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Labor shortage to continue impacting construction in 2025

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Construction jobs
ABC says that for every $1 billion in construction spending, 3,550 new jobs are needed.

The construction industry will need nearly half a million new workers to meet demand in 2025.

That’s according to a new forecast from Associated Builders and Contractors (ABC), which found that approximately 439,000 net new jobs are needed this year. In 2026, the industry will need to bring in 499,000 new workers as spending picks up in response to an expected drop in interest rates. 

ABC says that for every $1 billion in construction spending, 3,550 new jobs are needed. Construction spending is expected to increase by less than 3% in 2025 compared to last year.

In 2024, ABC said that the shortage of new construction jobs was over 500,000.

“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 ABC chief economist Anirban Basu. “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.”

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A previous report from ABC revealed that on a year-over-year basis, construction industry employment grew by 196,000 jobs in 2024, an increase of 2.4%. In December alone, 8,000 new jobs were added.

[READ MORE: CoStar: Service-based brands will be biggest leasers of real estate space in 2025]

“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 technology and innovation in educational programs and on jobsites helps maximize the productivity and efficiency of the construction workforce.”

ABC’s proprietary research model 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.

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