The construction industry is grappling with a significant labor shortage, with an estimated 439,000 net new workers needed in 2025 to meet growing project demands, according to a report from Associated Builders and Contractors (ABC). While the gap in labor supply is smaller than the previous year’s 501,000, it remains a critical issue for construction businesses looking to fulfill their obligations amidst a high demand for services.

Anirban Basu, the chief economist at ABC, emphasized that for builders—especially those in nonresidential construction—the main hurdle for the coming year will be securing a skilled workforce. The industry continues to struggle with the challenge of finding workers with specialized trade skills, which is vital for the successful completion of construction projects. With construction spending seeing a slight slowdown in recent years, the labor shortage has persisted, despite efforts to attract more workers into the sector.

The shortage of skilled workers is driven by several factors, including cyclical economic patterns where demand for construction services rises and falls. For instance, sectors such as multifamily housing and commercial office buildings are seeing reduced demand, while other areas like infrastructure and renovation are experiencing an uptick in projects. However, the lack of experienced workers, particularly those in highly specialized roles, continues to plague the industry, making it harder for contractors to deliver projects on time and within budget.

Basu further noted that the industry is facing a generational shift in the workforce. For the first time since 2011, the median age of construction workers is under 42 years old, meaning fewer workers are nearing retirement. However, this trend has resulted in an influx of younger workers who often lack the experience and skills of their more seasoned counterparts, contributing to the growing skills gap. As more workers enter the field at a lower skill level, the overall workforce shortage number is improving, but the industry still faces challenges when it comes to skilled trades.

In addition to the internal challenges facing the industry, Basu also pointed to broader societal factors, such as the lack of sufficient blue-collar education and training programs in the U.S., which has contributed to the labor shortage. He suggested that more people are beginning to recognize the value of pursuing careers in trades, and as economic realities continue to evolve, more individuals may consider these opportunities. "People begin to realize the economy is evolving, and they respond to that," Basu explained.

Another key factor that could affect the availability of workers is immigration policy. Historically, immigrant workers have played a crucial role in the construction industry, filling labor shortages across various sectors. However, Basu warned that potential changes in immigration laws, particularly under the Trump administration, could create significant challenges for the industry. The uncertainty surrounding immigration reform could reduce the pool of available workers, further compounding the problem.

In response to these challenges, ABC CEO Mike Bellaman called for a market-driven, merit-based visa system that would allow skilled workers to legally enter the U.S. and contribute to the construction sector. Bellaman stated that ABC would collaborate with the federal government to create a system that would help meet labor demands while ensuring a steady and qualified workforce.

As the construction industry looks ahead to 2025, addressing the labor shortage remains a top priority. Whether through workforce development, immigration reform, or industry innovation, the future of the construction sector depends on its ability to attract and retain skilled workers capable of meeting the growing demand for construction services across the U.S.