US construction industry short half a million workers, says ABC

There is a huge gap in labour and demand in the US construction industry, and an ‘all-hands-on-deck’ approach is needed to combat the deficit, ABC president and CEO Michael Bellaman said.

“ABC estimates that the US construction industry needs to attract about a half million new workers in 2024 to balance supply and demand,” said Bellaman. “Not addressing the shortage through an all-of-the-above approach to workforce development will slow improvements to our shared built environment, worker productivity, living standards and the places where we heal, learn, play, work and gather.”

ABC’s model uses the historical relationship between inflation-adjusted construction spending growth (sourced from the US Census Bureau’s Value of Construction Put in Place Survey) and payroll construction employment (sourced from the US Bureau of Labor Statistics). The data is used to convert anticipated increases in construction outlays into demand for construction labour – at a rate of approximately 3,550 jobs per billion dollars of additional spending. 

(Image: ABC)

That figure is added to the current level of above-average job openings, which also includes projected industry retirements, shifts to other industries and other forms of anticipated separation.

“Based on historical Census Bureau Job-to-Job Flows data, an estimated 1.9 million construction workers will leave their jobs to work in other industries in 2024. This should be offset by an anticipated 2.1 million workers who will leave other industries to work in construction,” added ABC.

The unemployment rate averaged 4.6% in the regional sector for the second straight year. That matches the second lowest level on record.

Job openings remained historically elevated, says ABC, at an average of 377,000 per month through the first 11 months of 2023.

“As a result of labour shortages, contractors laid off workers at a slower rate than in any year between the start of the data series in 2000 and 2020,” confirmed ABC.

ABC chief economist Anirban Basu noted not just one factor is leading to the labour gap.

“Broadly, there are two factors shaping the interaction between construction worker supply and demand,” said ABC Chief Economist Anirban Basu. “There are structural factors, including outsized retirement levels, megaprojects in several private and public construction segments and cultural factors that encourage too few young people to enter the skilled construction trades.

“More than one in five construction workers are 55 or older, meaning that retirement will continue to contract the industry’s workforce. These are the most experienced workers, and their departures are especially concerning.”