Construction Spending Dips Amid Skilled Worker Shortage

Between May 2023 and May 2024, 39 states added construction jobs, and ten states and the District of Columbia shed jobs, and employment remained unchanged in New Mexico. Photo: Canva.

Construction spending slid 0.3 percent from June to July, pulled down by declines in private residential and nonresidential construction, according to an analysis of a new government report released by the Associated General Contractors of America. Association officials said their newly released workforce survey indicates the decreases are attributable in part to a shortage of skilled workers, and they called on the federal government to increase support for programs to prepare more workers for construction careers.

“Nearly all spending categories show increases from a year ago but have fluctuated in recent months,” said Ken Simonson, the association’s chief economist. “Our workforce survey suggests this pattern is due in part to a worsening shortage of qualified workers.”

Construction spending, not adjusted for inflation, totaled $2.162 trillion at a seasonally adjusted annual rate in July. That figure is 0.3 percent below the June rate, but 6.7 percent above the July 2023 level. The May and June estimates were revised up, showing that spending was flat in June rather than declining, as initially reported.

Private nonresidential and residential spending both fell 0.4 percent in July but rose year-over-year, by 7.7 percent and 4.5 percent, respectively. Public construction spending climbed 0.1 percent for the month and 8.1 percent from July 2023.

The 2024 AGC/Arcoro Workforce Survey, which the association released on August 28, found that 94 percent of the firms that had openings for hourly craft workers reported difficulty filling those positions. That was an increase from the 88 percent of firms that reported difficulty in the association’s 2023 survey. Similarly, 92 percent of this year’s respondents reported difficulty filling salaried positions, up from 86 percent in 2023. Fifty-four percent reported experiencing project delays due shortages of workers.

Association officials urged federal leaders to boost investments in construction education and training programs, noting that most contractors attribute workforce shortages to the fact few potential hires have the skills needed. They also urged Congress and the Biden administration to find ways to allow more people to lawfully enter the country to work in construction as a short-term solution to labor shortages.

“Demand for construction remains strong, but unfortunately demand for workers remains even stronger,” said Jeffrey D. Shoaf, the association’s chief executive officer. “Federal officials need to embrace more effective workforce development policies to make sure construction activity continues to expand and keep pace with demand.”