NASHVILLE, Tenn. — Tennessee’s construction industry is experiencing some of the strongest growth in the nation, but labor shortages linked to immigration enforcement policies are emerging as a major threat to sustaining that momentum, according to industry leaders and new survey data.
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Construction activity is visible across much of Middle Tennessee, from infrastructure upgrades to large-scale commercial developments. Yet behind the cranes and job sites, contractors say staffing challenges are intensifying as immigration enforcement actions—both real and rumored—discourage workers from showing up or remaining on projects.
A 2026 Construction Industry Outlook survey from the Associated General Contractors of America (AGC) found that 45% of Tennessee construction firms are directly impacted by immigration enforcement issues. Within that group, 18% of contractors reported workers failing to show up or leaving jobs due to actual or rumored enforcement activity, while 32% said subcontractors have lost workers as a result.
Those disruptions come at a time when the labor market is already under strain. According to the survey, 88% of Tennessee construction firms report difficulty hiring hourly craft workers, highlighting a shortage that predates current enforcement concerns but is now being further stressed.
“So it's already stressing an already tight labor supply. The firms have always had difficulty hiring qualified workers. In Tennessee, specifically, is what was reflected in the data is that immigration enforcement is negatively impacting them,” said Marina Wilkins, senior research analyst with the Associated General Contractors of America.
Wilkins warned that uncertainty and fear surrounding enforcement actions can have ripple effects well beyond individual workers.
“Any environment that creates a degree of fear mongering is, you know, not going to be conducive to any growth,” Wilkins said.
Despite these challenges, Tennessee construction companies remain notably more optimistic than their counterparts in many other states. The AGC survey shows 45% of Tennessee firms reporting larger backlogs than last year, while 59% express confidence in their upcoming project pipelines. Additionally, 64% of companies plan to hire more workers over the next year, underscoring expectations that demand will continue.
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Several construction sectors are driving that optimism. Data center development leads the way, with 67% of firms anticipating increased activity, followed by water and sewer projects at 50% growth and hospital construction at 38%. Road, bridge, and factory construction are also seeing expanded workloads, reinforcing Tennessee’s role as a growing hub for infrastructure and industrial investment.
“It's an early indicator as to whether or not there's growth. You're seeing an increase in construction spending or construction employment. You're building facilities to facilitate the growth of a region,” Wilkins said.
Nationally, construction faces headwinds in five major sectors, but Tennessee has seen slowdowns in only three: college buildings, office space, and retail development. Industry leaders say the overall volume of work still signals strong economic fundamentals, including population growth, business relocations, and infrastructure investment.
However, construction leaders caution that proposed plans by Republican lawmakers to introduce even stricter immigration enforcement measures could worsen workforce shortages at a time when demand for skilled labor continues to rise.
With nearly two-thirds of Tennessee construction firms planning to expand their workforce, industry advocates say labor availability—not demand—could determine how fast projects move forward in 2026 and beyond.
While construction-related disruptions may frustrate residents navigating work zones and development activity, industry experts say the surge itself reflects a strong state economy—one that now faces a pivotal challenge in maintaining its labor pipeline.
Originally reported by Eric Pointer in News Channel 5.
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