To meet the needs of the construction industry by 2025, 439,000 new workers will be needed, according to a model developed by Associated Builders and Contractors (ABC). The model uses data from the US Census Bureau construction survey and US Bureau of Labor Statistics payroll construction employment data, while accounting for job openings, unemployment and planned retirements.
If those numbers can’t be met, “escalating labor costs across the industry will accelerate, exacerbating already high construction costs and reducing the volume of work that is financially feasible,” said Anirban Basu, chief economist of ABC, in a press release. “Average industry-wide hourly earnings rose 4.4% over the past 12 months, significantly outpacing earnings growth across all industries.”
However, Basu has stated, there is a possibility that “this model [is] too conservative, meaning the labor shortage could be more severe than expected in 2025.” He notes that the AIA’s consensus construction forecast, which predicts a less than 3% increase in construction spending this year ,” has underestimated growth by a significant margin in each of the past three years. If inflation dissipates in the coming months, borrowing costs will decline and construction volumes will increase. Faster-than-expected immigration over the past few years has also strengthened the labor supply, and potential changes to immigration policy will likely restrict the availability of workers.”
By 2026, the industry is expected to need 499,000 new workers to meet demand as construction spending is expected to increase due to lower interest rates.
