2025’s Top Construction Workforce Challenges
In 2025, the construction industry faces its top challenge of a severe workforce shortage—with 288,000 job openings and 94% of firms struggling to fill roles—exacerbated by supply chain delays and rising material costs, requiring companies to enhance recruitment, especially among young people, and improve retention through competitive pay and culture amid shifting economic conditions.
Demand for construction work has been strong for the past several years, which is positive for contractors but also brings significant challenges. Macroeconomic conditions such as ongoing supply chain delays and rising material costs are serious obstacles that construction companies have had to overcome.
For example:
- Nine in ten senior supply executives have encountered supply chain challenges in 2024. Many are using dual-sourcing strategies and regionalizing supply chains.
- Prices for residential construction building materials have accelerated since early 2024, with year-over-year price growth reaching its highest since February 2023.
- In September 2024, the Federal Reserve lowered interest rates, making construction projects more economical, though positive results may take time to materialize.
Despite these issues, the number one challenge in construction remains a shortage of workers. In September 2024, there were 7.4 million job openings in the US, with construction accounting for 288,000 of those. Workforce shortages have led to project delays for 54% of contractors, impacting their ability to build projects more than supply chain or shipping delays.
For 2025, the construction industry must continue to address the worker shortage while also adapting quickly to shifting economic conditions.
Construction’s #1 Challenge: Finding, Hiring, and Retaining Workers
Even with fewer open positions in 2024 compared to 2023, 94% of construction firms are still struggling to fill at least some roles, especially among the craft workforce. With over 200,000 positions open, companies face tough competition for workers and must build a strong company culture with competitive pay and benefits to retain employees. In 2025, construction companies need to reach more candidates in a shrinking labor pool and improve processes to retain a strong workforce.
Roadblock #1: Convincing More Young People to Enter Construction
The current labor shortage is partly due to a lack of investment in construction workforce education and training programs. A large percentage of high school graduates pursue higher education over trades, a trend that has increased over the past 40 years. To address this, recruiters need to target young candidates online and engage with construction education programs at the school level. Many firms are already adding online strategies and engaging with career-building programs.
To attract young workers, companies should highlight benefits such as:
- Earning money from day one through paid on-the-job training
- A variety of positions for different skill levels
- Avoiding student loan debt
Roadblock #2: Competing with Other Industries for Workers
Construction is not the only industry facing worker shortages. Many industries, including manufacturing, financial activities, leisure and hospitality, and professional services, have significant numbers of unfilled positions. Construction companies must work harder to recruit workers to their company and the industry as a whole, promoting company culture and benefits to stand out.
Using an Applicant Tracking System (ATS) can help by building a candidate pool and reducing time to hire, giving companies an edge over the competition.
Roadblock #3: Workers Demand Competitive Wages
To combat worker shortages, construction companies have had to raise wages. Union settlements saw first-year increases of 4.6% in 2024, and 91% of firms reported increasing base pay rates for hourly positions. Companies must adjust budgets for higher wages and consider enhancing benefits packages, offering flexibility, and providing health and wellness benefits. Benefits software can empower employees to choose benefits that work for them.
Roadblock #4: Lack of Skilled Workers
Many candidates lack the necessary skills or certifications for construction roles. This puts the responsibility for training and development on companies. Some firms are increasing spending on training and professional development, including online and video learning programs. Investing in a Learning Management System (LMS) can help track training completions and certifications, helping to close the skills gap.
Challenge #2: Adapting to Changing Economic Conditions
Labor shortages are the main reason for project delays, but other economic conditions also impact construction. Companies need to use data and advanced analytics to make strategic business decisions and adapt to external factors. Analytics can help by:
- 1.Identifying trends and patterns
- 2.Improving decision-making
- 3.Enhancing efficiency and productivity
- 4.Predicting future trends
- 5.Supporting strategic planning
Advanced analytics options can help companies leverage workforce data to remain agile and adaptive.
Leveraging HR Technology
To address workforce challenges, the construction industry increasingly needs to use technology to enhance HR functions, automate manual processes, and improve recruiting and learning. The right tools can make hiring, managing, and growing a construction workforce easier.
Core HR for Workforce Management
Core HR solutions collect and maintain employee data, streamlining HR management processes by eliminating paperwork and redundant data entry. Integration with ERPs and project management tools improves reporting and system interoperability. Employee self-service tools allow access to benefit statements, pay stubs, tax documentation, PTO balances, performance goals, and more.
ATS for Recruiting and Hiring
A cloud-based ATS automates recruiting tasks, posts positions to job boards, manages candidates, and maintains compliance with federal regulations. It streamlines the hiring process, reduces time to hire, and ensures compliance with reporting requirements.
LMS for Development Programs
A cloud-based LMS enables organizations to manage and share knowledge, improve workforce productivity, and support compliance. It centralizes certifications and compliance, offers flexible training methods, and enhances employee engagement and development.
Benefits Management Software
Benefits management software simplifies workflows, improves reporting, and increases employee engagement during open enrollment and throughout the year. It integrates with carriers, payroll, and HRMS interfaces, ensures ACA compliance, and provides web-based and mobile access.
Workforce challenges are ongoing, and addressing them effectively requires working smarter and using the right tools. Manual HR processes are not sustainable and prevent HR resources from focusing on strategic work necessary for attracting and retaining employees.
In 2025 and beyond, overcoming construction workforce challenges will be easier with HR technology, providing a competitive edge in recruiting and retaining the workers needed for business success.
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HR Software for Construction Industry | Arcoro
Arcoro's HR software for the construction industry addresses unique challenges such as high turnover, skill shortages, multi-site workforce management, and regulatory compliance by providing integrated tools like applicant tracking, onboarding, time tracking, payroll, benefits administration, performance management, learning modules, and compliance management to streamline HR processes, reduce administrative burdens, and enhance productivity and safety in construction businesses.