means fewer new offices, which hits nonresidential builders the hardest.

Sector split

‍While housing construction rebounded strongly, commercial projects are lagging — and big urban centers like NYC feel it most.

Workforce at risk

‍With a large share of immigrant labor in the city’s building trades, changes in federal immigration rules could deepen the worker shortage and delay major projects.

Next steps‍

Industry groups are urging lawmakers to invest in job training, affordable housing, and streamlined approvals to help the sector rebound.

Ongoing Drag on Office Construction

The shift to hybrid and remote work has permanently changed New York’s office construction outlook. Companies that once filled skyscrapers are downsizing or reconfiguring space, leaving developers hesitant to break ground on major commercial towers. Even high-profile projects face delays or redesigns as tenants rethink their needs.

The New York Building Congress has warned that without robust nonresidential construction, the city’s broader economic recovery could stall. Office towers and commercial buildings create ripple effects across local supply chains, from steel fabricators to electricians and contractors.

Residential Construction Is Not Enough

While demand for housing remains strong — especially for multifamily and affordable units — it hasn’t been enough to fully offset the drop in office and retail building. Many contractors that specialize in large-scale commercial work can’t easily pivot to smaller residential jobs, leading to mismatches in labor demand and skills.

Immigration: A Critical Labor Supply

New York’s construction workforce relies heavily on immigrant labor. DiNapoli’s report highlights that 61% of the city’s construction jobs were held by immigrants in 2023 — compared to about 30% nationwide. With tighter immigration enforcement policies, contractors fear they could face labor shortages that drive up costs and extend project timelines.

A First Drop in Construction Firms Since 2011

The 3% decline in the number of active construction companies in 2024 marks the first drop since the post-recession recovery over a decade ago. Many smaller firms closed or consolidated due to pandemic disruptions, supply chain challenges, or inability to secure financing for new work.

Calls for Action

Industry leaders and labor advocates say New York must take proactive steps to keep the construction sector healthy:

Fast-track permitting

‍Streamlining approvals for housing, public infrastructure, and energy projects could help fill the gap left by slower office builds.

Public investment

‍Advocates urge state and city leaders to prioritize large-scale public works — schools, transit, green energy — to sustain union jobs.

Workforce development

Expanding apprenticeships, trade training, and pathways for immigrant workers can help secure the next generation of skilled labor.

“The construction industry is a pillar of New York’s economy,” DiNapoli said when releasing the report. “Ensuring its recovery is vital not just for workers and businesses in the sector, but for the state’s overall economic health.”

Looking Ahead

Experts believe that while the office market may never fully return to pre-pandemic levels, new opportunities in life sciences, healthcare, data centers, and green energy infrastructure could help fill the gap — but only with supportive policies.

Contractors and unions alike are calling for clear state-level strategies to align the workforce with emerging opportunities. Without action, New York risks losing its position as a national leader in large-scale construction projects.

Originally reported by Carl Campanile in Newyork Post.