US construction keeps hiring as labor supply tightens
Subscribe to our free newsletter today to keep up to date with the latest construction news.
The US construction industry added 11,000 jobs in September, extending a period of employment growth that continues to outpace the wider labor market. Yet behind the headline increase sits a more difficult problem for contractors: The number of experienced construction workers looking for jobs continues to fall.
Construction employment reached 8.364 million in September, up by 109,000 jobs from a year earlier. That represents annual employment growth of 1.3%, compared with a 0.3% increase across total nonfarm payroll employment.
The figures suggest that construction remains capable of generating jobs even as growth elsewhere in the economy has slowed. They do not suggest, though, that employers have an abundant supply of people available to fill those positions.
Only 359,000 people with recent construction experience were actively looking for work during September, down by 45,000, or 11%, from a year earlier. The construction unemployment rate stood at 3.5%, compared with 3.8% in September 2025.
For contractors planning future projects, the widening gap between employment demand and worker availability is becoming more than a recruitment problem. It has direct implications for project capacity, labor costs, schedules, bidding and the ability to expand when new work becomes available.
Construction employment is growing, but the gains are far from even
September’s employment increase was driven entirely by nonresidential construction.
Nonresidential contractors added 16,100 workers during the month and 142,000 over the previous 12 months. Residential builders and subcontractors moved in the opposite direction, shedding 4,900 workers in September and 32,800 compared with a year earlier.
Within nonresidential construction, specialty trade contractors accounted for much of the growth, adding 12,300 employees during September. Nonresidential building firms added another 1,200 positions, while heavy and civil engineering contractors increased employment by 2,600.
The split matters because a single national construction employment figure can obscure large differences between project types, regions and individual contractors. Demand associated with data centers, power infrastructure, advanced manufacturing and selected public works projects is creating significant requirements for skilled labor, even as weaker conditions affect other construction markets.
That competition becomes particularly difficult when different types of projects depend on many of the same trades. Electrical workers, equipment operators, pipefitters and other skilled crafts cannot be added instantly when a contractor wins new work. Training takes time, experienced employees are already in demand and workers may not be located close to the projects that need them.
The result is a labor market in which employment can continue rising nationally even when individual contractors struggle to expand their teams.
That tension is already evident in industry surveys. Among contractors with openings for hourly craft positions, 88% said those positions were as difficult or more difficult to fill than a year earlier. Half of the surveyed firms said available applicants lacked the required skills, certificates or licenses.
Those findings point to a problem that cannot be measured solely by counting job applicants. For many employers, the relevant question is how many people can perform the required work at the required standard within the required location and timetable.
Higher construction wages are colliding with a smaller labor pool
Contractors are paying more as competition for qualified workers intensifies. Average hourly earnings for production and nonsupervisory construction employees reached $39.20 in September, 20.2% higher than the $32.60 average for comparable private-sector employees. Construction wages increased 4.3% over the previous year, compared with 3.3% growth for private-sector production employees overall.
That wage premium helps explain how construction firms are competing for workers, but higher pay alone cannot quickly increase the number of trained tradespeople available to the industry.
Construction’s challenge is partly numerical and partly structural. Contractors need enough people, but they also need people with the correct technical skills, certifications, licenses and experience. A shortage in a critical trade can constrain an entire project even when other positions are adequately staffed.
The fall in unemployment among people with recent construction experience highlights that constraint. In August, the construction unemployment rate fell to 3.1%, its lowest monthly level in the 26-year history of the series, before rising to 3.5% in September.
Low unemployment is positive for workers, but for employers it leaves less room to increase headcount quickly. Contractors trying to grow may have to recruit employees from competitors, invest more heavily in entry-level training or find ways to complete more work with their existing workforce.
Retention therefore becomes closely linked to project capacity. When qualified workers are difficult to replace, losing experienced employees can affect far more than recruitment costs. It can limit the amount of work a company can accept or create greater reliance on overtime, subcontractors and schedule adjustments.
Training has a similar strategic role. Apprenticeships and workforce development cannot resolve immediate shortages, but they can increase the future supply of qualified workers and reduce dependence on an already constrained pool of experienced employees.
Data center construction is intensifying the fight for skilled workers
Twenty-eight percent of contractors responding to a recent industry workforce survey said they had performed construction work on a data center project during the previous 12 months. Among those firms, 58% said data center activity had increased competition for skilled workers, while 49% reported greater wage pressure.
Another 37% identified the availability of workers or subcontractors as their biggest challenge when pursuing or delivering data center projects.
The effect reaches beyond companies building the facilities themselves. Large projects can draw skilled employees and subcontractors from surrounding markets, changing labor conditions for contractors working on commercial buildings, manufacturing facilities, infrastructure and other projects nearby.
Rapid growth in data center construction can therefore tighten an already constrained workforce without producing an equally rapid expansion in the number of qualified workers.
For contractors, that raises questions that extend beyond human resources. Estimators need realistic assumptions about labor availability and wage escalation. Project teams need to understand whether key trades can be staffed according to schedule. Business development teams need to consider whether winning another project could place pressure on work already under contract.
Workforce planning becomes part of risk management under those conditions.
The September employment gain shows that construction firms are still adding workers. The more important signal may be how difficult those additional hires are becoming.
With employment rising faster than the broader economy, wages increasing and the pool of experienced jobseekers shrinking, contractors are competing for a limited resource that directly determines how much work they can deliver.
The next phase of construction growth may therefore depend less on whether projects exist and more on whether companies can assemble the skilled workforce required to build them.
Source:
Associated General Contractors of America
