Construction workforce shortage tops 500,000

The construction industry's labor crunch shows no signs of stopping anytime soon. 

The industry will need to attract an estimated 501,000 additional workers on top of the normal pace of hiring in 2024 to meet the demand for labor, according to a proprietary model developed by Associated Builders and Contractors.

Looking ahead to 2025, the industry will need to bring in nearly 454,000 new workers on top of normal hiring to meet construction demand and that’s presuming that construction spending growth slows significantly next year.

“ABC estimates that the U.S. construction industry needs to attract about a half million new workers in 2024 to balance supply and demand,” said Michael Bellaman, ABC president and CEO. “Not addressing the shortage through an all-of-the-above approach to workforce development will slow improvements to our shared built environment, worker productivity, living standards and the places where we heal, learn, play, work and gather.”

The U.S. construction industry unemployment rate averaged 4.6% for the second straight year in 2023, matching the second-lowest level on record, while job openings remained historically elevated at an average of 377,000 per month through the first 11 months of 2023. Due to labor shortages, contractors laid off workers at a slower rate than in any year between the start of the data series in 2000 and 2020.

“Broadly, there are two factors shaping the interaction between construction worker supply and demand,” said ABC chief economist Anirban Basu. “There are structural factors, including outsized retirement levels, mega projects in several private and public construction segments and cultural factors that encourage too few young people to enter the skilled construction trades. There are also structural factors, including those related to interest rates, consumer sentiment and general economic performance."

More than one-in-five construction workers are 55 or older, meaning that retirement will continue to contract the industry’s workforce. 

"These are the most experienced workers, and their departures are especially concerning," Basu noted.

ABC says its model uses the historical relationship between inflation-adjusted construction spending growth, sourced from the U.S. Census Bureau’s Value of Construction Put in Place Survey, and payroll construction employment, sourced from the U.S. Bureau of Labor Statistics, to convert anticipated increases in construction outlays into demand for labor at a rate of approximately 3,550 jobs per billion dollars of additional spending.