Labor shortages in the construction industry exacerbate common project challenges like planning, budgeting, and logistics. Without enough workers, home building, commercial construction, and infrastructure updates are more likely to be delayed or abandoned altogether. Addressing the construction industry labor shortage with collaborative incentives and initiatives is critical to ensure housing availability and infrastructure safety.
What is the Construction Labor Shortage?
Associated Builders and Contractors (ABC) reports that the construction industry will need to bring in 501,000 more workers on top of normal hiring to manage the construction labor shortage in 2024. Three dominant factors are fueling the increased demand:
Residential: More housing is needed to accommodate a growing population and a greater percentage of people working from home
Commercial: Spending on nonresidential construction is rising, including an increasing investment in megaprojects with budgets of $1 billion or more
Infrastructure: President Biden allocated $1 trillion for infrastructure in 2021, and interest in clean energy projects remains high
Although seasonal fluctuations in demand across categories can affect data, the overall trend in the construction industry labor shortage suggests an ongoing struggle to find skilled workers.
Is the Labor Shortage in Construction Real?
Statistics confirm that hiring decreases are short lived: Construction employment has only declined once in any given month during the last two years. Overall, the industry saw a year-over-year increase of 270,000 jobs between 2023 and 2024.
But new hires aren't coming in fast enough to fill available positions. According to Julia Pollak, an economist for ZipRecruiter, online applications for construction jobs fell 40% between 2019 and 2020 and hadn't bounced back as of April 2023.
Even the National Science Foundation is feeling the effects of the shortage. The organization cites a lack of skilled labor as the reason why work on its Regional Class Research Vessel in Louisiana has been delayed. And there haven't been enough U.S. construction workers to spare to keep another facility, the Antarctic Infrastructure Modernization for Science's (AIMS) Vehicle Equipment and Operations Center, running on schedule.
The Impact of a Skilled Labor Shortage in Construction
Delays due to construction labor shortages can interfere with construction scheduling and push projects over budget. Workers must put in more hours to complete projects, which drives up labor costs. Tired workers are more prone to mistakes and may forget to perform safety and quality checks, leading to an increased risk of injury and further delays.
These effects may only continue to compound. According to the Bureau of Labor Statistics, construction has the third-highest projected employment growth rate of any industry. But with contractors already struggling to find labor, such significant growth could mean even bigger delays on projects across sectors.
Increased demand without an increase in available labor may drive up construction prices and make it difficult for stakeholders to find contractors who can afford to take on smaller projects. With a limited labor capacity, contractors and construction companies will likely prioritize projects with large budgets to ensure they can bring in enough revenue. This could lead to delays in critical projects like infrastructure updates and drive home prices even higher.
Why is there a Construction Labor Shortage?
Addressing ongoing challenges with viable construction labor shortage solutions starts with understanding the underlying causes:
An aging workforce. Older construction workers are retiring faster than young workers are entering. And since forty-five percent of construction workers are 45 or older, the retirement rate is likely to continue increasing without a concurrent influx of new labor.
Fewer young people pursuing construction careers. According to the Home Builders Institute (HBI), the number of construction workers ages 25 to 54 dropped 4.7% between 2015 and 2022 while the number of workers under 25 only increased by 1.8%. Continuing academic emphasis on careers in science, technology, engineering, and math (STEM) and a growing desire for work-life balance appears to be leading students away from industries like construction.
Education and training gaps. Although only 5% of K-12 students and 8% to 10% of college graduates go on to work in STEM jobs, schools continue to focus more on these areas than on skilled trades. Students who wish to pursue trade careers may be unable to get training due to a lack of dedicated teaching space and qualified educators.
Economic and demand fluctuations. Seasonality and economic downturns can affect the availability of construction work. High interest rates impact the cost of borrowing and make stakeholders wary of investing in construction projects, and supply chain volatility can disrupt construction timelines. These factors may deter young people who prefer stable jobs with predictable schedules.
Construction Labor Shortage Statistics
The National Association of Home Builders (NAHB) estimates that the industry will require 2.17 million more workers from 2024 to 2026 to overcome the labor shortage in construction. According to HBI, this works out to about 60,000 new hires per month—or 723,000 per year—in 2024 alone. Labor shortages appear to differ across categories. Currently, the industry's biggest needs are for carpenters, framing crews, and brick layers; demand for painters, roofers, and flooring installers is lower.
Paradoxically, some statistics show a decline in available construction work, but that doesn't appear to be the whole story. According to Construction Dive, open construction jobs dropped 24% from February to March in 2024. Industry experts say the decrease was likely due to high interest rates' effect on the demand for residential building rather than an overall drop in available construction jobs.
How to Fix the Construction Labor Shortage
Reversing the labor shortage in construction will require schools, contractors, and government agencies to work together on initiatives that close labor gaps and improve project efficiency:
Training and apprenticeships. Less than one-third of eighth graders have the foundation in science and math required to succeed in STEM jobs. Schools can support additional career paths through apprenticeships, which are a major source of skilled labor for the construction industry.
Improving construction work conditions and benefits. Young people may be more likely to consider construction jobs if they receive benefits like flexible schedules, paid time off, and vacation leave. Employers can offer additional incentives through programs that provide health coverage for independent contractors and can create safer working environments by following OSHA compliance guidelines and safety recommendations for job sites.
Utilizing new technologies. Technologies like augmented reality, digital twins, and mapping software can enable construction workers to anticipate potential challenges and address them proactively to avoid delays. And with construction management software, contractors can better visualize how to distribute tasks across their existing workforce for optimal productivity.
Automating time-consuming building tasks.Manufacturing prefabricated components can shorten build times by moving preliminary construction work from job sites to factories. Manufacturing jobs may also be more attractive to workers who enjoy construction but want a more stable option for employment. Onsite, autonomous and semi-autonomous robotics could fill labor gaps when contractors are unable to find enough human workers.
Changing the perception of construction careers. The trades are typically seen as less desirable than industries like technology, yet construction offers significant room for growth, including the chance to build valuable skills and progress from entry-level work to supervisory or ownership roles. Showing young people these opportunities and emphasizing the use of construction technology may capture the attention of a generation that desires long-term careers that utilize the skills they’ve developed as digital natives.
Construction Labor Shortage Solutions
Because the construction industry needs a new generation of workers, educational institutions are foundational to addressing the problem of how to fix the construction labor shortage. To encourage students to pursue skilled work, schools can:
Offer vocational training from skilled contractors and construction business owners
Enable students to receive on-the-job training through apprenticeships while they're still in school
Open paths to employment before or immediately upon graduation for students who complete training programs
Present the trades as a viable career path for students who desire to pursue careers in non-STEM industries
As students move from training into the workforce, government policies can ensure that contractors can take advantage of the influx of new labor by:
Providing tax incentives to ease financial burdens on construction companies and enable them to hire more workers
Offering incentives for hiring workers who historically have difficulty finding employment, such as veterans or the formerly incarcerated
Reducing restrictions on how funding for projects like infrastructure can be allocated
Updating zoning and housing rules to allow for more construction in under-served residential areas
Combined with improved job conditions and new technologies, this dual approach of educational support and government strategies can help the construction industry close the labor gap, shorten timelines, and address critical projects in every sector.
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