A new analysis from Associated Builders and Contractors (ABC) says the construction industry will need an additional 546K workers to meet demand in 2023—in addition to the industry’s normal pace of hiring.
The trade group also is projecting that the industry will need to hire an additional 324K new workers in 2024, a projection that factors in a slowdown in construction spending.
Rising interest rates have made it difficult for CRE developers to start new construction, slowing the pace of projects, despite a nationwide push to build new residential units to address the housing crisis. However, a flood of new federal spending on infrastructure, renewable energy and semiconductor chip fabs is driving demand for construction workers.
The post-pandemic labor pool in construction has been insufficient to meet demand, ABC said, reporting that there was an average of 390K job openings per month in 2022—the highest level on record—while the unemployment rate in the construction industry averaged 4.6%, the second-lowest ever.
ABC is projecting that demand for labor will increase by more than 3,600 new jobs for every $1B in new construction spending—on top of the current, above-average level of job openings.
ABC’s chief economist, Anirban Basu, said in a statement that shortage of labor that has persisted in the construction industry throughout the pandemic also increasingly becoming a skill shortage as the construction workforce increasingly reaches retirement age.
“With nearly one in four construction workers older than 55, retirements will continue to whittle away at the construction workforce,” Basu said.
“Many of these older construction workers are also the most productive, refining their skills over time. The number of construction laborers, the most entry-level occupational title, has accounted for nearly 4 out of every 10 new construction workers since 2012,” the economist noted.
Basu said the number of workers with licensed skills has grown at a much slower pace in the last decade and, for carpenters, has actually declined.
In its 2023 outlook, Fitch Ratings said it expects a tougher operating environment for North American building products and materials companies this year.
“A meaningful slowdown in new housing activity and pullback in residential remodel spending are expected to offset modest growth in the nonresidential and public construction end-markets,” Fitch said, in its report.
Fitch has projected that the U.S. economy will enter a “mild recession” in mid-2023, ending in 4Q23.
