US Construction Industry Needs 439K New Workers in 2025

The US construction industry is facing a key workforce shortage, with an estimated 439K new workers needed in 2025, according to new projections from the Associated Builders and Contractors (ABC). 

This labor gap is expected to worsen as demand for construction workers remains high, driven by various factors including recovery from natural disasters and a growing need for data centers, per Bisnow.

Meanwhile, federal policies on immigration and labor availability are creating additional pressure on the workforce.

The Growing Gap

The ABC’s estimate comes at a time when demand for construction workers is surging across sectors. With ongoing multifamily housing projects, hurricane recovery in the Southeast, and rebuilding efforts from California’s wildfires, the need for skilled workers is expected to intensify. 

Additionally, the federal government’s push to build data centers to support the growth of artificial intelligence adds another layer of demand.

Despite these factors, ABC warns that its estimate may be conservative, with labor shortages potentially more severe than expected.

Anirban Basu, ABC’s Chief Economist, cautioned that the model used to predict the demand for new workers underestimated construction growth in each of the past three years, signaling that the shortage could be worse than anticipated.

Impact of Inflation

Higher interest rates in recent years have already slowed construction spending, helping to ease labor shortages somewhat.

However, a decline in inflation and reduced borrowing costs could lead to an uptick in construction activity, which could, in turn, require an even larger workforce—potentially requiring up to 499K new workers by 2026.

This surge in labor demand could raise construction costs even more. With labor costs already rising—construction industry wages were up 4.4% in 2024—additional competition for workers could accelerate wage growth, further raising the price tag on construction projects.

Changing Demographics

Another factor complicating labor availability is the changing demographics of the workforce. While the median age of the construction workforce is now younger than it has been in over a decade, contractors will still struggle to fill positions, particularly in places where large projects, like manufacturing plants and data centers, are under construction.

Immigration has historically been a key source of labor for the construction industry, but changes in federal immigration policy could constrain this supply. ABC expressed concern that potential shifts in immigration laws may worsen the worker shortage and increase competition for available talent.

Industry Response

In light of these challenges, ABC is pushing for a new visa system to allow foreign workers to enter the US construction market.

Michael Bellaman, ABC’s President and CEO, called for measures to facilitate hiring foreign laborers, which could help alleviate some of the pressure on the domestic workforce.

Looking Ahead

The US construction industry is at a crossroads, with workforce shortages set to become a key challenge in the coming year.

While the need for new workers is critical, a combination of policy changes, rising wages, and increasing demand could put even more pressure on an already strained labor market. 

The outlook for 2025 suggests that unless significant action is taken to address these issues, many projects could be delayed or even canceled due to labor shortages and escalating costs.to 2025.s are expected to remain tight, with potential relief through concessions as landlords adjust to changing demand.