Construction industry needs half a million workers 

The United States faces a shortage of more than a half-million construction workers, according to a report from the Associated Builders and Contractors (ABC), a national trade group that represents nonunion industry workers.

Even as the residential market cools because of higher mortgage rates and additional interest rate hikes looming on the horizon, the skill shortfall will persist.

“Despite sharp increases in interest rates over the past year, the shortage of construction workers will not disappear in the near future,” Anirban Basu, the group’s chief economist, said in a release. 

To explain the shortage, Basu pointed to new infrastructure and commercial megaprojects, including chip manufacturing plants and clean energy facilities, even as demand for single family home construction has slowed. He also highlighted a major demographic trend: Compared to previous generations, fewer young workers are entering the trades, and the current workforce is aging out.

“Retirements will continue to whittle away at the construction workforce,” Basu added. “Many of these older construction workers are also the most productive.” 

To come up with its analysis, which claims that the construction industry would need to add 546,000 workers on top of normal hiring in 2023 to meet labor demand, ABC developed its own model that considers Census and Bureau of Labor Statistics construction employment data, projected retirements and other factors to calculate how many jobs are needed compared to construction spending. 

After a big dip in 2020, construction employment has steadily ticked up, to a current figure of nearly 8 million workers, according to ABC. That represents the highest number since at least 2003.

ABC’s methodology does not break down the data by state or region, a spokesperson said, but in another recent report the group tracked construction industry unemployment across states, which gives some idea of where the shortage is more or less acute. 

It found Colorado had the lowest construction unemployment rate, at about 1 percent, followed by Tennessee, Utah and Florida, which all had an unemployment rate of around 2 percent. In California the rate was about 4 percent, or slightly under the national average. It was highest — signaling a relative lack of demand for construction workers, or less of a shortage — in Alaska and Wyoming, where more than 10 percent of construction workers were unemployed. 

The data was for December 2022 and also included mining and logging workers.

In most states, including California, the December 2022 construction unemployment rate had gone down compared to both one year and three years earlier, signaling a tightening construction labor pool. 

The labor shortage will continue to reverberate throughout the country by slowing down development projects. Also, in the city of Los Angeles, developers are increasingly worried about the implementation of Measure ULA, a tax on all real estate deals in the city above $5 million that’s slated to kick in on April 1.