What Labor Shortages Are Really Costing U.S. Builders

National construction firms have warned of a stark labor shortage across the U.S. In 2024, analysts projected the industry needed roughly 501,000 new workers on top of normal hiring just to meet demand. Even as overall demand growth cools, experts say 439,000 net new construction workers will be needed in 2025. In practice this means nearly every contractor is scrambling to fill roles: an AGC survey found 94% of firms report open craft positions they can’t staff. In many regions the pinch is acute. Notably, demand has shifted by sector – single-family homes and offices have slowed while infrastructure, manufacturing and data-center projects have surged – so even if some markets ease up, others face blistering labor demand. The result is that nearly every project category is feeling the crunch.

On commercial and industrial projects, labor scarcity is driving delays. High-profile builds like data centers and factories are especially hit, since over 20% of nonresidential construction spending now goes to those projects. In this environment, many contractors report lagging timelines: 54% say workforce shortages are already causing project delays. In effect, big builds from skyscrapers to industrial campuses are moving slower, even as infrastructure work ramps up. Many firms are being cautious in bidding, knowing they lack crews to deliver on schedule.

Residential construction is strained as well. Home builders estimate the U.S. needs roughly 723,000 new hires per year just to keep up with housing demand. In response, wages for residential trades have climbed sharply – the Home Builders Institute notes overall construction pay is up 4.3% in 2024, to about $38.30/hour – but even higher pay hasn’t filled all gaps. Builders report persistent shortages of carpenters, electricians and plumbers, forcing many home projects to stretch schedules. With fewer workers onsite, additions, remodels and new subdivisions often run longer or over budget, worsening America’s housing crunch.

Infrastructure and public works projects are also feeling the shortage. The Biden administration’s infrastructure push has boosted demand for road, bridge and utility crews, but qualified workers remain scarce. As one ABC analyst warned, without enough hires these shortages will “delay the rebuilding of American infrastructure” and drive construction costs even higher. In practical terms, this means road repaving and transit expansions can miss deadlines or rely on costly overtime to stay on track. Critical utility and highway projects may face higher bids or slower progress as builders compete fiercely for the same skilled labor.

Beyond these sector impacts, several key consequences have emerged:

• Project delays. Over half of contractors say labor gaps are already holding up work. Workforce shortages now cause more delays than supply-chain issues, forcing many schedules to slip.

  
  

• Higher costs. Labor costs are ballooning. In the past year, 91% of firms report raising base wages for hourly construction workers, even as material inflation persists. This has translated into larger bids and cost overruns on many projects.

  
  

• Expensive rework. Less-experienced crews and rushed work can mean mistakes. Construction rework often eats up 9–20% of a project’s budget, adding time and expense to fix errors or redo mis-built sections.

  
  

• Reduced capacity. With crews stretched thin, many firms are forced to turn away work. As ABC’s analysis notes, without more workers labor cost inflation will “reduce the volume of work that is financially feasible”. In short, shortages leave contractors running at max capacity – or below – unable to take on new jobs.

  
  

• Retention challenges. Finding staff is only half the battle; keeping them is hard too. Survey data show roughly 50% of firms report new hires quit or don’t show up shortly after starting. High turnover means constant retraining and makes the skilled pool even shallower.

  
  

• Wage inflation. Competition for workers is pushing pay rates upward. Average construction hourly earnings have climbed about 4–5% in the last year, far outpacing wage growth in most industries. These rising wages help attract workers but also drive up overall project costs for builders.

  
  

Taken together, these factors – costly rework, extended timelines, and eroding productivity – show that labor shortages are costing U.S. builders on multiple fronts. By some estimates, rework and related conflicts alone cost the industry about $177 billion a year. For contractors already squeezed by general inflation and higher materials prices, labor gaps mean even tighter margins or costs passed on to clients.

At MyGreat Recruitment, we’ve seen these labor shortages up close – and we’re here to fix them. As a recruitment firm focused in construction, we’ve recently expanded into the U.S. market with one mission: to help American builders overcome the skilled labor gap. Whether you're short on carpenters, masons, heavy equipment operators, or site supervisors, we’ve got you covered.

Our growing database of pre-vetted, job-ready tradespeople is built to meet urgent demand—fast. We take care of the heavy lifting: sourcing, recruiting, vetting, verifying credentials, and ensuring every candidate is ready to work from day one. This means less downtime, fewer delays, and stronger project outcomes for your team.

In a market where time is money and margins are tight, MyGreat Recruitment offers a smarter, faster way to hire—so you can focus on building, not battling workforce shortages.