For the first time since the pandemic, more construction firms cut headcount than expanded it over the past year — and shortages of qualified workers got worse anyway. That is the central finding of the 2026 workforce survey released September 3, 2026 by the Associated General Contractors of America and the National Center for Construction Education and Research, reported by Engineering News-Record. Thirty-seven percent of respondents reduced headcount by at least 5 percent, against 34 percent that increased it by at least 5 percent. Yet 73 percent still expect to add employees over the coming year, and only 8 percent expect further reductions.

What the survey found

The survey drew 1,830 responses from firms of varying sizes and market sectors, conducted in July and August 2026. Key results, from ENR's coverage of the release:

• 87 percent reported openings for hourly craft workers; 82 percent for salaried positions.
• Nearly nine in ten firms with openings said those jobs are as hard or harder to fill than a year ago.
• Half said available candidates lack needed skills, certificates or licenses.
• Electricians were hardest to find, cited by 81 percent of firms seeking them. Superintendents followed at 75 percent, project managers and supervisors at 74 percent.
• 83 percent reported at least some turnover among new field employees within their first 90 days.
• 42 percent said labor shortages delayed projects, making workforce gaps the most frequently cited cause of delay. Only 26 percent reported no significant delays.

"While some firms are adjusting to weaker demand, many contractors continue to compete for a limited supply of qualified workers," AGC chief economist Ken Simonson said during the media briefing. In AGC's own release, Simonson added that "the need for people to work on new data centers is keeping labor conditions tight even as demand for many other types of projects remains relatively soft," and that "the nation is not producing enough qualified workers, even as federal immigration policies are impacting nearly one-third of firms."

Two forces distorting the labor market

Data centers. About 28 percent of respondents performed data center work in the past year. Among firms reporting workforce effects from those projects, 58 percent cited greater competition for skilled workers, 49 percent cited increased wage pressure and 36 percent reported greater difficulty filling openings, per ENR. That aligns with what backlog data shows: Associated Builders and Contractors found the 12 percent of its contractors with data center work carry 11.4 months of backlog versus 7.5 months for the 88 percent without it, according to ABC's July survey.

Immigration enforcement. Twenty-nine percent of firms reported at least one direct or indirect effect over the previous six months, with wide regional variation: 42 percent in the South, 37 percent in the Northeast, 22 percent in the West and 17 percent in the Midwest. Simonson cautioned that the survey does not establish that enforcement itself caused project delays, describing evidence of that connection as anecdotal. He noted larger nonresidential projects may be able to re-sequence work if a trade is affected, but that mission-critical projects have less room: "You can't afford to lose even a day of work."

Retention is now the harder problem

The most practically useful part of the survey concerns the first 90 days. With 83 percent of firms reporting early turnover, and the leading cited reason being a mismatch between workers' expectations and construction realities — followed by physical demands and travel or scheduling requirements — the problem has shifted from recruitment to onboarding.

"We still can't find enough, so we better figure out how to keep what we get," NCCER president and CEO Boyd Worsham said, per ENR.

ENR reported a detailed case from ACE Electric, a Valdosta, Georgia electrical contractor that netted more than 500 employees in 2026 but had to hire roughly 700 because of turnover. Human Resources Director Mindy Bates said the company now brings new hires to Valdosta for a weeklong orientation covering safety, company culture, benefits and career paths rather than sending traveling hires directly to a first project. That change, combined with better labor planning and expanded in-house development programs for field crew managers, superintendents, project managers and estimators, reduced turnover by more than 40 points over two years. "You cannot hire your way out of this situation," Bates said. "We've got to grow it from within as well."

ACE also administers written and hands-on skill assessments, and when a worker's ability falls short of what was claimed in recruiting, the company may offer a lower classification and wage rather than send the person home. Bates said 83 percent of workers offered a lower classification in the past year accepted it, though the company has not yet analyzed subsequent turnover in that group. Labor availability has also become a go/no-go criterion on pursuits: "We do have to turn down work," Bates said, most often because of the leadership required to run large hyperscale jobs.

Holder Construction senior manager Aja Gower framed the long game: "We're hopefully solving that problem five years from now because the people entering these programs today are going to be our field crew leaders in five years."

Why it matters, and what to do about it

For contractors, three concrete actions follow directly from the data.

• Fix the first 90 days before spending more on recruiting. If 83 percent of firms lose new field employees early and the top reason is expectation mismatch, then realistic job previews, structured orientation and an assigned mentor are cheaper than another round of job postings.
• Assess skills rather than accepting claimed classifications. Half of firms said candidates lack the skills, certificates or licenses claimed. A short practical assessment with a fair lower-classification path preserves the hire instead of losing the labor hour entirely.
• Treat electrician availability as a schedule input. With 81 percent of firms seeking electricians reporting difficulty, electrical manpower is the constraint most likely to drive a delay claim. Buy out electrical early and validate manpower commitments in writing.

For owners and developers, the schedule implication is direct. Workforce shortages are the single most frequently cited cause of delay at 42 percent of respondents. Aggressive durations that assume full crew availability are not credible in markets with active data center or semiconductor construction. Building float into the schedule costs less than accelerating later.

For subcontractors, this is a pricing argument. When a general contractor asks for a hard bid with a compressed schedule in a labor-constrained market, the survey data is the documentation supporting a labor escalation allowance or a manpower-contingent schedule qualification.

What to watch next

• The regional and state fact sheets published with the survey, available through AGC's release materials, which break results out by region, firm size, project type and union or open shop status.
• Monthly construction employment data. July employment totaled 8,343,000, up 22,000 from June and 82,000 from a year earlier, per AGC's analysis of BLS data. Watch whether hiring holds as backlog thins.
• Whether the 73 percent hiring intention survives a weaker market. Intentions measured in July and August reflect expectations, not commitments.
• Regional immigration enforcement effects, which range from 17 percent of Midwest firms to 42 percent in the South and could shift quickly with policy.

Bottom line

The 2026 AGC/NCCER survey documents a labor market that is loosening and tightening at once. More firms cut headcount than added it for the first time since the pandemic, yet 87 percent still have craft openings, half say candidates lack required skills, and 42 percent had projects delayed by workforce gaps. Data center demand is pulling skilled labor away from other work. The most actionable finding is the least glamorous: 83 percent of firms lose new field employees within 90 days, mostly because the job is not what those workers expected. Contractors that solve onboarding will out-staff competitors that keep spending on recruitment alone.

Sources

• Engineering News-Record, "Even as Contractors Cut Headcount, 73% Still Plan to Hire" — https://www.enr.com/articles/63618-even-as-contractors-cut-headcount-73-still-plan-to-hire
• Associated General Contractors of America, "Construction Workforce Shortages Remain Acute Despite 'Soft' Market Conditions As Data Centers Strain Labor Supply, Survey Finds" — https://news.agc.org/workforce-development/construction-workforce-shortages-remain-acute-despite-soft-market-conditions-as-data-centers-strain-labor-supply-survey-finds/
• Associated General Contractors of America, July 2026 construction employment analysis — https://www.agc.org/news/2026/08/07/construction-employment-gains-and-wages-accelerate-july-industry-officials-warn-gains-may-stall-amid
• Associated Builders and Contractors Construction Backlog Indicator, July 2026 — https://ctasc.com/abc-construction-backlog-fell-to-8-months-in-july/
• Associated General Contractors of America newsroom — https://www.agc.org/newsroom