Report: Higher Wages Aren't Doing Enough to Fill Construction Jobs

Ryan Whisner Headshot
overhead view of workers looking at construction plans
Despite the increasing wages, construction contractors continue to face the issue of finding qualified skilled workers.
Getty Images

A government report shows that the construction industry added 11,000 jobs in January. It was the 10th straight month the number has gone up, despite several weather-related project delays across numerous regions. 

According to the Associated General Contractors of America analysis of the data released by the U.S. Bureau of Labor Statistics, more construction contractors are boosting wages and taking steps to attract more workers as they try to keep pace with the relatively strong demand.

The construction unemployment rate rose to 6.9% in January, tied for the third-lowest January rate on record. Unemployment across all industries remained unchanged at 3.7% last month.

Job openings in construction at the end of December totaled 374,000, not seasonally adjusted, greatly exceeding the 227,000 workers hired and implying that contractors want to hire far more workers than they can find, AGC Chief Economist Ken Simonson said. In addition, spending on projects underway that month totaled $2.1 trillion at a seasonally adjusted annual rate, 0.9 percent higher than in November and 14 percent higher than a year earlier.

“Although job gains were modest last month, other evidence suggests there is still lots of demand for workers,” said Simonson. “Wages rose faster than in other sectors; job openings at the end of 2023 were at near-record levels for December, and construction spending jumped that month.”  

Jobs Graph 2 2 24Associated Builders and ContractorsAnirban Basu, Associated Builders and Contractors chief economist, also cited the wage increases, noting that they were increasing at the fastest rate since July 2023.

Through 2023, average hourly earnings for most workers, including office staff, climbed by 5.3% to $35.21 per hour. In December, contractors provided a wage “premium” of nearly 19% compared to the average hourly earnings for all private-sector production employees. However, despite the high wages, construction contractors continue to face the issue of finding qualified skilled workers.

Partner Insights
Information to advance your business from industry suppliers

“With both the construction industry and the broader economy continuing to grow at a rapid pace, contractors will struggle to remain adequately staffed over the coming quarters, especially with a majority of contractors intending to increase their staffing levels over the next six months,” Basu said.

A prior government report on construction spending suggests that demand for workers and projects remains high. 

Construction employment in January totaled 8,137,000, seasonally adjusted, an increase of 11,000 or 0.1 percent from the revised December total. On a year-over-year basis, industry employment has increased by 216,000 jobs, a gain of 2.7 percent. 

Residential building and specialty trade contractors added 2,700 employees in January and 60,100 (1.8%) over the past year. 

Employment at nonresidential construction firms (nonresidential building and specialty trade contractors along with heavy and civil engineering construction firms) climbed by 7,600 positions for the month, with growth in 2 of the 3 subcategories. Nonresidential specialty trade added 13,700 positions, while nonresidential building added 1,600 jobs on net, and heavy and civil engineering firms lost 7,700 jobs. Year-over-year, nonresidential has gained 155,100 (3.3%) since January 2023.

Jobs Table 2 2 24Associated Builders and Contractors