Construction Industry Needs 349,000 New Workers in 2026 Amid Labor Shortage Crisis

The construction industry will need to attract 349,000 new workers in 2026 just to keep labor supply and demand in balance, according to a forecast by the Associated Builders and Contractors (ABC). The alarming projection underscores a critical workforce crisis that threatens to drive up labor costs, delay projects, and impact construction spending across America.

Understanding the 2026 Labor Shortage

ABC's workforce model analyzes the historical relationship between inflation-adjusted construction spending and employment using data from the U.S. Census Bureau and Bureau of Labor Statistics. The model estimates that every $1 billion increase in construction spending generates demand for approximately 3,450 additional workers.

"If current forecasts hold, the construction industry will need to add 349,000 workers in 2026 just to keep labor supply and demand in balance," said Anirban Basu, ABC Chief Economist. "If it fails to do so, labor shortages—already severe in some regions and occupations—will intensify, driving labor costs even higher."

Why 2026 Labor Demand Is Lower Than Recent Years

Surprisingly, the 349,000 worker target is lower than demand in recent years due to modest construction spending growth projections for 2026 and 2027. Much of the demand for new workers will stem from retirements rather than increased construction activity, despite continued growth in AI-related infrastructure projects like data centers.

However, Basu cautioned that labor needs could exceed projections if spending forecasts prove too conservative. Factors such as declining financing costs or improved policy certainty could accelerate construction activity.

Persistent Shortages in Specialized Trades and Regions

The workforce crisis is uneven across the country and trades.

Electricians face acute shortages: Demand for electricians with precision wiring skills has surged due to rapid data center construction. Nearly one-fifth of electricians are over age 55, creating a retirement wave that will intensify shortages.

Regional hotspots: Labor shortages remain particularly acute in areas hosting large industrial projects, such as semiconductor manufacturing facilities. These areas pull skilled workers from neighboring regions, exacerbating local shortages.

Recent positive trends: Nonresidential specialty trade contractors have added 95,000 jobs since August 2024, showing that hiring remains strong in some areas despite macroeconomic headwinds.

Macroeconomic Challenges Facing the Workforce

ABC President and CEO Michael Bellaman emphasized multiple forces shaping workforce challenges:

• Aging workforce: A significant portion of experienced construction workers are nearing retirement age
• Immigration enforcement: Recent data show a sharp decline in undocumented worker inflows in 2025, alongside an increase in voluntary deportations
• High material costs and tariffs: Reducing project profitability and contractor ability to raise wages
• Office vacancies: Changing real estate dynamics affecting construction project pipelines
• Rapidly advancing technology: Requiring new skill sets and continuous worker retraining

"Despite these challenges, the industry continues to face an urgent need for skilled workers to build and rebuild America's infrastructure," Bellaman said.

Solutions and Policy Recommendations

ABC outlines a multi-pronged approach to addressing the workforce crisis:

1. Market-Based Worker Visa System
A more flexible visa framework to allow construction companies to hire needed workers while protecting prevailing wages and working conditions.

2. Expanded Reskilling and Upskilling Initiatives
Government and industry-sponsored training programs to help workers transition into construction careers, particularly attracting younger workers and career changers.

3. Industry-Led Training Combined with Government-Registered Apprenticeships
ABC's workforce development strategy combines proprietary training with formal apprenticeship programs, creating multiple pathways into construction careers.

Why This Matters for Construction and the Economy

Construction labor shortages have ripple effects throughout the economy. Delayed projects mean:

• Slower infrastructure modernization and repair
• Housing shortages and higher costs for consumers
• Delayed commercial development and economic growth
• Reduced competitiveness in global markets for AI and semiconductor infrastructure

"The construction industry does not have to fall off the workforce shortage cliff," Bellaman concluded. "But avoiding that outcome will require decisive action now to strengthen the talent pipeline and reinforce construction as a career of choice in today's competitive job market."

Industry Insight: Westside Construction Group understands the challenges of finding and retaining skilled construction workers. With experience managing complex projects across Upstate New York, WCG invests in apprenticeship training and competitive wages to attract talent. For consultation on workforce planning or construction staffing solutions: (585) 440-0304 or www.buildwcg.com