For the first time since the pandemic, more construction firms shrank than grew. Thirty-seven percent of contractors cut headcount by at least 5% over the past twelve months, against 34% that grew it by at least 5%, according to the 14th annual workforce survey AGC of America and NCCER released September 3.
And 73% still plan to hire over the next year.
The craft shortage didn’t go away when demand softened
The survey drew 1,830 respondents and was fielded across July and August. Eighty-seven percent of firms have open hourly craft positions and 82% have open salaried ones. Of the firms with craft openings, 88% say those roles are as hard or harder to fill than a year ago, and half say outright harder. Electricians are the worst of it: 81% of firms seeking them report difficulty, ahead of superintendents at 75% and project managers and supervisors at 74%.
Half of respondents say the candidates who do apply lack the skills, certificates or licenses the work requires. That’s a different problem from a thin applicant pool, and it doesn’t get solved by posting more jobs.
Construction workforce retention is now a 90-day problem
Eighty-three percent of firms report at least some turnover among new field employees inside the first 90 days. The leading cause contractors cite is a mismatch between what new hires expected and what construction actually is, followed by the physical demands, then travel and scheduling. ACE Electric, the Valdosta, Georgia electrical contractor, netted more than 500 employees this year but had to hire roughly 700 to get there. Its HR director, Mindy Bates, says orientation and workforce-development changes cut turnover by more than 40 points over two years, and that 83% of workers offered a lower classification after skills testing accepted it. Those are company figures, and Bates said ACE hasn’t analyzed downstream turnover in that group.
Data center labor demand is repricing everyone else’s crews
Twenty-eight percent of respondents performed data center work in the past year. Among them, 58% cite increased competition for skilled workers and 49% cite wage pressure, while 37% name worker or subcontractor availability as their single biggest challenge. That pressure doesn’t stay inside the fence line. Every other job in those metros bids against it, which is part of why 42% of all firms had projects delayed by shortages of their own or their subs’ workers, the most-cited delay cause in the survey. Seventy-four percent had at least one significant delay; only 26% had none. Chicago is a live illustration, with the $1.7 billion Bally’s casino resort at the Freedom Center site running concurrently with the Red Line Extension and O’Hare Concourse D work.
Where contractors put the money
More than eight in ten firms raised base pay for craft and salaried workers by as much as or more than the prior year, and 36% started or increased training spend. Forty-nine percent added online and social recruiting; 48% deepened engagement with high school, college and CTE career programs. Growth skews hard by size. Headcount rose at least 5% at 30% of firms doing $50 million a year or less, 54% in the $50 million to $500 million band, and 79% above $500 million.
Ken Simonson, AGC’s chief economist, cautioned that the survey doesn’t establish causation on the delay attribution, and it’s a self-reported member survey rather than a probability sample. Read it that way and it still says something hard to argue with: the market has split. The firms with volume can’t staff it, and the firms without it are letting people go. Full results are in AGC’s release.