The U.S. construction industry begins 2026 facing a structural labor gap that industry economists say cannot be closed through business-as-usual hiring. An aging workforce heading toward retirement, tightened immigration enforcement removing workers from active rosters, and accelerating demand from AI data centers, infrastructure, and industrial megaprojects have converged to create a workforce challenge with no quick fix.

The Core Numbers

The construction industry must attract an estimated 349,000 net new workers in 2026 to meet demand for construction services, according to a proprietary model released January 15 by Associated Builders and Contractors (ABC). In 2027, that figure rises to 456,000 as construction spending growth is projected to resume.

ABC's model uses the historical relationship between inflation-adjusted construction spending growth—sourced from the U.S. Census Bureau's Construction Put in Place survey—and payroll employment data from the Bureau of Labor Statistics. The model estimates that every $1 billion in additional construction spending generates demand for approximately 3,450 workers. It also embeds current job openings, industry unemployment, and projected retirements.

"If current consensus forecasts hold true, the construction industry will need to bring in 349,000 new workers in 2026 just to keep the supply and demand for labor in equilibrium," said Anirban Basu, ABC Chief Economist. "Failing to do so will worsen labor shortages, especially in certain occupations and regions, placing further upward pressure on labor costs."

Importantly, the 349,000 figure is lower than previous years' projections. That decline reflects modest spending growth forecasts for 2026 and 2027—not an easing of structural pressure. "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.

The Retirement Wave Is Real

Demographic pressure is the most durable driver of the workforce gap. The National Center for Construction Education and Research (NCCER) projects that approximately 41% of the current construction workforce will retire by 2031. With roughly one in five construction workers currently over the age of 55, the industry faces a compressed timeline to transfer decades of expertise before it walks off job sites permanently.

The occupational specificity of the retirement problem matters. ABC noted that approximately one-fifth of all electricians are over 55—a critical concern given surging demand for precision wiring on data center, semiconductor fab, and AI infrastructure projects. Nonresidential specialty trade contractors added 95,000 jobs since August 2024, according to ABC's BLS data analysis, reflecting the pull from high-growth sectors. But filling those seats with experienced workers is a different challenge from simply adding headcount.

Immigration Enforcement Adds a New Variable

AGC's 2026 Construction Hiring and Business Outlook, which surveyed 951 firms across 49 states, found that one-third of firms (33%) report having been affected by immigration enforcement actions in the past six months. The specific impacts break down as follows:

• 6% report a jobsite or offsite location was visited by immigration agents.
• 11% report workers left or failed to appear because of actual or rumored immigration actions.
• 24% report subcontractors lost workers.

Roughly one-quarter of the U.S. construction workforce is foreign-born—a larger share than the economy-wide average—making the sector disproportionately sensitive to immigration policy shifts. AGC and NCCER's workforce survey found that workforce shortages are now the leading cause of project delays, with 45% of contractors reporting at least one delayed project in the past year.

"The effects of immigration policy represent another potential wildcard for the industry's labor force dynamics," Basu said. "Data regarding border encounters indicate that the flow of undocumented workers into the country fell precipitously in 2025 while voluntary deportations accelerated."

Sector Imbalances: Where the Gap Bites Hardest

The labor shortage is not uniform across project types. AGC's outlook survey shows that contractor expectations remain strongest in sectors with long-lead, capital-intensive programs that cannot be easily deferred:

• Data centers: 65% of respondents expect the market to increase, with a net reading of +57%—the most bullish sector in the survey.
• Power projects: Net reading of +34%, driven by grid expansion and electrification demand.
• Healthcare (non-hospital): Net reading of +24%.
• Water and sewer: Net reading of +16%.
• Manufacturing: Net reading of +15%.

Meanwhile, expectations for lodging (-7%), private office (-14%), and retail (-18%) are negative—meaning labor demand in those sectors will not offset the tightness created by the booming categories above.

More than four out of five AGC survey respondents (82%) report difficulty filling hourly craft positions, and 80% report difficulty filling salaried openings—the highest proportions in the past three years.

Technology Investment as a Partial Response

Construction firms are increasingly turning to technology to manage the productivity gap that workforce shortages create. AGC's survey found that 61% of respondents say their firms are using artificial intelligence or plan to increase investment in it, up from 44% the year prior. AI is most commonly applied to office and administrative functions, estimating, and preconstruction activities.

"AI is becoming an increasingly important tool for construction firms facing tighter labor markets and more complex projects," said Julie Adams, senior vice president of construction and real estate solutions at Sage. "Firms are using technology to improve efficiency, manage risk, and maintain productivity in a more uncertain environment."

Implications for Owners, Developers, and Contractors

For project owners and developers, the workforce gap creates schedule risk that is distinct from—and compounds—materials cost uncertainty. Projects in electrically intensive categories, such as data centers, semiconductor fabs, and healthcare, should be assessed for realistic subcontractor bench depth, not just price. Early trade partner engagement and longer procurement timelines are becoming standard risk management tools.

For general contractors, the 2026 environment favors firms that can demonstrate self-perform capacity, strong apprenticeship pipelines, and stable subcontractor relationships. Firms entering competitive bid environments without locked subcontractor commitments face both pricing and schedule exposure.

For workforce development programs, the ABC and AGC assessments point to three policy levers: a market-based temporary worker visa program for construction trades, expanded registered apprenticeship investment, and reskilling programs targeted at workers from contracting sectors such as retail construction.

What to Watch Next

The August BLS employment situation report will be the first to capture whether summer 2026 construction hiring has narrowed the equilibrium gap identified by ABC's model. Congressional action—or inaction—on a temporary construction-specific work visa program will shape the labor supply picture for 2027 and beyond, with ABC and AGC both making this a top legislative priority. Monthly BLS job openings and labor turnover survey (JOLTS) data for construction will be the most current indicator of how tightly the market is running month to month.

Bottom Line

The 349,000-worker gap ABC identifies for 2026 is not primarily about construction spending growth—it is a retirement and enforcement story. The industry is losing experienced workers to age and policy simultaneously, while demand from the most technically demanding project types is rising fastest. Firms that treat workforce development as a strategic function rather than a cost center are best positioned for the escalating competition for skilled labor in 2026 and 2027.

Sources:

• ABC: Construction Industry Must Attract 349,000 Workers in 2026
• AGC: 2026 Construction Hiring and Business Outlook
• AGC: Construction Workforce Shortages Are Leading Cause of Project Delays
• AGC: 2026 Construction Hiring and Business Outlook Report (PDF)
• CIC Construction: Half a Million Short — The Construction Workforce Crisis