Top Construction Workforce Challenges in 2024
In 2024, the rapidly growing US construction industry, fueled by significant government infrastructure investments, faces critical workforce challenges including a shrinking labor pool, high job vacancies, rising wage demands driven by increased living costs, and a shortage of qualified workers despite increased employment in many metro areas.
The US construction industry is experiencing significant growth, with projections indicating continued expansion over the next several years. A recent report forecasts that the industry will reach an output of $1,749,898.1 million by 2027.
Why is the Construction Industry Growing?
Much of this growth is attributed to substantial government investment in domestic manufacturing and infrastructure, particularly through the CHIPS and Science Act and the Infrastructure Investment and Jobs Act. Both residential and commercial construction sectors are expanding. According to the Associated General Contractors of America (AGC), construction spending increased in October 2023 for manufacturing, power, education projects, and single-family homebuilding. Private residential construction rose by 1.2%, with single-family construction climbing for the sixth consecutive month.
Despite this demand, the industry faces a persistent challenge: a shrinking construction workforce. The US Bureau of Labor Statistics reported 431,000 job openings in construction in September 2023 and 375,000 in August. In late November 2023, AGC noted that while construction employment increased in 63% of metro areas, tight labor conditions are limiting further hiring.
Here are the top workforce challenges facing the construction industry in 2024:
Workers Want Higher Wages
With increased demand for workers, contractors must offer higher wages to attract talent. This is not just a matter of competition; workers are also facing rising cost-of-living expenses. The Bureau of Labor Statistics reports that the consumer price index rose 3.2% over the past 12 months, with shelter, food, and medical care seeing the largest increases. If these costs continue to rise, workers will demand higher wages or seek employers who can offer them.
Lack of Qualified Workers
There are more job openings than available workers, and many candidates lack the necessary qualifications. This shortage is partly due to the retirement of Baby Boomers, who make up a significant portion of the construction workforce. By 2030, all Baby Boomers will be retired. Between 2003 and 2020, the percentage of construction workers aged 55 and older nearly doubled from 11.5% to 22.7%.
Competing with Other Industries for Workers
Worker shortages are not unique to construction. In 2022, over 50 million workers across various industries quit their jobs seeking better work/life balance, higher pay, and stronger company culture. Labor shortages are also impacting industries such as leisure, hospitality, and manufacturing. As a result, contractors must work harder to recruit workers, emphasizing company culture and benefits to attract candidates.
Convincing Young People to Enter Construction
Fewer young people are entering the construction industry. In 2022, 60% of high school graduates aged 16 to 24 were enrolled in colleges or universities, reflecting a long-term trend toward higher education over trades. In 1969, 8 million students were enrolled in postsecondary institutions; by 2019, that number had risen to 19.6 million. The focus on higher education, along with factors such as irregular hours, outdoor work, and safety concerns, contributes to the decline in young people pursuing construction careers. While recruitment efforts are ongoing, more is needed to meet the industry's growing talent needs.
Bigger Need for Specialized Skills
As construction becomes more technologically advanced, the demand for specialized skills is increasing. Recent years have seen the adoption of technologies such as augmented reality, autonomous robots, drones, AI, and modular construction. Workers must now possess more specialized technical skills than ever before.
To meet the growing demand for infrastructure, residential, and commercial projects, the construction industry must address these workforce challenges. HR technology can play a key role by helping contractors hire, manage, and develop a strong workforce to remain competitive in this expanding market.
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