The U.S. construction labor shortage is set to intensify next year, even as broader economic indicators point to cooling conditions in the national job market. Industry forecasts show construction firms will need to add nearly half a million workers in 2027, driven by a wave of retirements and unprecedented spending on artificial intelligence infrastructure.
According to a recent report from the Associated Builders and Contractors, the industry will require approximately 456,000 new workers in 2027, a sharp increase from the 349,000 estimated for this year. The U.S. construction labor shortage remains structural rather than cyclical, with workforce demographics playing a central role.
Retirements, Not Recessions, Are Driving Demand
ABC Chief Economist Anirban Basu noted that most new hiring demand is not tied to an expanding volume of construction projects. Instead, it reflects the need to replace older workers exiting the labor force.
Failing to meet hiring targets would worsen existing shortages across key trades and regions, pushing labor costs higher and increasing the risk of project delays. While the 2027 forecast is lower than peak projections from earlier years, ABC expects overall construction spending to return to growth after a prolonged slump.
The group estimates that every additional $1 billion in construction spending supports demand for roughly 3,450 jobs. If current spending forecasts prove conservative, labor needs could climb even further.
AI Capital Spending Reshapes Construction Priorities
Just days after ABC released its labor forecast, quarterly earnings reports from major technology companies surprised investors with massive capital expenditure plans. Meta, Microsoft, Amazon, Google, and Oracle are collectively expected to spend around $700 billion this year, up from roughly $400 billion last year.
Much of that capital is earmarked for AI-related infrastructure, including advanced chips and data centers. These projects are often larger, more complex, and more profitable for contractors, drawing labor away from other segments such as residential housing, healthcare facilities, and manufacturing plants.
ABC data shows that spending on new data center construction rose 32 percent during the first ten months of 2025 compared with the same period a year earlier. Since August 2024, nonresidential specialty trade contractors have added approximately 95,000 jobs.
Immigration Limits and Competition for Talent
The labor crunch is being compounded by policy factors. Tighter immigration enforcement has reduced access to a traditional source of construction labor, according to the Associated General Contractors of America. The group reported last year that 92 percent of construction firms hiring workers struggled to find qualified candidates.
As AI-driven projects attract top talent with higher margins and longer timelines, competition for skilled labor has intensified across the industry.
Skilled Trades See Faster Growth Than the Economy
A separate report from BlackRock highlighted the long-term implications for the workforce. Labor Department projections show employment in skilled trades is expected to grow 5.3 percent on average from 2024 to 2034, compared with 3.1 percent for the overall economy. Electricians are projected to grow 9.5 percent, while HVAC technicians could see growth of 8.1 percent.
Nearly one-fifth of construction workers are over the age of 55, creating urgency around training and apprenticeships. Licensing and certification requirements can take years to complete, slowing the pace at which new workers can replace retirees.
A Warning From the “Essential Economy”
Despite signs of weakness elsewhere in the labor market, including rising layoff announcements and fewer job openings, leaders in manufacturing and construction continue to warn of shortages. Jim Farley has estimated deficits of nearly 600,000 factory workers and close to half a million construction workers nationwide.
Farley has cautioned that ambitious plans to reshore manufacturing and expand data center capacity risk stalling without sufficient labor to build and maintain new facilities. The gap between investment ambition and workforce readiness remains one of the most significant constraints on U.S. infrastructure growth.
