In recent years, financial commitment from the federal government to rebuild and expand critical American infrastructure has been a boon for the construction industry. Stemming from the Infrastructure Investment and Jobs Act, CHIPS and Science Act, and Inflation Reduction Act of 2022, federal funding announcements for infrastructure projects have totalled $552.8 billion as of June 2024. From building and expanding critical railroad corridors to securing clean water and broadband internet in rural communities, the American construction industry has its work cut out for it.
Despite these sizable financial commitments, the construction industry faces a major labor shortage. Largely due to the aforementioned infrastructure developments combined with recent large private sector construction projects, Associated Builders and Contractors—a construction industry trade association—estimates the sector needs to hire over 500,000 workers to satisfy current demand in 2024.
Trends in Construction Employment and Spending
Construction employment has not kept pace with increasing construction spending
Source: Construction Coverage analysis of U.S. Census Bureau and U.S. Bureau of Labor Statistics data | Image Credit: Construction Coverage
Construction employment recovered after a brief but steep round of layoffs during COVID. However, hiring in the sector has plateaued while construction spending has continued to grow. Since February 2020, construction employment has increased by only 2.8%, while the annual rate of construction spending has risen by 44.4%. While the construction labor shortage has been exacerbated by present economic factors, it is a longer-term issue resulting from a decades-long decline in trade education, an aging workforce, and an inability to attract younger workers.
Geographic Differences in Construction Employment
Tennessee and parts of the Mountain West are experiencing a hiring boom in construction
Source: Construction Coverage analysis of U.S. Bureau of Labor Statistics data | Image Credit: Construction Coverage
Despite short- and long-term labor shortages at the national level, some states have seen substantial growth in construction hiring. The Bureau of Labor Statistics recorded a 27.7% increase in construction employment in Tennessee from 2018 to 2023, leading the nation. The Mountain West has also seen substantial increases with Idaho (+26.8%), Arizona (+25.7%), Utah (+21.5%), Nevada (+18.6%), and Montana (+17.5%) all ranking in the top 10. Many of these construction job gains can be attributed to population growth and demand for more residential housing in these areas.
Construction Employment in Metropolitan Areas
Local construction job growth strongly correlates with overall employment growth
Source: Construction Coverage analysis of U.S. Bureau of Labor Statistics data | Image Credit: Construction Coverage
At the metropolitan level, there is a strong positive correlation between the overall health of the local economy and construction-specific job growth. In general, locations with the most total employment growth were more likely to have strong construction job growth, while metros suffering from job losses were more likely to cut back on construction hiring. These trends highlight the fact that job growth tends to reinforce itself. When a city adds more workers in one part of the economy, it often needs to create more homes, office space, and services to accommodate them, which helps create more jobs in other parts of the economy as well. In many of these high-growth cities, construction job growth significantly outpaced total employment growth over the past five years.
Below is a breakdown of construction job growth for the top and bottom metropolitan areas and states. The analysis was conducted by Construction Coverage, a website that provides construction insurance guides, using data from the U.S. Bureau of Labor Statistics. For more information and complete results, see the original post—Cities With the Biggest Increase in Construction Jobs—on Construction Coverage.
Large Metros With the Biggest Increase in Construction Jobs
States With the Biggest Increase in Construction Jobs
Methodology
Photo Credit: Syda Productions / Shutterstock
The data used in this analysis is from the U.S. Bureau of Labor Statistics’ Occupational Employment and Wage Statistics. To determine the locations with the biggest increase in construction jobs, researchers at Construction Coverage calculated the percentage change in construction employment between 2018 and 2023. Only changes which were statistically significant at a 90% confidence interval were reported. Researchers also calculated the percentage change in total employment, total change in construction employment, and the median annual wage for construction workers in 2023. To improve relevance, metropolitan areas were grouped into cohorts based on population size: small (less than 350,000), midsize (350,000-999,999), and large (1,000,000 or more).
For complete results, see Cities With the Biggest Increase in Construction Jobs on Construction Coverage.
