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The construction industry will need to attract an estimated  in 2025 to meet anticipated demand for construction services, according to a proprietary model developed and released today by Associated Builders and Contractors (ABC). In 2026, the industry will need to bring in 499,000 new workers as spending picks up in response to presumed lower interest rates.

“While the construction workforce has become younger and more plentiful in recent years, the industry still must attract 439,000 new workers in 2025 to balance supply and demand,” said Anirban Basu, ABC chief economist. “If it fails to do so, industrywide labor cost escalation will accelerate, exacerbating already high construction costs and reducing the volume of work that is financially feasible. Average hourly earnings throughout the industry are up 4.4% over the past 12 months, significantly outpacing earnings growth across all industries.”

������’s�� uses the historical relationship between inflation-adjusted construction spending growth, sourced from the U.S. Census Bureau’s 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 construction workers at a rate of approximately 3,550 jobs per billion dollars of additional spending. This model also incorporates the current level of job openings, unemployment and projected industry retirements and exits into its computations.

“This represents improved labor availability relative to recent years,” Basu said. “The improvement can be traced to two primary factors. First, construction spending is expected to grow at its slowest pace in years throughout 2025, especially in interest rate-sensitive segments like homebuilding. Interest rates will remain elevated in 2025 before likely beginning to dip next year. Second, the industrywide workforce has become significantly younger over the past several quarters, with the median construction worker now younger than 42 for the first time since 2011. As a result, the pace of retirements is expected to slow this year.

“Despite that improvement, contractors will struggle to fill open positions,” Basu said. “This will be especially true in areas where manufacturing and data center megaprojects are underway. More than $1 in every $5 spent on nonresidential construction currently goes toward manufacturing projects, and those projects are absorbing a significant share of the labor force in their respective regions.”

“The U.S. construction industry’s efforts to hire more workers to replace retirees and meet the demand for new construction projects gained momentum in 2024,” said Michael Bellaman, ABC president and CEO. “That is fantastic news, but we still have a long way to go to shore up the talent pipeline. The data on the number of young people choosing a career in construction suggests that employing practical  in educational programs and on jobsites helps maximize the productivity and efficiency of the construction workforce. ������’s�� workforce development strategy is working to draw new entrants into the industry through hundreds of entry points and upskill them through both industry-driven and government-registered ������Dz���������.”

“There are also factors that could render this model overly conservative, meaning worker shortages could be more severe than predicted in 2025,” Basu said. “While  has construction spending increasing by less than 3% in 2025, that same forecast has underestimated growth by a significant margin during each of the past three years. If inflation dissipates in coming months, borrowing costs will subside and construction volumes will increase. Faster-than-expected immigration over the past few years has also bolstered labor supply, and potential changes to immigration policy will likely constrain worker availability.”

“Another solution to addressing the shortage is a merit-based, market-based visa system,” Bellaman said. “ABC’s goal is to work with the Trump administration and Congress to create a visa system that allows people who want to contribute to society and work legally in the construction industry to do so.