The construction industry will need to attract nearly 650,000 additional workers on top of the normal hiring pace in 2022 to meet the demand for labor, according to a model developed by the Associated Builders and Contractors (ABC).
“ABC’s 2022 workforce shortage analysis sends a message loud and clear: The construction industry desperately needs qualified, skilled craft professionals to build America,” president and CEO Michael Bellaman says.
The proprietary model developed by ABC uses the historical relationship between inflation-adjusted spending growth and payroll construction employment—sourced from the U.S. Census Bureau’s Value of Construction Put in Place survey and Bureau of Labor Statistics, respectively—to convert anticipated increases in construction outlays into demand for construction labor at a rate of 3,900 new jobs per billion dollars of additional construction spending. The increased demand is added to the current level of above-average job openings. The model also considers projected retirements, shifts to other industries, and other forms of anticipated separation.
Using historical Census Bureau Job-to-Job flow data, ABC estimates 1.2 million construction workers will leave their jobs to work in other industries, which will be offset by approximately 1.3 million workers who will leave other industries for construction.
“The workforce shortage is the most acute challenge facing the construction industry despite sluggish spending growth,” says ABC chief economist Anirban Basu. “After accounting for inflation, construction spending has likely fallen over the past 12 months.”
Basu says an additional concern is the 8% decline in the number of construction workers between the ages of 25 and 54 over the past decade coupled with the increasing share of older workers exiting the workforce. According to the Centers for Disease Control and Prevention, the construction industry’s average age of retirement is 61, and more than 1 in 5 industry workers are currently older than 55.
“Since 2011, the number of entry-level construction laborers has increased 72.8%, while the number of total construction workers is up just 24.7%,” Basu says. “For reference, the number of electricians was up 23.9% over that span, while the number of carpenters actually declined 7.5%. The number of construction managers has increased by just 2.1% More than 40% of construction workforce growth over the past decade is comprised of low-skilled construction laborers, who represent just 19% of the workforce.”
The ABC model projects that in 2023, the industry will need to bring in nearly 590,000 new workers on top of normal hiring to meet industry demand. The projections for 2023 are contingent on assumptions that construction spending growth will slow in 2022.
