U.S. Construction Labor Trends – February 2025

Persistent Workforce Shortages and Hiring Challenges

The construction sector continues to face significant labor shortages in early 2025. Industry models estimate that around 439,000 additional workers will be needed this year to meet demand​. This gap, while slightly smaller than in the past two years, remains a top concern for contractors. Surveys show the vast majority of contractors (roughly 80–90%) are struggling to hire qualified workers for open positions​. Even when companies manage to recruit, finding experienced tradespeople is difficult, and some new hires are even failing to show up on job sites amid fears of stricter immigration enforcement​. Contractors report that the lack of skilled labor is driving up project costs, extending timelines, and even causing project delays or cancellations​. In short, filling craft positions remains one of the industry’s biggest challenges heading into 2025.

Key drivers of the workforce gap include both cyclical and structural factors. On the cyclical side, demand has cooled in certain segments (like single-family housing, multifamily and office projects) even as other sectors are booming (e.g. manufacturing, infrastructure and data centers). This mixed demand means some regions and project types have intense labor needs while others have slowed down. Structurally, there is a long-term shortfall in training and entering new workers into construction trades.

As ABC’s chief economist Anirban Basu noted, “the U.S. hasn’t educated and produced enough blue-collar workers in recent years” for fields like construction and manufacturing. The result is a limited pipeline of younger skilled workers to replace an aging crew of retirees. (Notably, the workforce has started skewing younger recently – the median construction worker’s age is now under 42 for the first time since 2011, which may slow the pace of retirements​. However, a younger workforce also means many workers with less experience and skill.)

According to a U.S. Chamber of Commerce report, the construction industry actually had an average of ~383,900 job openings per month in 2023 versus about 480,300 unemployed workers with construction experience – essentially a surplus on paper of available workers.

However, this doesn’t mean jobs are easy to fill. Many unemployed workers aren’t in the right location or lack the specific skills needed for the open roles​. In practice, contractors in high-demand areas still struggle to find enough qualified people, indicating a mismatch between where/what skills workers have and where demand is. In other words, the nominal surplus hasn’t eliminated the felt shortage on job sites.

Wage Growth and Labor Cost Trends

With workers in short supply, wages in the construction industry have been climbing. Over the past year, average hourly earnings in construction rose around 4% year-over-year​. According to AGC data, field craft professionals now earn about $36.54 per hour on average, which is roughly an 18% premium over the typical private-sector wage (~$30.84)​. This wage growth reflects contractors boosting pay to attract and retain talent amid the competition for workers. Notably, construction pay is rising faster than overall earnings growth in many other industries​, underscoring how acute the demand for labor has become.

These rising labor costs have a direct impact on the sector’s economics. Higher wages contribute to already elevated construction costs, which can squeeze contractors’ profit margins and make some projects financially unfeasible. Industry leaders warn that if the worker shortage isn’t addressed, labor cost escalation will accelerate further, potentially pricing out certain projects​. In effect, the labor crunch is not only a workforce issue but also a constraint on construction capacity – fewer available workers at higher wages mean fewer projects can get built for a given budget.

On the upside, the strong wage growth is drawing more interest to construction jobs, and a growing number of young people may be enticed into the trades by the promise of good pay. But until that translates into a larger skilled workforce, contractors are likely to keep paying a premium for talent.

Employment and Workforce Statistics

Despite the hiring challenges, construction employment has continued to grow to record levels. Total U.S. construction employment reached about 8.29 million in January 2025 (seasonally adjusted)​, after adding a modest 4,000 net jobs in January​. The industry’s headcount is roughly 178,000 jobs higher (+2.2%) than a year ago​, reflecting steady expansion. In fact, construction employment now exceeds its pre-2008 peak, thanks to the surge in infrastructure projects, reshoring of manufacturing, and pandemic-era building booms.

However, the gains have been uneven across segments. Nonresidential construction firms are driving recent job growth, adding about 4,400 positions in January alone (especially in commercial building and specialty trades)​. This has offset slight declines on the residential side – homebuilding and residential trades together saw a small net loss of ~200 jobs in January​, as the housing sector remains softer due to high interest rates. The divergence shows how public works, commercial developments, factories, and energy projects are sustaining labor demand even while higher mortgage rates cool the homebuilding market.

Unemployment in construction remains relatively low (hovering in the mid-4% range in late 2024), and job openings – while still high – have recently declined, which may indicate the labor market is tightening. Indeed, a sharp drop in construction job openings was observed toward the end of 2024, suggesting a potential turning point: firms may be pulling back on unfilled postings either because they’ve hit hiring limits (given the difficulty finding workers) or because certain projects are pausing​. In short, the industry is near full employment for available skilled workers, with hiring constrained by the worker pool and economic signals.

Outlook and Industry Forecasts

Outlook for 2025

Industry forecasters anticipate that 2025 will bring a slight moderation in construction activity growth – but not enough to resolve labor pressures. The consensus economic forecast projects construction spending will grow less than 3% in 2025, the slowest pace in years​.

High interest rates are expected to continue weighing on rate-sensitive sectors like homebuilding throughout this year​. This cooling in demand growth, combined with a younger and somewhat larger workforce (thanks to recent hiring gains), means the labor shortage won’t worsen as rapidly as before. In fact, ABC’s model suggests the gap between needed and available workers in 2025 is smaller than in the previous two years​.

Nonetheless, contractors will still struggle to fill open positions in 2025​. Certain booming categories – for example, large semiconductor plants, data centers, and manufacturing facilities fueled by federal investment – are absorbing a significant share of the construction labor force in their regions​, making it hard for other projects nearby to staff up.

Looking ahead

‍If economic conditions improve moving into 2026, the workforce challenge could intensify again. ABC predicts that the industry will need to bring in nearly 500,000 new construction workers in 2026 to meet rising project demand, on top of the 439,000 needed this year​. The expectation is that as inflation eases and interest rates eventually come down, construction activity will ramp up (especially in housing and private development), creating another wave of labor demand​. This gives the industry a short window in 2025 to try to attract and train more workers before the next upswing.

Both industry groups and government agencies are ramping up workforce development efforts – from high school vocational programs to fast-track apprenticeships – to broaden the pipeline of trade workers. Contractors are also advocating for immigration reforms (such as merit-based visa programs for construction jobs) to supplement the workforce​. Policy decisions will play a role: for instance, more restrictive immigration policies could further constrain the labor supply at a time when domestic workers alone might not suffice​.

In Summary

In summary, the U.S. construction labor market in February 2025 is defined by high demand and tight supply. By the numbers, employment is at an all-time high and wages are climbing, yet a gulf remains between the workforce available and the workforce needed. This labor squeeze is shaping everything from project costs and timelines to the industry’s future growth prospects.

Reputable analyses from industry associations and economic experts all point to the same conclusion: addressing the construction labor shortage is critical for sustaining the sector’s momentum. Whether through training, technology, or immigration solutions, stakeholders are seeking ways to boost the labor force. In the meantime, contractors will continue to compete for talent in a historically tight labor market – a trend likely to persist through 2025 and beyond, with broad implications for construction costs and capacity.