The U.S. construction industry will need to recruit approximately 439,000 net new workers in 2025 to meet rising demand, according to a proprietary model released by Associated Builders and Contractors (ABC). This figure rises to 499,000 in 2026, as economic factors like reduced interest rates are expected to spur additional spending on construction projects.
“While the workforce has become younger and more robust recently, the industry must still attract hundreds of thousands of workers to keep pace with demand,” said Anirban Basu, ABC Chief Economist. “Failure to do so will accelerate labor cost escalation, further driving up construction costs and limiting the scope of feasible projects. Over the past year, average hourly earnings in construction have risen by 4.4%, significantly outpacing overall wage growth across all industries.”
Behind the Numbers: How Demand Is Calculated
ABC’s demand model relies on historical data, including inflation-adjusted construction spending growth from the U.S. Census Bureau’s Construction Put in Place Survey and payroll employment data from the U.S. Bureau of Labor Statistics. It estimates that every billion dollars of additional construction spending translates into approximately 3,550 new jobs. The model also factors in current job openings, unemployment rates, and anticipated retirements within the industry.
“This outlook reflects improved labor availability compared to recent years,” Basu explained. “Two key factors are driving this improvement: slower growth in construction spending, particularly in sectors sensitive to high interest rates, and a younger construction workforce. For the first time since 2011, the median age of construction workers has dropped below 42, which is expected to slow retirement rates.”
Regional and Sectoral Challenges
Despite these improvements, contractors will still face challenges filling positions, especially in regions hosting large-scale manufacturing and data center projects. Currently, more than 20% of nonresidential construction spending is directed toward manufacturing, absorbing significant labor resources in those areas.
Workforce Development Efforts
Michael Bellaman, ABC President and CEO, highlighted the industry’s progress in attracting new talent. “The industry has made strides in addressing the labor shortage, but we still have a long way to go,” he said. “Leveraging practical technology and innovative educational programs on jobsites has proven effective in enhancing workforce productivity and efficiency.”
ABC’s workforce development initiatives include industry-driven and government-registered apprenticeship programs aimed at upskilling new entrants.
Potential Challenges and Policy Solutions
Basu noted that the labor shortfall could be even more severe than projected if construction spending exceeds current forecasts. “While consensus estimates suggest spending will grow by less than 3% in 2025, previous forecasts have consistently underestimated growth. Factors like a quicker-than-expected decline in inflation and lower borrowing costs could drive higher demand.”
Additionally, immigration policy will play a critical role. “Faster immigration in recent years has bolstered the labor supply, but policy changes could constrain worker availability,” Basu warned.
ABC is advocating for a merit-based, market-driven visa system to address workforce shortages. “We aim to work with policymakers to create a system that allows skilled workers to contribute legally to the construction industry,” Bellaman said.
He also called on policymakers to advance legislation like the Tax Cuts and Jobs Act and the Fair and Open Competition Act, emphasizing that reducing regulatory barriers and fostering workforce development are key to rebuilding America’s infrastructure.
“With the right policies in place, the construction industry’s 8.3 million workers can continue to thrive and build the future of America,” Bellaman concluded.
Visit www.abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.
Celebrating its 75th anniversary in 2025, Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 23,000 members. Founded on the merit shop philosophy, ABC and its 67 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit www.abc.org for more information.
