Labor

The construction industry will need to attract an estimated 349,000 net new workers to keep up with demand in 2026, according to data from Associated Builders and Contractors. That number is set to rise to 456,000 in 2027, as spending growth is poised to resume.

That gap is certainly sizable, but it also represents a precipitous drop. In 2025, ABC predicted a need for 439,000 new workers. In each of the two years prior, the group foresaw the need for more than half a million fresh faces.

Failing to bring in the needed workers, “will worsen labor shortages, especially in certain occupations and regions, placing further upward pressure on labor costs,” said Anirban Basu, chief economist for ABC, in the release.

Basu tacked the shrinking labor gap in part to modest growth forecasts in construction spending for 2026 and 2027. However, he hedged that the forecasts could prove overly conservative and that demand may, in fact, be higher than indicated. 

That would likely arise if “project financing costs decline unexpectedly or if lingering policy uncertainty resolves itself quickly and favorably,” Basu said. He also noted that nonresidential specialty trade contractors have added 95,000 jobs since August 2024, “demonstrating that certain sectors of nonresidential construction hiring are going strong.”

But contractors may find themselves strapped to hire staff due to experienced workers nearing the end of their careers, as well as ongoing political and economic uncertainty, said Mike Bellaman, ABC president and CEO, in the release.

“Given current assumptions regarding prospective industry growth, a majority of new worker demand in 2026 will be attributable to retirement rather than increased demand for construction services, despite the ongoing boom in artificial intelligence infrastructure buildout,” Basu said.

Indeed, the construction industry has had an age problem for years, with the median worker closer to retirement than the total U.S. labor force at large. Nonetheless, there may be hope to shore up numbers, as Gen Z, those born between 1997 and 2012, are more likely to join construction occupations, per the National Association of Home Builders.

Meanwhile, Basu described immigration policy as a “potential wildcard for the industry’s labor force dynamics.” It remains unclear to what extent unauthorized workers have departed the U.S. construction workforce, he said, but data indicates “the flow of undocumented workers into the country fell precipitously in 2025 while voluntary deportations accelerated.”

Despite the shrinking gap, Bellaman reiterated the challenges construction employers will have finding workers, especially those with in-demand skills.

“The construction industry does not have to fall off the workforce shortage cliff,” said Bellaman. “To avoid this outcome and shore up the talent pipeline, now is the time for action—not complacency—to reaffirm that the construction industry offers careers of choice in today's complex job market.”

The labor shortage in the construction industry is nothing new. It’s been a top challenge for employers for well over a decade. Associated Builders and Contractors predicts that the U.S. needs to hire about 300,000 additional workers just to meet current demand. The labor force that construction companies desperately need to get the work done simply isn’t there.

This isn’t to say that the industry hasn’t tried to overcome these mounting challenges. But strategies like wage increases, signing bonuses and training programs, while essential, haven’t been enough to turn things around. Unfortunately, the scale of the shortage now outpaces any positive effect those solutions might be able to bring to the table. 

A fix in plain sight

A small fix could pay big dividends. 

The EB-3 visa program is a long-standing, employment-based green card system that gives employers in the U.S. the ability to sponsor foreign nationals. It applies to full-time work when employers are unable to find American workers for common roles. In construction, that means concrete laborers, carpenters, drywall installers, equipment operators and the like. These positions and many others are often eligible under EB-3’s “Other Workers” category.

However, the program is too often hobbled by outdated rules and overwhelming backlogs. Making the situation even more challenging is the fact that of the 10,000 green cards available each year in the “Other Workers” category, only about 3,000 go to workers. The remaining 7,000 visas are eaten up by the spouses and children of EB-3 workers, counting against the cap even though they’re not filling jobs. 

The Dignity Act’s common-sense approach

A fix could be coming with the Dignity Act of 2025. It’s a bipartisan immigration bill and it's been gaining support in Congress since being introduced in July 2025. The Dignity Act proposes a simple but critical accounting fix. Under the proposal, only the principal EB-3 worker, not their dependents, would be counted against the 10,000 visa cap, meaning 7,000 visas each year would be freed up to help alleviate this nagging shortage of labor.

It’s a small adjustment, but one that can have major implications across construction and several other industries if it passes. A simple shift of the math could triple the number of EB-3 workers that are admitted each year, without raising overall immigration numbers. It’s a meaningful change for construction employers that would create fewer backlogs and give predictable access to the workers they need. 

Why the timing matters

The Dignity Act also sets aside nearly $4 billion in funding to upgrade federal agencies that are responsible for processing EB-3 visa applications. This includes the Department of Labor, U.S. Citizenship and Immigration Services and the State Department. The goal of these changes would be to move up approval timelines, cut through red tape and realize better coordination between departments, all critical for employers trying to meet staffing needs on multi-year projects.

The bill has received endorsements from groups across the political and economic spectrum, including from the U.S. Chamber of Commerce, the National Association of Home Builders and the National Roofing Contractors Association. There is real momentum and the construction industry has much to gain from the Dignity Act’s passage. 

Not a silver bullet

It’s a strong tool, but the Dignity Act certainly won’t solve every problem contributing to the ongoing labor shortage. Still, it presents a stable solution for long-term workforce planning, something that has been missing for construction companies for far too long. 

Workers with an EB-3 visa arrive vetted, committed and ready to roll up their sleeves and work. Unlike those in temporary guest worker programs, these are green card holders with a path to stay, grow and contribute for the long haul. For construction companies, it means greater workforce consistency, reduced turnover and a stronger ability to take on projects with confidence. 

Whether or not the Dignity Act passes in its current form, construction leaders should begin evaluating whether EB-3 sponsorship could become part of their workforce strategy. If the bill moves forward, and signs suggest it will, those who prepare now will be in the best position to reap its rewards

During each of President Donald Trump’s campaigns for the White House, immigration reform has been a major policy cornerstone. 

A year into his second term, the impact from ramped up Immigration and Customs Enforcement action is being felt in construction, though not necessarily in ways that reflect broader headlines. This is particularly true for nonresidential contractors, who are feeling pressure to find qualified workers for data centers and other megaprojects, but aren’t actually seeing widespread enforcement on their jobsites — at least not yet. 

“I've been hopping around the country ... and it's hard to find a construction company that says they've been affected [by Trump’s immigration policy] even indirectly,” Ken Simonson, chief economist at the Associated General Contractors of America, told Construction Dive. 

Indeed, impacts thus far seem to be nuanced, even if expectations for broader and sustained enforcement actions persist. The mobilization of law enforcement agents to find and remove people the administration deemed unauthorized to be in the U.S. started about five months after the start of Trump’s second term in January 2025, which was expected, said Brian Turmail, vice president of public affairs and workforce AGC.

High-profile ICE actions took place in Portland, Oregon, and Los Angeles in June and later in Chicago. On Sept. 4, 2025, a raid of a Hyundai plant in Georgia resulted in the arrest of 475 workers. 

But construction industry observers say those headlines actually obscured a lesser focus on construction, as ICE appeared to widen its net instead. 

“It seems the administration has shifted from a jobsite focus on immigration enforcement to a community-wide focus on immigration enforcement,” Turmail told Construction Dive. “This kind of coincided with the surges that we saw in ICE enforcement in LA and in Chicago.”

Immigration impact and exodus

Construction has a large number of workers who were born outside the U.S., many without the authorization to work, Simonson said. Around 34% of construction trades workers are immigrants, with some trades seeing as high a share as 61%, Simonson said.

---

"It means that the construction inflow of potential workers has been turned off."

Ken Simonson

Chief economist, The Associated General Contractors of America

---

Despite that makeup, the reality for most contractors has been more muted than national headlines would suggest. For construction, the impacts of enforcement have played out in less dramatic fashion than the round up at the Georgia Hyundai plant. Instead, undocumented workers have proactively chosen to avoid being targeted. 

Anecdotally, rather than raids, contractor groups say undocumented employees may simply not show up to work — either due to already being apprehended by ICE or for fear of that possibility. 

“With many undocumented construction workers self-deporting or simply not showing up to work anymore even though they remain in the country, many of these contractors haven't replaced that talent,” Anirban Basu, chief economist for Associated Builders and Contractors, told Construction Dive.

At the same time, Simonson said he sees a possibility of enforcement efforts at jobsites reemerging in 2026, saying immigration has been “the dog that didn't bite, but I expect the other shoe to drop.” 

Simonson said ramped up ICE funding from the One Big Beautiful Bill Act, more time to mobilize and train officers and fewer immigrants entering the U.S. could mean the industry is only beginning to feel the impact of the administration’s policy. 

Though concrete data isn’t yet available, Simonson said early estimates indicate that the number of people immigrating to the U.S. has declined and potentially even reversed, suggesting a flight of foreign-born workers.

“It means that the construction inflow of potential workers has been turned off,” he said.

---

“So the story of 2025 has been a marketplace in which demand for construction services has been declining in many segments, while the cost of delivering such services has been rising. That’s not good from an industry perspective.”

Anirban Basu

Chief economist, Associated Builders and Contractors

---

While economists indicate the residential construction sector likely has a larger portion of foreign-born workers, a significant decrease in the overall U.S. labor pool could greatly reduce demand for construction projects across multiple sectors. Indeed, having fewer foreign-born workers in the labor force could reverberate beyond jobsites to impact other areas of the economy. 

“We may see a lot of states, a lot of communities within states, that suddenly have a lot of vacant homes, a lot of people not showing up for jobs, not applying for jobs, not buying at stores, not even going for healthcare or other things where they feel at risk,” Simonson said.

Paying more for workers

Against this new backdrop, as some sectors boom and others bust in construction, the skilled labor crisis could look very different in 2026 from how it has in recent years. 

For example, the result of the shrinking labor pool means builders who need workers have sought out documented individuals, said Basu, raising the cost of construction services. As the cost for that labor has gone up, demand for new projects in many sectors outside of data centers has simultaneously softened.

“So the story of 2025 has been a marketplace in which demand for construction services has been declining in many segments, while the cost of delivering such services has been rising,” Basu said. “That’s not good from an industry perspective.”

Wages impact

On the other hand, while contractors may pay more for the services of documented workers, official payroll numbers may not show much of an increase.

For years, the narrative for construction has been a tight labor market where contractors competed for a small pool of competitive workers. In 2025, however, contractors pulled back from aggressive compensation strategies, according to a report from accounting and tax advisory firm Baker Tilly. 

That indicates that most builders find themselves to be about “right-sized” for their backlog, said Aaron Faulk, principal and hospitality sector lead at Baker Tilly, which has its U.S. headquarters in Chicago. 

In line with contractors’ reports, the repercussions from immigration policy seem thus far indirect, or at the very least, are playing out against the backdrop of several other economic obstacles facing the sector.

“I'm not sure that immigration policy is having a huge impact on wages currently,” Faulk told Construction Dive. “Some of the uncertainties with tariffs, some uncertainty with interest rates and some of the mid-market segments that aren’t performing at a high level have moderated the need to expand the workforce.”

Within the data center boom and the regions where it is unfolding, competition for workers will likely remain fierce. More often than not, the bigger purse will win out.

“The reason the data centers can attract higher quality talent is because the hyperscalers can pay more,” Basu said. “These electricians that work on data centers, they're major leagues. They're not Double-A or Triple-A, they’re major league and they’re very expensive and they’re in very short supply. Who can afford this kind of talent on scale? Only the hyperscalers.”

According to Faulk, searches for high-performing project managers, an in-demand position with a skillset that’s tough to replicate, will also likely remain competitive.

The other shoe

In August 2025, construction saw open jobs drop 38% year over year, as 2.2% of positions went unfilled, the lowest in nearly a decade. Nonetheless, layoffs remained low, implying that contractors expected a market turnaround. And in November, job openings bounced back by 90,000 unfilled positions, according to the Bureau of Labor Statistics.

“Presumably, they’re still optimistic,” Simonson said. “That is what I hear when I go around the country. Most contractors say, ‘Our order books for next year are strong. We just aren’t getting the go ahead on projects now.’”

Having a huge drop in the available pool of workers, Simonson said, will further highlight the boom and bust categories. As data centers likely continue to see increased demand for megaprojects, other areas such as multifamily and residential may continue to struggle.

“Those with the skills do that kind of [in-demand] project, they’re going to be in high demand, whereas more generic kinds of projects are going to languish,” Simonson said.

Construction job openings sank to an "extraordinarily low” level in October 2025, signaling a lingering cool-off in labor demand, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics report.

Construction employers reported 213,000 job openings on the last day of October, down 18,000 from September 2025 and 36,000 year over year. The report considers a job opening any unfilled position for which an employer is actively recruiting.

Openings dipped as hires also dropped sharply, another sign construction activity slowed through most of 2025, according to ABC.

The October total kept job openings at a muted level, a trend that has held throughout 2025. The pattern aligns with other indicators pointing to a broader industry slowdown outside of the booming construction niches, such as data center construction.

“The number of open, unfilled construction jobs remained extraordinarily low in October,” said Anirban Basu, ABC chief economist, in the release. “The construction industry has been in a state of contraction throughout the majority of 2025.”

The job openings report stands as the most current snapshot of labor activity, as other construction economic releases remained delayed following the recent government shutdown.

Nevertheless, contractors are still showing signs of confidence, said Basu. Many firms still plan to expand their workforces as they prepare for opportunities to materialize in early 2026.

“Despite what has been a fairly dismal stretch of industry data, contractors remain upbeat about their hiring intentions over the next six months,” said Basu.

Architecture, engineering and construction firms reported three consecutive months of lost jobs in summer 2025 amid project delays, stalled timelines and high turnover due to an ongoing workforce shortage. Business leaders may be asking themselves, “Why can’t our firms fill critical roles?”

The answer is sobering. Today’s workforce expects more from employers: Job seekers are evaluating purpose, flexibility, advancement opportunities and alignment with their values before they’ll pursue or accept a role. Firms unable to clearly express what they stand for and what they offer to prospective employees will struggle to attract qualified talent and may even lose those individuals to competitors.

The cost of inaction

Finding and retaining the right talent is critical in an industry where reputation and relationships are directly connected to growth.

AEC firms face real consequences when workforce challenges go unaddressed. In an Aug. 28, 2025, survey by the Associated General Contractors of America, 92% of firms reported difficulty finding qualified workers, and nearly half experienced project delays due to labor shortages. These delays have ripple effects across operations and client relationships.

This challenge isn’t solved by filling open roles with anyone who will take the job. Fifty-seven percent of firms say new hires lack critical skills or credentials, per the AGC survey. Upskilling these employees takes time, budget and energy. And when new talent leaves early, it disrupts business and the cycle starts over.

These disruptions have the potential to slow progress and damage reputations built over decades, which can have long-term impact in a trust-based industry.

Employer brand matters more than ever

A company’s employer brand is its reputation as a place to work. It reflects the culture, values and experience the company offers employees. It’s built on what people inside and outside the organization believe to be true about what it’s like to work there.

Employer brands have become just as important as the projects and technical expertise a firm specializes in. Firms that articulate these benefits through a strong employer brand stand out. They draw in people who want to stay and grow with your firm and provide clear signals to those who wouldn’t be the right fit. All of this reduces time-to-hire and improves retention.

An employer brand goes hand in hand with an employee value proposition, which defines the tangible and intangible benefits an organization offers employees in return for their skills, capabilities and experience. It gives potential candidates a reason to choose a firm and current employees a reason to stay. This might include:

• Purpose and impact beyond the jobsite.
• Access to modern tools and technology.
• Career development and mentorship.
• Inclusive workplaces and strong culture.

At its core, the employee value proposition is what the organization says it offers while the employer brand is what people believe about an organization based on its reputation and their experience. Together, they support business development: Clients want to partner with firms that can deliver on time, on budget and with the right team in place.

How to activate your brand

Developing a strong employer brand and employee value proposition asks leaders to align around and commit to a clear and consistent vision for what your organization offers to prospective and current employees. The following strategies will help AEC leaders develop both.

1. Understand your people. Start with listening. Use surveys, exit interviews and focus groups to understand what employees value, where your organization’s culture is particularly strong or unique and where your organization isn’t hitting the mark. Look for patterns across teams, generations and project types. The goal is to understand what makes your culture unique and where your promise aligns (or misaligns) with the employee experience.
2. Define your authentic employee value proposition. Use these insights to create a clear value proposition rooted in your firm’s culture and strategy. Be specific. Maybe your firm gives team members experience across a wide range of projects. Maybe your culture emphasizes growth and mentorship. Avoid vague claims and focus on what your firm offers and what sets you apart.
3. Empower employee ambassadors. Your people are your best messengers. Encourage them to share their experiences at industry events, on LinkedIn and through informal networks. Equip them with stories that reflect your employee value proposition in action, whether it’s how a foreperson moved into project management, or how an eagle-eyed tradesperson flagged a key constructibility issue. This authentic storytelling from a trusted source builds credibility.
4. Evaluate and evolve. Employer brands should not be static once they’re developed. Track engagement metrics, retention trends and brand perception. Check in regularly with employees as your business evolves. Align your employee value proposition with shifts in the market, the workforce and your firm’s strategic direction. What matters to employees today may not be what matters tomorrow.

Workforce shortages aren’t going away. The AEC industry needs nearly half a million new workers in 2025 alone. Firms that build a clear, compelling employer brand and value proposition are better positioned to compete and thrive in a demanding industry.

California Gov. Gavin Newsom has approved $25 million in grants for apprenticeship programs across the state, many of which will funnel workers into the construction industry, according to an Oct. 20, 2025, announcement.

The grants aid 88 apprenticeship programs that will train approximately 22,208 California workers in the skilled trades via the Employment Training Panel, a state government apparatus that helps employers fund training for their workers, according to the news release.

Amid an ongoing labor crisis in the industry, California emphasized the economic impact that construction has on the state’s economy, as it generates more than $156 billion in annual economic activity and employs close to one million people, per the announcement.

Many who will join the funded apprenticeships are women, justice-involved individuals, veterans and people transitioning from unemployment or low-paying jobs. Over Newsom’s tenure as governor, the ETP has supported 99,023 apprentices, according to the release.

“This pathway aligns with our goal of supporting 500,000 apprentices by 2029, creating a more equitable job pipeline for Californians across the state,” Newsom said in the announcement. The grants are funded by the Employment Training Tax on employers and don’t come out of the state’s General Fund.

In the construction industry, more than a third of California developers have delayed or canceled commercial real estate projects due to rising costs and tariff uncertainty, according to a summer 2025 Allen Matkins and UCLA report. However, the Golden State has moved to help speed up building work as well, via overhauls to the California Environmental Quality Act, to ease the amount of red tape on certain kinds of projects.

“ETP is proud to invest in high-wage, high-road job training programs that are directly aligned with industry needs,” said Jessica Grimes, executive director of ETP, in the release.