Table of Contents

Data originally compiled December 2025 and most recently updated May 2026 using the latest available federal and industry sources. Most BLS series are current through April 2026. Employment data have been updated to reflect the April 2026 Employment Situation release (BLS, May 8, 2026), which includes revised February and March 2026 figures. The U.S.-Iran conflict, which began in late February 2026, remains ongoing as of mid-May; oil and diesel price figures reflect early May 2026 data points.

---

Executive Summary

~8.32 million U.S. construction workers (NAICS 23, April 2026)

82% Share of firms reporting difficulty filling hourly craft positions (AGC/Sage, 2026)

~30% Share of total compensation attributable to benefits

As of spring 2026, the U.S. construction workforce remains under structural pressure, with the ongoing U.S.-Iran conflict and rising input costs adding fresh strain. Employment has held near 8.32 million as of April 2026, but labor supply remains severely constrained relative to demand. Hiring difficulty is widespread, skill requirements are intensifying, and demographic headwinds are accelerating.

Construction employment has been choppy in early 2026. The sector added 16,000 jobs in March (revised from 26,000) and another 9,000 in April, with nonresidential continuing to outperform residential and nonresidential employment up roughly 2.0% over the past year, supported largely by surging data center construction. Yet firms cannot convert demand into hires. The AGC/Sage 2026 Outlook found that 82% of firms report difficulty filling hourly craft positions and 80% report difficulty filling salaried openings. Among firms actively hiring, the AGC 2025 Workforce Survey found the rate even higher at 92%. Associated Builders and Contractors (ABC) estimates the industry needs 349,000 net new workers in 2026, rising to 456,000 in 2027.

Compensation and cost pressures are building from multiple directions, though wage growth has begun to decelerate. Average hourly earnings reached $40.97 as of April 2026, up 4.2% year-over-year. Employer compensation costs in construction rose 3.2% year-over-year in Q1 2026, down from 4.0% in Q4 2025, signaling that the wage acceleration of recent years may be cooling. On the materials side, the U.S.-Iran conflict, now in its third month, continues to drive oil-market volatility that has cascaded through construction input costs. Construction input prices were up 4.8% year-over-year through March 2026, the largest annual increase since January 2023, compounding existing tariff-driven cost escalation. Diesel reached $5.64 per gallon in the week of May 4, 2026, approaching its all-time national record, with several states already setting new highs. Brent crude has reached prices not seen since 2022, and higher treasury yields are adding pressure on project financing.

Workforce risk is increasingly structural. Roughly one in five construction workers is over 55, and retirement is the primary driver of new-worker need. Immigration enforcement has directly or indirectly affected 33% of construction firms, constraining a labor pool in which foreign-born workers represent roughly a quarter of payroll employment and a third of craft workers. At the same time, AI data center construction is pulling the highest-skilled trades workers toward more lucrative projects. The divide is now measurable: data center contractors carry 10.6 months of backlog compared to 8.3 months for everyone else.

Through 2026, workforce challenges are unlikely to resolve through economic cycles alone. Construction firms that align workforce planning with compensation strategy, skills development, safety investment, and flexible staffing will be best positioned to deliver projects on time amid ongoing uncertainty.

Related: U.S. Construction Wage Report (2026)

---

---

Key Construction Workforce Benchmarks at a Glance (2025–2026)

Workforce Size

Total construction employment: ~8.32 million (April 2026, preliminary) — BLS CES

Production & nonsupervisory employees: ~6.06 million, or roughly 73% of total employment (April 2026, preliminary) — BLS CES

Labor Availability

Unemployment rate (previously employed in construction): ~3.8–7.1% (Dec 2025–Apr 2026) — BLS CPS

Construction job openings: ~212K–240K (Feb–Mar 2026) — BLS JOLTS

Construction hiring rate: 3.3% (February 2026, lowest on record since JOLTS began in 2000) — BLS JOLTS

Hiring Difficulty

Firms reporting difficulty filling hourly craft positions: 82% — AGC/Sage 2026 Outlook

Firms reporting difficulty filling salaried positions: 80% — AGC/Sage 2026 Outlook

Firms reporting project delays from labor shortages: 45% — AGC 2025 Workforce Survey

Net new workers needed: ~349,000 in 2026; ~456,000 in 2027 — ABC

Pay Benchmarks

Average hourly earnings (all employees): $40.97/hour (April 2026, preliminary) — BLS CES

Average hourly earnings (production & nonsupervisory): $38.73/hour (April 2026, preliminary) — BLS CES

Wage growth (Employment Cost Index): +3.1% year-over-year (Q1 2026) — BLS ECI

Total Compensation

Employer compensation cost per hour worked: $50.93/hour (Q4 2025) — BLS ECEC

Benefits share of total compensation: ~30.3% — BLS ECEC

Contractor Backlog

Average backlog: 8.6 months (March 2026) — ABC CBI

Data center contractors: 10.6 months; all other contractors: 8.3 months — ABC CBI

Input Costs

Construction input prices: +4.8% year-over-year (March 2026, largest annual increase since January 2023) — ABC/PPI

Nonresidential construction input prices: +5.4% year-over-year (March 2026) — ABC/PPI

Workforce Stability

Union membership rate: 11.1% (2025, 11-month average) — BLS CPS

Union median weekly earnings: $1,585; nonunion: $1,132 (2025) — BLS CPS

Safety

Total recordable injury rate: 2.2 cases per 100 workers (2024) — BLS SOII

Fatal injuries: 1,064 deaths (2024); 1,099 deaths (2023) — BLS CFOI

Productivity

Labor productivity (output per hour) growth: +2.0% (2024) — BLS Productivity

Industry Sentiment

Top concern for 2026: Economic slowdown/recession (cited by 62% of firms) — AGC/Sage 2026 Outlook

Firms affected by tariffs: ~70% — AGC/Sage 2026 Outlook

Firms affected by immigration enforcement (past six months): 33% — AGC/Sage 2026 Outlook

Technology Adoption

Firms using or increasing AI investment: 61% (up from 44% in prior year) — AGC/Sage 2026 Outlook

Future Outlook

Firms planning to increase headcount: 63% (down from 69% in prior year) — AGC/Sage 2026 Outlook

Firms planning to decrease headcount: 15% (up from 10% in prior year) — AGC/Sage 2026 Outlook

Sector with strongest contractor optimism: Data centers (net +57%) — AGC/Sage 2026 Outlook

Sectors with negative contractor outlook: Retail (-18%), private office (-14%), lodging (-7%), higher education (-5%), K-12 (-1%) — AGC/Sage 2026 Outlook

Related: Your Ultimate List of Construction Conferences in 2026

---

1. Overview of the U.S. Construction Workforce

~73% Production and nonsupervisory share of the construction workforce

Construction employment has been choppy in early 2026, with sharp month-to-month revisions complicating any simple narrative. Total employment rose to 8,317,000 in January 2026 (revised), edged down to 8,296,000 in February (revised), recovered to 8,312,000 in March (revised), and reached 8,321,000 in April (preliminary). Recent BLS releases have revised prior months downward, suggesting the industry’s early-2026 recovery was weaker than initially reported. In January, the construction sector accounted for 33,000 of the 130,000 total jobs added nationwide, nearly one in four. In March, the sector added 16,000 jobs (revised from an initial estimate of 26,000). April added approximately 9,000 jobs, with nonresidential up roughly 2.0% year-over-year, driven by surging data center construction.

Production and nonsupervisory employees, the workers who physically build, make up the majority of the construction workforce at approximately 6.06 million, or roughly 73% of total employment. This composition reflects construction’s deep and ongoing dependence on hands-on craft labor that is difficult to automate or replace quickly.

The sector comprises three major subsectors under NAICS 23: Construction of Buildings (236), Heavy and Civil Engineering Construction (237), and Specialty Trade Contractors (238). Specialty trades, including electrical, plumbing, HVAC, and concrete work, represent the largest share and are where hiring pressure is most acute.

Unemployment among workers previously employed in construction has shown sharp seasonal volatility. The rate stood at 5.0% in December 2025 before rising to 7.1% in January 2026 (revised upward due to updated population controls), moderating to 6.9% in February and 6.7% in March, then dropping sharply to 3.8% in April as seasonal hiring picked up. The not-seasonally-adjusted nature of these data exaggerates winter-to-spring swings, but the underlying pattern is consistent: construction unemployment runs higher than manufacturing and reflects the seasonal and project-based nature of the work. Notably, October 2025 data was unavailable due to the 2025 lapse in appropriations.

Underlying employment dynamics tell a more complex story. Gross job gains in construction totaled 699,000 in Q1 2025, compared to gross job losses of 608,000, indicating net positive momentum at that point. The picture reversed in Q2 2025, with gross losses of 687,000 exceeding gains of 646,000. By Q3 2025, the pattern had stabilized but stayed negative, with losses of 678,000 against gains of 623,000, signaling that the labor market was cooling well before the early-2026 employment data was published. The number of private construction establishments reached approximately 954,000 in Q3 2025 (preliminary), underscoring the industry’s vast and fragmented structure.

---

2. Hiring Pressure and Vacancy Rates

82% Of construction firms report difficulty filling hourly craft positions

Despite what headline employment data might suggest, the construction industry continues to experience one of the most severe hiring crunches of any major sector. The nature of that crunch has shifted in early 2026, with sharp month-to-month volatility making clean narratives difficult.

The AGC 2025 Workforce Survey, conducted with NCCER, found that 92% of firms that are hiring report having a hard time finding qualified workers. This figure reflects firms actively seeking to fill positions, not the industry as a whole, but its consistency across multiple years of AGC surveys suggests the difficulty is persistent rather than anomalous. The AGC/Sage 2026 Outlook, surveyed in late 2025, breaks the problem down further: 82% of firms report difficulty filling hourly craft positions and 80% report difficulty filling salaried openings — a higher proportion than at any point in the past three years. A majority (53%) expects hiring craft workers to remain hard or become even harder over the coming 12 months.

From the Field: The Hardest Salaried Role to Fill

“One of the most challenging roles to fill in construction, and a frequent topic among recruiters, is the Estimator position. This is due not only to the high level of skill required to succeed, but also to the limited pool of qualified candidates who meet these highly specified standards.

More specifically, since the start of the year, nearly all of my clients across a range of construction sectors including general contracting, concrete, drywall, steel, HVAC, and civil have been actively searching for top Estimators to join their teams. This demand is fairly typical for this time of year, as companies ramp up bidding activity and look to secure their project pipelines for the years ahead.”

— Ryan DeSmith, Sr. Direct Hire Staffing Manager, Amtec

The problem is not just volume, it is qualification. Fifty-seven percent of firms report that available candidates lack essential skills or do not have the appropriate license for the position. The industry doesn’t simply need more bodies; it needs trained, certified, job-ready workers.

Federal labor market data reinforces the picture but reveals significant month-to-month volatility. Job openings in construction declined sharply through late 2025 and early 2026: 239,000 in January, 212,000 in February (a multi-year low), then rebounding to 240,000 in March 2026 (preliminary). This pattern of decline followed by partial recovery suggests the labor market is volatile rather than uniformly cooling. Even at March’s higher level, openings remain well below the peaks of mid-2025.

The early-2026 decline in posted openings did not necessarily signal cooling demand. It may have reflected what happens when firms stop posting positions they cannot fill, particularly as macroeconomic uncertainty intensified. The March rebound to 240,000 openings suggests firms re-engaged with the labor market as conditions clarified. With 82% of firms still reporting hiring difficulty even amid this volatility, the gap between stated demand and the ability to act on it persists.

Hires and separations data tell a more nuanced story. Construction labor turnover slowed sharply heading into early 2026: hires fell to 241,000 in February while separations dropped to 271,000, producing the least labor force churn since the Bureau of Labor Statistics began tracking these measures in December 2000. The hiring rate of 3.3% was the lowest on record. At the same time, quits fell 29.5% year-over-year, suggesting workers were no longer confident enough to move between employers. The February freeze proved short-lived, however: hires rebounded to 317,000 in March against 242,000 separations, producing positive net hiring for the first time in months. Whether this signals a durable recovery or a transitional bounce will become clearer with April and May JOLTS data.

The February freeze coincided with growing uncertainty from the early days of the U.S.-Iran conflict, rising fuel and materials costs, and tightening financing conditions, all of which intensified in early 2026. Quits, which had been running 31% above year-ago levels in December 2025, fell 29.5% year-over-year by February as workers grew less willing to move between employers. The March rebound in hires suggests at least some of that hesitation eased, though structural pressures remain.

The severity of these pressures varies significantly by region and by firm type. AGC’s 2025 Workforce Survey includes regional and state-level fact sheets showing that immigration enforcement impacts, for example, ranged from 75% of firms affected in Georgia to just 8% in Idaho. The AGC/Sage 2026 Outlook adds further detail: firms in the South were more likely to report enforcement-related impacts across all categories, while firms in the Northeast were least likely to report being affected. Among firms with openings for hourly craft workers, 86% of open-shop firms report difficulty filling positions compared to 77% of union firms, suggesting that the union hiring pipeline, while still strained, provides a modest structural advantage.

Hiring difficulty, wage escalation, and project delay rates all differ based on local labor supply, project mix, and proximity to high-demand segments like data center construction. National benchmarks provide essential context, but construction leaders should evaluate these figures against conditions in their specific markets.

---

3. Labor Supply Constraints

349,000 Net new workers needed in 2026 (ABC)

Behind the hiring difficulty numbers is a deeper structural problem: the supply of available construction workers is shrinking, and the forces driving that contraction are not easily reversed.

ABC estimates the industry needs to attract 349,000 net new workers in 2026, with that number rising to 456,000 in 2027 as construction spending growth resumes. According to ABC’s model, every additional $1 billion in construction spending creates demand for approximately 3,450 new jobs.

Critically, the majority of near-term new-worker demand is driven by retirement rather than growth. Roughly one in five construction workers is over the age of 55, and Deloitte projects that 41% of the current construction workforce will retire by 2031, while only 10% of current workers are under 25. Apprenticeships and licensing require years of training, meaning the replacement pipeline cannot be built overnight.

Immigration policy is adding further constraint, and the impact is growing. The AGC 2025 Workforce Survey found that 28% of construction firms had been affected directly or indirectly by immigration enforcement activities as of mid-2025. By late 2025, that share had risen to 33%, according to the AGC/Sage 2026 Outlook. Six percent of firms report a jobsite or offsite was visited by immigration agents, 11% say workers left or failed to appear because of actual or rumored enforcement actions, and 24% report subcontractors lost workers. An additional 17% have adjusted project schedules or scopes due to labor or material shortages linked to immigration enforcement or policy changes.

The impacts vary sharply by geography. State-level responses in the AGC/Sage 2026 Outlook point to especially elevated effects in parts of the South: firms in Florida were among the most likely to report workers leaving or failing to appear (42%), while firms in Alabama were particularly affected through subcontractors losing workers (49%). Texas firms reported relatively high levels of both jobsite visits and worker departures (each at 20%). North Carolina firms reported 31% worker departure rates. By contrast, firms in Washington, New York, and Nebraska reported little to no direct impact from immigration enforcement.

Only 10% of firms use the H-2B visa program or other temporary work visa programs, leaving the vast majority of the industry without a formal mechanism to replace lost labor through legal immigration channels.

The AIA Consensus Construction Forecast provides essential context: of the 12 million payroll and nonpayroll employees in the construction industry, a quarter are foreign-born, and this share rises to a third for craft workers. An estimated half of these foreign-born workers are undocumented, making construction more exposed to immigration enforcement than nearly any other industry. (For deeper data on immigrant workers across sectors, see Amtec’s Immigrant Labor Force Statistics report.) Rising wages may attract some domestic workers into the trades over time, but with only 7% of potential job seekers considering construction careers, wage increases alone are unlikely to close the gap left by reduced immigration flows in the near term.

From the Field: Why the Shortage Isn’t Just About Headcount

“One piece of conventional wisdom that no longer really holds up is that compensation is the primary driver for candidates in construction hiring. While pay absolutely matters, it is rarely the deciding factor for top talent today. What we consistently hear from candidates is that stability, backlog, leadership, and company culture carry more weight, especially after seeing how volatile the industry can be.

Many experienced professionals have lived through both sides of the cycle. They have seen companies go from overloaded with work to layoffs within a year, so they are far more focused on joining an organization with a strong, consistent pipeline and leadership they trust. They want to know where the company will be in three to five years, not just what the offer looks like today.

Another outdated belief is that the shortage is purely about a lack of candidates. In reality, there is a shortage of expectation between both client and candidate. Strong candidates exist, but they are selective and often turned off by rigid structures, unclear growth paths, or companies that overemphasize short term needs instead of long term fit.

In today’s market, the companies that win are the ones that present a clear vision, demonstrate stability, and treat hiring as a long term investment rather than a transactional process.”

— Ryan DeSmith, Sr. Direct Hire Staffing Manager, Amtec

Compounding these pressures, the surge in AI data center construction is pulling the most skilled trades workers (electricians, welders, HVAC technicians) toward more lucrative projects, exacerbating shortages in residential, commercial, and institutional construction. The scale of this pull is now measurable. According to ABC’s Construction Backlog Indicator, the 15% of contractors working on data centers carry an average backlog of 10.6 months, compared to 8.3 months for everyone else, a gap of 2.3 months that reflects both the volume of data center work in the pipeline and the premium these projects command for the industry’s most in-demand workers. With Dodge Construction Network reporting that commercial planning momentum was up 28.5% year-over-year in March but down 12.7% when data centers are removed, the gravitational pull of this single segment on the broader labor supply is only intensifying.

For firms competing outside the data center segment, the implications are direct. The workers they need, particularly licensed electricians, experienced welders, and certified HVAC technicians, are being recruited into projects that offer longer engagements, higher pay, and more predictable schedules. BlackRock projects electrician employment to grow 9.5% from 2024 to 2034 and HVAC technicians to grow 8.1%, both well above the 3.1% overall employment growth rate. The supply of these workers is not expanding fast enough to serve both data center demand and the rest of the industry simultaneously.

---

---

4. Construction Workforce Pay Benchmarks

$38.73/hour Average hourly earnings for production & nonsupervisory workers (April 2026)

Compensation continues to be a central workforce challenge in construction and a primary tool for attracting and retaining talent in a historically tight labor market.

As of April 2026, average hourly earnings for all construction employees reached $40.97 per hour (preliminary), while production and nonsupervisory workers earned $38.73 per hour (preliminary). Average weekly hours stood at 39.3 for all employees and 40.2 for production and nonsupervisory workers.

The two main measures of construction wage growth tell a complementary but distinct story. Average hourly earnings (AHE) rose 4.2% year-over-year as of April 2026, reflecting actual pay growth across all workers in the sector. The Employment Cost Index, which controls for compositional shifts in the workforce, provides a cleaner read on underlying wage pressure and shows wages and salaries in construction increased 3.1% year-over-year in Q1 2026, down from 4.3% in Q4 2025. Total compensation followed a similar trajectory, decelerating from 4.0% year-over-year in Q4 2025 to 3.2% in Q1 2026. Whether this represents genuine cooling in the labor market or a temporary pause amid early-2026 uncertainty will become clearer with Q2 2026 data. First-year union settlement increases averaged 4.7% in 2025, a rate that has held stable since 2023 according to the Construction Labor Research Council.

The union wage premium remains substantial, though it has narrowed. Union construction workers earned a median of $1,585 per week in 2025, compared to $1,132 for nonunion workers, a gap of approximately 40%. This represents a narrowing from 2024, when union workers earned $1,530 per week compared to $1,051 for nonunion workers, a premium of roughly 46%. The compression likely reflects the tight labor market’s effect on nonunion pay, as open-shop firms compete more aggressively for the same workers.

Wage pressure is increasingly role-specific rather than uniform, driven by skill scarcity in occupations directly tied to the highest-growth construction segments. BLS occupational data for 2024 shows the range:

• Construction managers: $50.26/hour median ($104,530/year)
• Electricians: $29.53/hour median ($61,420/year)
• Operating engineers and equipment operators: $29.31/hour median ($60,950/year)
• Carpenters: $28.79/hour median ($59,890/year)
• Construction laborers: $22.63/hour median ($47,070/year)

Electricians and specialty trades workers are commanding the steepest premiums, fueled by data center and energy infrastructure demand. BlackRock projects electrician employment to grow 9.5% from 2024 to 2034 and HVAC technicians to grow 8.1%, both well above the 3.1% overall employment growth rate.

The AGC/Sage 2026 Outlook provides a detailed look at how firms are responding. Forty percent of firms increased base pay rates more in 2025 than they did in 2024, while 44% provided similar increases and 9% increased pay but by less than the prior year. Only 8% of firms reported no pay increases at all. Among firms that raised pay, the most common increase fell in the 4 to 6 percent range (46% of firms), followed by 1 to 3 percent (33%), 7 to 10 percent (12%), and more than 10 percent (4%). In addition to base pay, 21% of firms introduced or increased incentives and bonuses, and 20% increased their share of benefit contributions or enhanced employee benefits.

For firms competing in markets where data center and energy projects are concentrated, wage escalation remains the cost of keeping crews intact. But multiple signals now suggest the rate of acceleration is leveling off. The AGC/Sage data shows that the share of firms raising pay more aggressively than the prior year (40%) is lower than the “seven out of eight” characterization from the AGC 2025 Workforce Survey. The Q1 2026 ECI deceleration to 3.1% reinforces the picture: competitive pressure for skilled labor remains intense, but the pace of wage growth is no longer accelerating, and absolute wage levels are continuing to climb at a slower rate than they did through most of 2025.

---

5. Total Compensation and Benefits

$50.93/hour Total compensation per hour worked in construction (Q4 2025, ECEC)

Wages alone do not reflect the true cost of employing construction workers, or the full value proposition available to attract and retain them. Total employer compensation in construction averaged $50.93 per hour worked in Q4 2025, according to BLS Employer Costs for Employee Compensation (ECEC), up from $49.05 in Q2 2025.

Here’s where that $50.93 actually goes, and why the breakdown matters for firms evaluating whether their compensation package is competitive. Wages and salaries account for $35.47 per hour (69.7% of total compensation), while total benefits account for $15.45 per hour (30.3%). Within benefits, insurance costs $3.72 per hour (7.3%), retirement contributions cost $2.31 per hour (4.5%), and paid leave costs $2.59 per hour (5.1%).

Total compensation growth in construction has decelerated meaningfully since late 2025. Year-over-year, total compensation rose 3.8% in Q2 2025, 3.8% in Q3, 4.0% in Q4, then dropped to 3.2% in Q1 2026. Wages and salaries followed the same pattern, decelerating from 4.3% year-over-year in Q4 2025 to 3.1% in Q1 2026. The three-month ECI changes tell the same story: 1.4% in Q1 2025, 1.0% in Q2, 0.9% in Q3, 0.6% in Q4, and 0.6% in Q1 2026, indicating that the deceleration is now a sustained trend rather than a single-quarter anomaly. For firms budgeting labor costs, this matters: the wage acceleration that defined the 2023–2025 period has clearly moderated, even as absolute compensation levels remain elevated.

Benefits access among construction workers is broad but not universal. BLS National Compensation Survey data for 2025 shows that 75% of private construction workers have access to employer-sponsored health care, 81% have access to paid vacation, 72% have access to paid sick leave, and 72% have access to retirement benefit plans.

However, participation lags access: only 53% of workers with retirement plan access actually participate, and just 47% participate in defined contribution plans. Defined benefit plan access remains low at 12%. Defined contribution plan access stands at 67%.

Mean vacation days total 7 after one year of service and 13 after 20 years.

Beyond base pay and standard benefits, firms are increasingly using supplemental compensation to compete for workers. The AGC/Sage 2026 Outlook found that 21% of firms introduced or increased incentives and bonuses in 2025, while 20% increased their share of benefit contributions or enhanced employee benefits. Only 2% of firms reduced or eliminated benefits or employer contributions. These figures suggest that most firms recognize the role benefits play in retention, even if the aggregate benefits share of compensation has not increased meaningfully.

Construction’s benefits share of total compensation (30.3%) remains lower than manufacturing’s (~33%). At the individual worker level, a three percentage point difference may not be immediately visible, but in aggregate, it signals that construction firms may be underinvesting in the non-wage components that increasingly influence retention decisions. The AGC/Sage 2026 Outlook reinforces this concern: 57% of firms cite insufficient supply of workers or subcontractors as a major concern for 2026, and 56% cite rising direct labor costs including pay, benefits, and employer taxes. In a labor market where firms are competing not only with each other but with manufacturing, energy, and technology sectors for the same skilled tradespeople, competing on hourly pay alone while offering thinner benefits leaves firms exposed.

The retention stakes are real. As detailed in Section 2, the construction labor market briefly froze in February 2026 before partially rebounding in March, suggesting that worker mobility is sensitive to short-term uncertainty even as structural shortages persist. Workers who stopped moving in February reflected broader economic uncertainty rather than satisfaction, with 62% of firms citing economic slowdown or recession as their top concern. As conditions stabilize, workers may resume switching, and firms with stronger total compensation packages will be better positioned to hold their crews together.

---

6. Workforce Stability and Union Representation

Union membership in construction rose to 11.1% in 2025, reversing several years of steady decline from 12.6% in 2021 to 11.7% in 2022, 10.7% in 2023, and 10.3% in 2024. Workers represented by unions, including non-members covered by collective bargaining agreements, totaled 12.0%, up from 11.2% in 2024. The 2025 figures are based on an 11-month average that excludes October, for which data was not collected due to the federal government shutdown. Whether this uptick marks the beginning of a sustained reversal or a one-year anomaly will become clearer with 2026 data.

Despite the increase in membership rates, the union share of the construction workforce remains well below historical levels. Union influence on construction compensation, however, continues to exceed what the membership numbers alone would suggest. Union members earned a median of $1,585 per week in 2025, compared to $1,132 for nonunion workers. While the union premium remains substantial at approximately 40%, it has narrowed from roughly 46% in 2024, when union workers earned $1,530 per week compared to $1,051 for nonunion workers. Union wages have grown steadily, from $1,319 per week in 2022 to $1,424 in 2023 to $1,530 in 2024 to $1,585 in 2025. Over the full 2022–2025 period, union wages grew roughly 20%, outpacing nonunion growth of approximately 16% ($976 to $1,132). However, the most recent year tells a different story: from 2024 to 2025, nonunion wages jumped 7.7% ($1,051 to $1,132) while union wages grew just 3.6% ($1,530 to $1,585). That faster nonunion acceleration in the latest year is what compressed the weekly premium from roughly 46% to 40%. The compression reflects the intense competition for skilled workers in the nonunion segment, where open-shop firms have been forced to raise pay more aggressively to attract and retain talent.

These premiums, along with union benefit structures, continue to set market expectations across the broader sector even for nonunion firms. When union settlements average 4.7% annually and union members earn 40% more per week, nonunion employers must benchmark against those figures whether or not they bargain collectively.

The AGC/Sage 2026 Outlook reveals differences in how union and open-shop firms are navigating the current market. Fifty-eight percent of union contractors expect to expand headcount in 2026, compared to 65% of open-shop firms. On the hiring difficulty side, the gap is reversed: among firms with openings for hourly craft workers, 86% of open-shop firms report difficulty filling positions compared to 77% of union firms. For salaried positions, the rates are closer at 81% for open-shop and 80% for union firms. These figures suggest that union hiring pipelines, including apprenticeship programs and hiring halls, provide a modest but measurable structural advantage in sourcing craft labor, even as both segments remain under significant strain.

Labor market dynamics shifted sharply in early 2026, regardless of union status. JOLTS data shows quits in construction increased 31% year-over-year in December 2025, with workers confident enough in the market to move between employers. By February 2026, the picture had reversed: quits fell 29.5% year-over-year, the hiring rate dropped to a record low of 3.3%, and total labor force churn reached its lowest level since the BLS began tracking in 2000. The U.S.-Iran conflict, rising diesel and materials costs, and higher borrowing costs all contributed to a market in which both workers and employers pulled back simultaneously. The freeze was short-lived: March hires rebounded to 317,000, more than reversing February’s drop, though the volatility itself suggests workers and firms alike are uncertain about how durable any recovery will be.

Workforce satisfaction and retention outcomes are increasingly shaped by local labor market conditions, scheduling practices, safety culture, benefits, and advancement opportunities rather than representation status alone. In a market this uncertain, every dimension of the employment experience matters.

---

7. Safety, Injuries, and Workforce Risk

1,064 Construction fatalities (2024)

Construction remains one of the most physically dangerous sectors in the U.S. economy. While the industry’s total recordable injury rate (2.2 cases per 100 full-time workers in 2024) is actually lower than manufacturing’s 2.7, the fatality picture tells a very different story.

Construction recorded 1,064 workplace deaths in 2024, down from 1,099 in 2023. This marks the first year-over-year comparison available since the NAICS 2022 series break, and the 3.2% decline is a modest but meaningful improvement. Despite the decrease, construction remains consistently the deadliest sector by total count, with a fatality figure that is disproportionately high relative to the industry’s share of total U.S. employment.

Looking more closely at nonfatal injuries, 0.9 cases per 100 workers involved days away from work, while 0.4 per 100 involved days of job transfer or restriction, and 1.3 per 100 involved days away, restriction, or transfer combined.

The connection between workforce planning and safety outcomes is direct and material. When crews are short, overtime increases, supervision is stretched thin, and less experienced workers are placed in higher-risk positions. The AGC 2025 Workforce Survey confirms that labor shortages are causing project delays for 45% of firms, and understaffed projects face compounding pressures that elevate both human and operational risk. The AGC/Sage 2026 Outlook reinforces the point: 18% of firms cite safety as a major concern for 2026, a figure that likely understates the issue given that safety risk is embedded in many of the other top concerns, including insufficient worker supply (57%), worker quality (53%), and rising labor costs that can lead firms to defer training or stretch crews across more tasks.

The early 2026 hiring volatility documented in Section 2 adds another dimension to this risk. Even with the March hires rebound, hiring difficulty persists at record levels, and existing crews continue to face pressure to do more with less. The combination of structural labor scarcity, rising input costs, and growing macroeconomic uncertainty creates conditions in which safety investments may be among the first to be deprioritized, precisely when they are most needed.

For construction leaders, safety is not separate from workforce strategy, it is a core component of it. Firms with strong safety cultures are better positioned to attract and retain workers, reduce workers’ compensation costs, and avoid the project disruptions that follow serious incidents.

Note: 2023 and 2024 fatality data reflect the NAICS 2022 series break. Data for years prior to 2023 are available separately from BLS.

---

8. Productivity, Output, and Labor Costs

+2.0% Labor productivity (output per hour) growth (2024)

Productivity trends are essential context for understanding whether the construction industry can absorb rising labor and materials costs without eroding margins. Through 2024, the productivity picture showed signs of recovery. In early 2026, the cost picture has deteriorated sharply.

Recent data from the BLS Productivity and Costs program shows construction labor productivity (output per hour) grew 2.0% in 2024, following a 2.4% gain in 2023. This represents a meaningful recovery from steep declines of –3.1% in 2021 and –7.0% in 2022. Total factor productivity, which accounts for capital, energy, materials, and services inputs alongside labor, grew 1.3% in 2024.

Output growth has been healthy at 3.6% in 2024, supported by infrastructure spending, data center construction, and continued residential demand. Combined inputs grew 2.3%, with capital input up 3.6% and labor input up 1.8%.

Firm-level data tells a similar but more varied story. The AGC/Sage 2026 Outlook found that 32% of firms reported productivity improved over the past 12 months, while 41% said there was no change and 25% reported that productivity declined. Results were largely consistent across regions and between union and open-shop firms, though firms in the South were somewhat more likely to report gains (37%) and large firms (revenue of $500 million or more) reported slightly stronger improvement (41%). The gap between the BLS aggregate data showing positive productivity growth and the roughly one in four firms reporting declines highlights how unevenly productivity gains are distributed across the industry.

However, the cost math has become significantly more challenging since these productivity gains were recorded. Construction firms now face cost pressure from multiple directions simultaneously.

On the labor side, wage growth has decelerated but still outpaces productivity. Construction wages and salaries rose 3.1% year-over-year in Q1 2026, down from 4.3% in Q4 2025, while total compensation rose 3.2%. Both figures remain above the 2.0% productivity growth rate, meaning the labor-productivity gap continues to pressure margins even as it narrows, particularly for firms operating under fixed-price agreements signed when wage growth was running hotter.

On the materials side, construction input prices rose 4.8% year-over-year in March 2026, the largest annual increase since January 2023, according to ABC’s analysis of BLS Producer Price Index data. Nonresidential construction input prices rose even faster at 5.4% year-over-year. The primary driver is oil. Crude petroleum prices surged 20.2% in March, which ABC attributes to oil-market volatility tied to the U.S.-Iran conflict that began in late February 2026. Conditions have intensified since: diesel reached $5.64 per gallon in the week of May 4, 2026, approaching the all-time national record, with several states already setting new highs. Brent crude has reached prices not seen since 2022, with WTI swinging between $88 and $107 per barrel in the first week of May. Rising diesel prices raise shipping costs, putting upward pressure on virtually every construction material regardless of its origin.

These fuel-driven increases are compounding, not replacing, existing tariff-related cost pressures. Deloitte’s 2026 E&C Outlook noted that steel prices were up 13%, aluminum up 23%, and copper products up 4.9% year-over-year. The AGC/Sage 2026 Outlook shows how broadly tariffs are affecting the industry: roughly 70% of firms report being affected. In response, 40% have raised bid prices, 35% have passed most or all tariff costs on to project owners, 32% have accelerated purchases, 20% have added price-sharing adjustments or other terms to contracts, 13% have switched from foreign to domestic suppliers, and 11% have absorbed most or all tariff costs. Only 24% report not being affected, with an additional 7% unsure.

The combined effect is a margin squeeze from both sides, though the labor cost contribution is moderating. With labor costs now rising at roughly 3.1–3.2%, materials costs rising at 4.8–5.4%, and productivity improving at only 2.0%, materials have become the dominant pressure on contractor margins. For firms on fixed-price contracts where neither tariff-related cost increases nor geopolitical price spikes can be passed through to project owners, the pressure is acute. ABC Chief Economist Anirban Basu has noted that while contractor profit margin expectations reached their highest level since February 2025 in ABC’s March Construction Confidence Index, that optimism was recorded before the full impact of the Iran-related oil price shock was reflected in project costs. With the conflict now in its third month and diesel still climbing, whether contractor confidence can hold under sustained input cost pressure remains an open question.

Construction has historically lagged other sectors in productivity improvement, a structural issue tied to the fragmented, project-based, and site-specific nature of the work. Deloitte’s 2026 E&C Outlook notes that firms are increasingly deploying technologies such as building information modeling (BIM), prefabrication, modular construction, and AI-driven scheduling to improve output per hour. The AGC/Sage 2026 Outlook confirms that adoption is accelerating: 61% of firms now use AI or plan to increase their investment in it, up from 44% in the prior year. The most common applications are office and administrative functions (45%), estimating (23%), design or preconstruction (20%), and recruitment, training, and other HR functions (16%). However, adoption remains uneven, and poor-quality data continues to undermine the reliability of analytics and AI solutions at many firms.

Sustaining productivity gains depends not just on technology investment but on workforce skill levels. Workers must be trained to use digital tools effectively, and firms that invest in both technology and people will see compounding returns. Those that invest in one without the other will likely be disappointed. In the current environment, where labor costs, materials costs, and macroeconomic uncertainty are all rising simultaneously, productivity improvement is no longer a long-term aspiration. It is an immediate margin imperative.

---

9. Construction Spending and Sector Outlook

~$2.24 trillion Total U.S. construction spending (2025 estimate)

Understanding where construction spending is headed is essential for workforce planning, because spending growth directly drives labor demand and the current outlook is unusually unbalanced. As of spring 2026, construction activity is increasingly concentrated in a single segment, while most other sectors are cooling or contracting.

The AIA Consensus Construction Forecast (January 2026) projects just a 1.0% gain in nonresidential building spending for 2026, increasing to 2.2% in 2027. Since these figures are not adjusted for inflation, real growth is likely flat or negative. The forecast panel noted that 2025 results were disappointing across the board: a projected 1.5% gain in commercial spending instead became a 3% decline, and manufacturing spending fell approximately 5%.

More recent data from Dodge Construction Network reinforces this picture while sharpening it. Total construction starts declined 13.2% in February 2026 to a seasonally adjusted annual rate of $1.08 trillion. On a year-to-date basis through February, total starts were down 1.9%, with residential starts down 12.4% and nonresidential starts down 2.0%. The Dodge Momentum Index, which tracks projects entering the planning phase and leads construction spending by 12 to 18 months, grew 1.8% in March to 250.5. However, that growth was powered almost entirely by data center projects, with most other sectors easing back.

The degree to which data centers are distorting the broader picture is now quantifiable. Dodge reports that commercial planning momentum was up 28.5% year-over-year in March, but when data centers are removed, commercial planning was down 12.7%. This single statistic captures the two-tier nature of the current construction market more clearly than any other.

The AGC/Sage 2026 Outlook corroborates this divide through contractor sentiment data. Of the 17 project categories surveyed, net optimism was positive for 12 and negative for five, compared to just two negative categories a year ago. The average net reading across all categories, while still moderately positive at 9%, is only a fraction of the prior year’s level. Expectations are less positive than a year ago for 15 of the 17 categories.

The picture varies dramatically by sector:

Strong: Data centers stand alone as the dominant growth engine. AIA forecast panelists expect spending gains of 26% in 2026 and nearly 17% in 2027, following an estimated 32% increase in 2025. Contractor sentiment reflects this: data centers posted a net reading of +57% in the AGC/Sage 2026 Outlook, the highest of any category and the only segment with a double-digit increase in optimism from the prior year. For the past three years, data centers, warehouses, and manufacturing together have accounted for over 40% of all spending on building construction nationally, up from 25% in 2019. The scale of individual projects entering the pipeline underscores the magnitude: in February alone, Dodge reported a $3 billion Google data center campus breaking ground in Miami, Texas, and a $3 billion Polaris Forge 2 AI data center in Harwood, North Dakota. In March, an Amazon data center campus in Hamlet, North Carolina, entered planning with 17 individual buildings each valued at $500 million, alongside a Microsoft data center in Dallas, Iowa, with 10 buildings at $250 million each.

From the Field: Data Center Demand Reaching Specialty Subcontractors

“One trend we’re seeing right now is the data center market absolutely exploding. We’re partnered with one of the industry’s largest security perimeter and access control providers, and we support them across a wide range of data center projects nationwide.

For them, demand has been growing quarter after quarter, and it’s really starting to take off. The volume of new builds and expansions is driving a significant need for skilled talent, and it’s clear this is going to remain a major area of growth moving forward.”

— Ryan DeSmith, Sr. Direct Hire Staffing Manager, Amtec

Strong: Power facilities. Closely linked to data center demand, power construction posted the second-highest contractor sentiment at +34% net, and was one of only two categories (alongside data centers) with a higher reading than in the prior year’s survey. Nonbuilding electric power and utilities construction starts were up 133.8% year-to-date through February, according to Dodge, though monthly volatility is high in this category.

Growing: Healthcare. Contractor sentiment remains positive for both hospitals (+20% net) and other healthcare facilities such as clinics, testing facilities, and medical labs (+24% net), supported by strong demographic tailwinds from an aging population. AIA projects healthcare spending to increase 4.6% in 2026. However, Dodge data shows healthcare construction starts dropped 46.6% month-over-month in February, and institutional planning broadly weakened in March. The annual forecast may hold, but the near-term trajectory warrants caution.

Mixed: Water/sewer, manufacturing, transportation, and bridge/highway. These sectors remain in positive territory in the AGC/Sage survey but with notably reduced expectations. Water and sewer posted a net reading of +16% (down 18 points from the prior year). Manufacturing registered +15% (down 10 points). Transportation dropped sharply from +29% to +11%, and bridge/highway fell from +24% to +10%. Manufacturing construction starts pulled back 54.1% month-over-month in February according to Dodge, and AIA expects manufacturing spending to decline about 4% in 2026 after several years of extraordinary growth.

Stalled: Warehouse, federal, multifamily, and public building. All four categories remain slightly positive in the AGC/Sage survey but at their lowest net readings since 2021. Warehouse fell from +14% to +5%, federal work from +22% to +5%, multifamily from +12% to +4%, and public building from +14% to +1%. Residential starts were down 12.4% year-to-date through February, with single family down 17.5%, according to Dodge.

Declining: K-12 education, higher education, lodging, private office, and retail. Five segments now post negative net readings, compared to just two a year ago. K-12 slipped from +13% to -1% and higher education from +12% to -5%, marking the first time since 2021 that both education categories have posted negative readings. Census Bureau projections of significant declines in school-age population cohorts over the next decade continue to weigh on the education outlook. Lodging fell from +7% to -7% after briefly recovering from pandemic-era collapse. Private office declined to -14%, consistent with a national vacancy rate of 20.5%. Net of data center spending, office construction spending is projected to decline in the double-digit range both this year and next. Retail posted the most negative reading at -18%.

Cost pressures are intensifying from multiple directions. Tariff policy has driven steel prices up 13%, aluminum up 23%, and copper products up 4.9% year-over-year. Roughly 70% of firms report being affected by tariffs, with 40% raising bid prices and 35% passing costs to project owners. Layered on top of tariffs, the U.S.-Iran conflict that began in late February 2026 has driven sustained oil-market volatility, with crude petroleum prices having surged 20.2% in March and continuing to climb. Diesel reached $5.64 per gallon in the week of May 4, 2026, approaching the all-time national record. Overall construction input prices were up 4.8% year-over-year through March 2026, the largest annual increase since January 2023, with nonresidential inputs up 5.4%. Higher treasury yields are also putting renewed pressure on borrowing costs, contributing to an environment in which 34% of firms report project financing as unavailable or too expensive and 37% cite funding uncertainty as a reason for project postponements or cancellations.

The combined effect of these cost pressures, uneven demand, and rising economic uncertainty has reshaped how firms approach 2026. The AGC/Sage 2026 Outlook found that 63% of firms had a project postponed, scaled back, or canceled in the past six months. Beyond cost and funding issues, 22% pointed to policy changes including federal funding levels, taxes, or regulatory requirements, and 13% cited tariffs specifically as contributing to changes in project demand. These policy-related impacts were especially pronounced among larger firms, with 32% of firms with revenues over $500 million reporting that broader policy changes affected project demand, compared to 20% among smaller firms.

For workforce planning purposes, the key implication is this: even modest overall spending growth, combined with accelerating retirements, immigration constraints, and the gravitational pull of data center projects, sustains intense competition for skilled construction labor. The firms competing for workers in 2026 are not only competing with each other, they are competing with every other sector that needs electricians, welders, and project managers. And the firms that are winning that competition right now are the ones building data centers.

---

---

10. What Construction Firms Expect Next

62% Of firms cite economic slowdown or recession as their top concern for 2026

Construction firms enter 2026 with what the AGC/Sage 2026 Construction Hiring and Business Outlook describes as “dampened” expectations, cautious but not pessimistic, with significant variation by sector and region. The mood has shifted from the expansion-oriented optimism of recent years toward careful risk management, driven by a combination of macroeconomic uncertainty, geopolitical disruption, and persistent workforce constraints.

The most striking signal in the AGC/Sage 2026 Outlook is the emergence of economic slowdown or recession as the industry’s top concern, cited by 62% of firms. This marks a notable shift from the prior year’s survey, when recession ranked fifth. The next four most cited concerns were all workforce and cost related: insufficient supply of workers or subcontractors (57%), rising direct labor costs including pay, benefits, and employer taxes (56%), worker quality (53%), and materials costs (53%). Increased competition for projects (44%), high interest rates or financing costs (36%), and project delays due to government funding, review, permitting, or inspection delays (30%) rounded out the most frequently cited issues.

There are signs that the most acute phase of the labor shortage may be stabilizing in some respects. ABC’s projected need for 349,000 new workers in 2026 is down from 439,000 in 2025 and over 500,000 in each of the two prior years, driven partly by modest spending growth forecasts. But as ABC cautions, this is not a signal to relax. Spending is projected to reaccelerate in 2027, and the structural drivers of labor scarcity (retirements, immigration, low career interest) remain firmly in place.

Headcount plans reflect cautious optimism. The AGC/Sage survey found that 63% of firms plan to increase headcount in 2026, while 15% expect to decrease, with the remainder holding steady. Both figures represent a shift from the prior year, when 69% planned increases and just 10% planned decreases. Among firms planning growth, 44% expect increases of 1 to 10%, while 19% anticipate larger gains of 11% or more. The share of firms expecting to add workers is slightly lower than in the past four years, even as hiring difficulty continues to rise.

The gap between hiring intentions and hiring reality remains volatile. With 63% of firms wanting to grow headcount and staffing expectations reaching their highest level since April 2022 in ABC’s March Construction Confidence Index, the February drop to the lowest hiring rate on record raised concern that intentions could not be acted on. The March rebound to 317,000 hires moderated that concern, but the volatility itself underscores how sensitive actual hiring is to short-term uncertainty. Whether 2026 settles into a sustained recovery or continues this stop-start pattern will be one of the defining dynamics of the year.

Workforce shortages remain the leading cause of project disruption. The AGC 2025 Workforce Survey found that 45% of firms experienced project delays specifically due to shortages of their own or subcontractors’ workers, and 78% had at least one delayed project in the past twelve months. The AGC/Sage 2026 Outlook adds further detail: 63% of firms report that a project was postponed, scaled back, or canceled in the past six months, with causes spanning funding uncertainty (37%), financing unavailable or too expensive (34%), increasing materials or labor costs (23%), other policy changes (22%), tariffs (13%), and lengthening or uncertain completion times (12%).

Contractor backlog has rebounded, but the picture is uneven. ABC reported average backlogs of 8.6 months in March 2026, fully recovering from a four-year low in January and returning to levels not seen since the prior summer. In the AGC/Sage survey, 39% of firms said their backlog was larger than a year ago, 30% said it was about the same, and 30% reported it was smaller. Three-quarters of firms (76%) were at least moderately confident in their backlog and bidding pipeline going into 2026.

The most revealing backlog data, however, is the split between segments. The 15% of ABC member contractors working on data centers reported average backlog of 10.6 months, compared to 8.3 months for the 85% not working on data centers. This 2.3-month gap, combined with the sector sentiment data showing data centers as the only category with rising optimism, underscores how dependent the industry’s forward momentum is on a single project type.

Confidence is holding, but the foundation is fragile. ABC’s March Construction Confidence Index showed profit margin expectations at their highest level since February 2025, and all three CCI components (profit margins, staffing levels, and sales) remained above the 50 threshold indicating expectations for growth. However, ABC Chief Economist Anirban Basu has cautioned that much of this data predates the full impact of the U.S.-Iran conflict on oil prices and borrowing costs. Conditions have intensified since: oil prices have risen to heights not seen since 2022, diesel has climbed to $5.64 per gallon, and higher treasury yields continue to pressure financing. An April 8 ceasefire collapsed within days, and as of early May negotiations remained unresolved. Whether contractor optimism can persist under these conditions likely depends on how quickly the geopolitical situation resolves. A lengthy disruption will put continued upward pressure on both input costs and borrowing costs, eroding the margin confidence that contractors currently express.

Firms are not standing still. According to the AGC 2025 Workforce Survey, 42% of firms have initiated or increased spending on training and professional development to address shortages. Fifty-five percent have added online strategies such as social media and targeted digital advertising to reach younger applicants, and 52% have engaged with career-building programs at high schools, colleges, or career and technical education institutions. The AGC/Sage 2026 Outlook adds that 61% of firms now use AI or plan to increase their investment in it, up from 44% in the prior year, with the most common applications in office functions (45%), estimating (23%), and design or preconstruction (20%).

Immigration policy remains a wildcard. ABC Chief Economist Anirban Basu has described immigration as a “potential wildcard for the industry’s labor force dynamics.” The AGC/Sage 2026 Outlook found that 33% of firms have been affected by immigration enforcement in the past six months, up from 28% in the AGC workforce survey conducted months earlier. The full impact of reduced immigration flows on the construction workforce is still unfolding, but the direction is clear: a traditional source of labor is constrained, and domestic replacement is not keeping pace. Seventeen percent of firms have already adjusted project schedules or scopes due to labor or material shortages linked to immigration enforcement or policy changes.

The prevailing industry mindset has shifted from aggressive expansion to careful optimization, finding ways to deliver more with constrained labor resources, invest strategically in the workers they have, and build flexibility into staffing models. With recession now the top industry concern and cost pressures compounding from tariffs, fuel prices, and borrowing costs simultaneously, 2026 is shaping up to be a year in which survival depends less on the volume of work available and more on how efficiently and selectively firms pursue it.

---

11. Future Workforce Outlook (2026 and Beyond)

Construction workforce challenges are structural rather than cyclical. Even if hiring slows temporarily or spending softens in certain sectors, labor availability, skills alignment, demographic pressures, and policy constraints will continue to shape workforce decisions for years to come. What has changed since early 2026 is the addition of macroeconomic and geopolitical risk on top of these structural forces, creating an environment in which firms must plan for uncertainty and scarcity simultaneously.

The numbers are stark. ABC projects the industry will need 456,000 new workers in 2027, up from 349,000 in 2026. Deloitte estimates a potential shortage of over two million skilled craft professionals by 2028 if current trends persist. Meanwhile, interest in construction careers remains low, with only 7% of potential job seekers considering the field.

As detailed in Section 3, the demographic picture is the most urgent pressure, with 41% of the current workforce projected to retire by 2031 and only 10% under 25. Replacement pipelines cannot keep pace. As BlackRock noted in a January 2026 analysis, reported by Fortune, “the crunch time for recruiting and training the skilled workers of the future is now, before that knowledge retires.”

The labor market dynamics documented throughout this report add urgency to that timeline. The construction hiring rate fell to a record low of 3.3% in February 2026 before partially rebounding in March, even as 63% of firms plan to increase headcount and staffing expectations sit at their highest level since April 2022. Firms want to grow but volatility makes execution difficult. If hiring remains uneven through 2026 while retirements continue at their projected pace, the industry will enter 2027 with an even deeper structural deficit, precisely when ABC projects worker demand will jump to 456,000.

The concentration of activity in data center construction adds a complicating layer. With Dodge Construction Network reporting that commercial planning momentum is down 12.7% year-over-year when data centers are removed, and ABC data showing that data center contractors carry 10.6 months of backlog compared to 8.3 months for everyone else, the industry’s forward pipeline is increasingly dependent on a single segment. This concentration creates risk in both directions: if data center construction sustains or accelerates, it will continue to pull the most skilled workers away from other segments; if it slows due to financing constraints, regulatory delays, or shifts in AI investment strategy, the broader industry will lose its primary growth engine without a clear replacement.

Immigration policy remains what ABC Chief Economist Anirban Basu calls a “potential wildcard for the industry’s labor force dynamics.” The share of firms affected by enforcement has risen from 28% in mid-2025 to 33% by late 2025, and 17% of firms have already adjusted project schedules in response. With a quarter of the construction workforce foreign-born and an estimated half of those workers undocumented, any sustained reduction in immigration flows will compound the retirement-driven shortage in ways that domestic training pipelines, however aggressively expanded, cannot offset in the near term.

Recession risk introduces a new variable into the outlook. With 62% of firms citing economic slowdown or recession as their top concern for 2026, up from fifth place in the prior year, the industry faces an unusual combination of structural labor scarcity and growing demand uncertainty. A recession could temporarily reduce worker demand, easing the shortage in the short term, but it would also slow apprenticeship investment, defer training programs, and drive experienced workers out of the industry permanently. The 2008-2009 downturn demonstrated this pattern: the construction workforce lost roughly 2.2 million jobs and took nearly a decade to recover to pre-recession employment levels. Firms that cut workforce investment during a downturn pay the price for years afterward.

The U.S.-Iran conflict, now in its third month, continues to drive uncertainty in oil prices, diesel costs, and borrowing rates that is difficult to plan around. Construction input prices rose at 4.8% year-over-year through March 2026, diesel has reached $5.64 per gallon in the week of May 4, and higher treasury yields are tightening project financing. These pressures could either dampen construction activity, reducing labor demand, or accelerate cost escalation that makes each project more expensive and each worker more valuable. The direction depends on duration and resolution, neither of which is predictable.

Technology is augmenting, not replacing, the construction workforce. Deloitte’s 2026 E&C Outlook describes an industry moving toward AI-driven analytics, autonomous equipment, robotics, and prefabrication, tools that reduce labor requirements per unit of output but simultaneously increase demand for digitally skilled workers such as data scientists, digital engineers, and specialists capable of managing AI-driven workflows. The AGC/Sage 2026 Outlook confirms that adoption is accelerating: 61% of firms now use AI or plan to increase their investment in it, up from 44% in the prior year. The most common applications are office and administrative functions (45%), estimating (23%), design or preconstruction (20%), recruitment, training, and HR (16%), onsite construction monitoring and documentation (13%), scheduling (12%), and procurement (7%). While these tools offer meaningful productivity potential, poor-quality data continues to undermine the reliability of analytics and AI solutions at many firms, and only 13% are applying AI to onsite construction activity, where the productivity impact could be greatest.

Skilled trades employment is projected to grow 5.3% from 2024 to 2034, well above the 3.1% overall rate, with electricians at 9.5% and HVAC technicians at 8.1%. These projections assume sustained demand from data center, energy, and infrastructure construction, all of which are currently contributing to the concentration dynamic described above.

For firms navigating this environment, Deloitte recommends an adaptive workforce strategy:

• Build critical skills internally through apprenticeship, craft training, and upskilling programs
• Buy specialized expertise through direct hire when specific skill sets are needed immediately
• Borrow flexible labor through contract staffing to manage project-based volatility and demand surges

This framework reflects a reality that no single approach to workforce development will be sufficient. The AGC/Sage 2026 Outlook data supports this: firms are pursuing multiple strategies simultaneously. Forty percent raised pay more aggressively than the prior year. Twenty-one percent introduced or increased incentives. Twenty percent enhanced benefits. Forty-two percent increased training investment. Fifty-five percent expanded digital recruiting. Sixty-one percent are investing in AI. No single lever is sufficient, and the firms best positioned to deliver projects on time through 2026 and beyond will be those that combine internal development, targeted recruitment, flexible staffing, technology adoption, and competitive total compensation into an integrated workforce strategy.

---

What This Means for Construction Leaders

• Plan for total compensation, not wage pressure alone. Construction’s benefits share (30.3%) lags manufacturing (~33%), and that gap becomes a retention risk when economic uncertainty lifts and workers feel confident enough to move again.
• Treat vacancies as a project delivery risk, not just an HR metric. Forty-five percent of firms report delays directly caused by labor shortages, and 63% have had a project postponed, scaled back, or canceled in the past six months.
• Target overtime and fatigue hotspots to reduce both safety incidents and turnover. Understaffed crews compound injury risk on every jobsite, and with hiring volatile and structural shortages persistent, replacing injured or burned-out workers is harder than ever.
• Invest in apprenticeship and skills development now. The demographic cliff is approaching, with 41% of the current workforce projected to retire by 2031, and replacement pipelines take years to build. Firms that cut training investment during downturns pay the price for years afterward.
• Use workforce flexibility as a competitive advantage, not a last resort. Project-based staffing models can protect schedules when the labor market will not cooperate, and the combination of volatile hiring conditions and rising demand in 2027 makes flexible labor a strategic necessity rather than a stopgap.
• Account for inter-sector labor competition, especially from data centers. Data center contractors carry 10.6 months of backlog compared to 8.3 months for everyone else, and planning momentum for all other commercial categories is declining. Firms outside this segment need distinct strategies to attract and retain the skilled trades workers being pulled toward higher-paying, longer-duration data center projects.
• Prepare for cost pressure from multiple directions simultaneously. Tariffs, the U.S.-Iran conflict, and rising borrowing costs are compounding, not replacing, each other. Construction input prices were up 4.8% year-over-year through March, diesel has reached $5.64 per gallon, and 34% of firms report project financing as unavailable or too expensive. Firms on fixed-price contracts are especially exposed.
• Build recession contingency into workforce plans. With 62% of firms citing economic slowdown as their top concern, the possibility of a downturn must be weighed against the certainty of ongoing structural labor scarcity. Historically, firms that maintain workforce investment through downturns have been better positioned when activity rebounds.
• Accelerate technology adoption with a focus on productivity impact. Sixty-one percent of firms are now using or increasing AI investment, but only 13% are applying it to onsite construction activity. The margin squeeze from rising labor and materials costs makes productivity improvement an immediate imperative, not a long-term aspiration.

---

Key Takeaways for Construction Leaders

• Construction workforce challenges are structural, not temporary
• Retirement is now the primary driver of new-worker demand
• Skills shortages outweigh pure headcount shortages
• Wage growth has decelerated from 4.3% to 3.1% year-over-year as of Q1 2026, but labor and materials costs still outpace productivity gains
• Immigration policy and enforcement materially affect labor supply, with the share of firms impacted rising from 28% to 33% in six months
• Data center and energy construction are intensifying competition for skilled trades, creating a measurable two-tier market
• The construction labor market hit a historic low in February 2026 before partially rebounding in March, with volatility now as much a challenge as scarcity
• Recession risk is now the industry’s top concern, complicating workforce planning in an already-scarce labor market
• Technology is reshaping work, not eliminating workers, and AI adoption is accelerating
• Geopolitical disruption and oil price volatility have emerged as new cost drivers that compound existing tariff pressure
• Flexible workforce strategies are becoming a competitive necessity, not just an advantage

---

Methodology & Sources

This report consolidates publicly available government data and industry research to provide a comprehensive view of the U.S. construction workforce.

The report was originally compiled in December 2025 and most recently updated in May 2026 using the latest available data. Federal labor market series are current through April 2026. April 2026 figures are preliminary and subject to BLS revision; February and March 2026 figures reflect revisions published with the April release.

Scope

• Industry: NAICS 23 (Construction)
• Geography: United States
• Workforce: All employees, with emphasis on production and nonsupervisory roles

Practitioner Commentary

Qualitative input was collected from Ryan DeSmith, Sr. Direct Hire Staffing Manager at Amtec, on April 30, 2026. His comments appear as inset quotes in Sections 2, 3, and 9, supplementing the federal and industry data with on-the-ground recruiting perspective.

---

Primary Sources

U.S. Bureau of Labor Statistics (BLS)

Official U.S. government labor market data used for employment, wages, benefits, safety, and productivity metrics throughout this report.

Construction sector overview (NAICS 23): https://www.bls.gov/iag/tgs/iag23.htm

The following BLS programs and datasets were referenced via the construction overview and associated series:

• Current Employment Statistics (CES): employment levels, average hourly earnings, average weekly hours
• Job Openings and Labor Turnover Survey (JOLTS): job openings, hires, and separations
• Occupational Employment and Wage Statistics (OEWS): occupation-level wage data
• Current Population Survey (CPS): unemployment rates for workers previously employed in construction, union membership and representation, weekly earnings by union status
• National Compensation Survey (NCS): benefit incidence and access
• Employer Costs for Employee Compensation (ECEC): total compensation, benefit cost shares, compensation cost trends
• Employment Cost Index (ECI): year-over-year compensation changes
• Survey of Occupational Injuries and Illnesses (SOII / IIF): nonfatal injury and illness rates
• Census of Fatal Occupational Injuries (CFOI): fatalities
• Productivity and Costs Program: output per hour, total factor productivity, combined inputs
• Business Employment Dynamics (BED): gross job gains and losses
• Quarterly Census of Employment and Wages (QCEW): establishment counts

Additional BLS publications referenced:

The Employment Situation, April 2026. Released May 8, 2026. Used to update construction employment figures for February 2026 (revised), March 2026 (revised), and April 2026 (preliminary), as well as average hourly earnings, weekly hours, and broader labor market context. https://www.bls.gov/news.release/empsit.htm

Employment Cost Index, First Quarter 2026. Released April 30, 2026. Used to update construction wage growth and total compensation cost trends. https://www.bls.gov/news.release/eci.htm

Job Openings and Labor Turnover, March 2026. Released May 5, 2026. Used to update construction job openings, hires, and separations.

Note: All BLS data referenced are publicly available federal datasets accessible through the construction sector overview page and linked series. Data extracted May 8, 2026. October 2025 unemployment data was unavailable due to the 2025 lapse in appropriations. January 2026 unemployment estimates were revised to incorporate updated population controls. 2025 union membership data is an 11-month average excluding October. Employment data for February and March 2026 reflect revisions published with the April 2026 Employment Situation release.

---

Associated General Contractors of America (AGC)

Industry sentiment, hiring expectations, workforce constraints, and project impact data reported directly by U.S. construction firms.

• 2025 Workforce Survey (conducted with NCCER, July–August 2025) https://www.agc.org/news/2025/08/28/construction-workforce-shortages-are-leading-cause-project-delays-immigration-enforcement-affects

• 2026 Construction Hiring and Business Outlook (with Sage, surveyed November–December 2025, published January 2026) https://www.agc.org/sites/default/files/users/user21902/2026%20Construction%20Hiring%20and%20Business%20Outlook%20Report_Final2.pdf

• 2026 Construction Outlook National Survey Results https://www.agc.org/sites/default/files/users/user21902/2026_Outlook_National_F.pdf

These sources were used to inform: firm-level hiring difficulty rates, project delay impacts, vacancy and qualification data, immigration enforcement impacts, training and recruiting investment trends, tariff impacts on projects, compensation changes, productivity self-assessments, AI adoption, sector-by-sector demand expectations, backlog confidence, project postponement causes, and forward-looking hiring expectations.

---

Associated Builders and Contractors (ABC)

Workforce demand projections, construction spending analysis, backlog data, contractor confidence, materials prices, and employment analysis.

• 2026 Construction Workforce Shortage Analysis (January 2026) https://www.abc.org/News-Media/News-Releases/abc-construction-industry-must-attract-349000-workers-in-2026-despite-macroeconomic-headwinds

• Construction Employment, March 2026 (April 3, 2026) https://www.abc.org/News-Media/News-Releases/abc-construction-employment-rebounds-by-26000-in-march

• JOLTS Analysis, February 2026 (March 31, 2026) https://www.abc.org/News-Media/News-Releases/abc-slowest-rate-of-construction-hiring-on-record-in-february

• Construction Backlog Indicator and Construction Confidence Index, March 2026 (April 14, 2026) https://www.abc.org/News-Media/News-Releases/construction-backlog-contractor-confidence-outpace-year-ago-levels-in-march-says-abc

• Construction Materials Prices, March 2026 (April 14, 2026) https://www.abc.org/News-Media/News-Releases/abc-oil-prices-contribute-to-march-surge-in-construction-materials-prices

These sources were used to inform: net new worker demand projections for 2026 and 2027, the relationship between construction spending and job creation, retirement-driven demand estimates, contractor backlog data and data center vs. non-data center backlog split, contractor confidence indices, construction employment trends, JOLTS hiring and churn analysis, materials price trends, oil and diesel cost impacts, and forward-looking staffing expectations.

---

American Institute of Architects (AIA)

Macroeconomic context, construction spending forecasts, and sector-level outlook.

• January 2026 Consensus Construction Forecast https://www.aia.org/resource-center/consensus-construction-forecast/january-2026

This source was used to frame the Construction Spending and Sector Outlook section, including: nonresidential building spending projections, sector-by-sector performance (data centers, healthcare, offices, manufacturing, education), immigration and labor force composition data, and tariff/interest rate impacts on construction activity.

---

Deloitte Research Center for Energy & Industrials

Forward-looking workforce, technology, and industry insights used to contextualize long-term construction labor trends.

• 2026 Engineering and Construction Industry Outlook (November 2025) https://www.deloitte.com/us/en/insights/industry/engineering-and-construction/engineering-and-construction-industry-outlook.html

This source was used to frame the Future Workforce Outlook section, particularly in areas related to: workforce demand projections and retirement timelines, skills-based labor shortages and career interest data, technology adoption (AI, BIM, prefabrication, robotics), digital transformation and data governance, tariff and supply chain impacts, and the Build, Buy, or Borrow workforce strategy framework.

---

Dodge Construction Network

Construction starts data and planning momentum indicators used to provide current market activity context alongside spending forecasts.

• Construction Starts, February 2026 (March 20, 2026) https://www.construction.com/company-news/construction-starts-slow-by-13-in-february/

• Dodge Momentum Index, March 2026 (April 7, 2026) https://www.construction.com/dodge-momentum-index/dodge-momentum-index-grows-2-in-march/

These sources were used to inform: total construction starts levels and trends, residential and nonresidential starts breakdowns, nonbuilding and infrastructure activity, the Dodge Momentum Index as a forward indicator of construction spending, data center concentration in the planning pipeline, regional construction start patterns, and specific large-project examples.

---

Additional Sources Referenced

• BlackRock — Skilled trades employment growth projections (January 2026), as reported by Fortune

• Construction Labor Research Council (CLRC) — Union settlement data (2025), as reported by Construction Citizen / AGC Data DIGest

• Association of Equipment Manufacturers (AEM) — January 2026 jobs report analysis, via Construction Equipment Guide

• Construction Dive — ABC workforce shortage analysis context, via Construction Dive

Injury and fatality statistics reflect the most recent finalized SOII and CFOI releases available at the time of compilation.