While construction company executive compensation remains historically above average, companies are rapidly reducing annual salary increases. Recent increases in executive pay peaked in 2023, when average annual increases reached 5.6 percent, according to data from industry compensation research firm PAS. It was the highest increase recorded in more than two decades.
After dropping to 5.2% in 2024, PAS data shows the trend accelerated last year with executive pay rises falling to 4.5%. This year, companies expect to reduce annual raises again, down to 4%, according to respondents to the 2026 Business Executive Compensation Survey for Contractors.
Jeff Robinson, president of PAS, notes that competition for talent was very high in 2022 and 2023, driving annual compensation demands. He says management-level employees, in particular, were in very high demand, which also helped drive executive raises. In recent years, this demand has declined and compensation is returning to historical norms.
“Last year, turnover was down a little bit and recruiting was down,” Robinson says. “All the things that forced those jumps [in compensation] loosened…. Although there is still rotation, it is not as extreme and at the same time there is a lot of caution.”
PAS data shows that employee turnover has been reduced recently, except in high-demand specialist recruitment such as mechanical and electrical. Robinson adds that these operations are heavily involved in the current data center construction boom. “Without data center work, that 4.5% [average annual increase] it could have been more than 4.2%,” he says.
Recent declines in wage increases vary by region in the US. The largest one-year declines occurred in the south-central states of Arkansas, Louisiana, New Mexico, Oklahoma and Texas, which declined from 5.9% in 2024 to 4.4% in 2025.
The Plains states of Iowa, Kansas, Missouri, and Nebraska had the largest two-year decline: from 5.8 percent in 2023 to 3.9 percent in 2025. The Southeast also saw a significant decline over that time period, from 5.8 percent in 2023 to 4.3 percent last year. New York and New Jersey have remained the most stable in recent years, peaking at 5% in 2022, but otherwise remained between 4.3% and 4.5% from 2021.
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While average compensation across the industry may be returning to normal, the demand for strong leadership remains high in some sectors. Mark Jones, executive vice president and director of national sales for Kimmel & Associates, says some companies are willing to pay top dollar for the right candidate, especially in specialty retail and among firms with private equity investors.
“I just did a deal where we took a $250,000 senior vice president [in total compensation] at a base salary of $270,000, plus an expected bonus of about $100,000,” he says. “I think there’s a big delta between average raises with current employees and newly hired employees.”
The willingness to invest heavily in senior executives is particularly acute at companies that are backed by private equity, which typically looks for returns on investments in about five to seven years, Jones says.
“I’m doing a search in the Mid-Atlantic for a chief operating officer … and one of the hiring parties said, ‘Look, Mark. I’m not going to let $100,000 get in the way of getting the right candidate,'” he says.
Alan MacNair, founder of MacNair Retained Search, also sees certain sectors that are willing to be more generous with compensation than others, particularly in the electrical, mission critical and industrial niches.
“Last year, turnover … and recruiting was down. While there’s still turnover, it’s not as extreme.”
– Jeff Robinson, President, PAS
While there are solid offers for good candidates, MacNair says companies expect results and structure bonuses accordingly. He notes that he has seen a greater emphasis on metrics-driven bonuses and less on discretionary factors. Bonuses are often tied to EBITDA [earnings before interest, taxes, depreciation and amortization]he says
“I’m now looking at an offer with a base of $525,000 and a bonus based on EBITDA,” says MacNair. “It’s a scale, so with incremental improvements in EBITDA, [the candidate] would receive a bonus of between 30% and 100% of base salary.”
Additionally, the recruiter sees signing bonuses and vehicle bonuses being used more and more to close the gap during negotiations. MacNair adds that some offers for company leadership include future payments if the company sells for a higher value than when the candidate was hired.
“Base salaries are going up and we still see traditional bonuses, but there may also be an uptick in the event the company is sold,” he says.
