The U.S. construction industry faces a critical labor shortage in 2026, with a projected gap of 23,000 project managers and 500,000 total workers. This shortfall stems from increased federal funding, surging demand for data centers, and a wave of renewable energy projects. Construction spending is expected to rise 4.2%, surpassing $2.24 trillion. However, the aging workforce and growing project complexity are creating skill gaps, especially in Building Information Modeling (BIM), MEP systems, and sustainability compliance.
To address these challenges, firms are investing in mentorship, upskilling programs, and partnering with specialized recruiters like iRecruit.co to secure skilled talent for mission-critical projects.
2026 Construction Labor Shortage: Regional Wage and Workforce Trends
By 2027, nonresidential construction starts in the Northeast are expected to grow from $99.3 billion in 2026 to $102.4 billion, fueling a growing need for skilled project managers. While this growth aligns with broader national trends, the region faces distinct challenges tied to its unique economic and infrastructure landscape.
The civil infrastructure sector forms the foundation of construction activity in the Northeast. Federal and state funding are driving significant growth, with civil construction starts projected to hit $49.2 billion by 2027 - a 16.4% increase. For instance, the Metropolitan Transportation Authority (MTA) plans to invest $10.4 billion by 2027 in transit, bus systems, and rail facilities.
Commercial construction is also on the rise, with starts forecasted at $13.0 billion in 2026. Meanwhile, industrial construction is climbing from $6.5 billion in 2025 to $8.4 billion in 2027. Manufacturing alone is set to more than double, growing from $2.23 billion to $4.81 billion by 2025. Major projects like JPMorgan Chase's 2.5 million square foot headquarters at 270 Park Avenue, Disney's 1.2 million square foot headquarters at 4 Hudson Square, and the Port Authority's $10 billion Bus Terminal in Manhattan are reshaping the region. These large-scale developments increasingly emphasize automation and advanced manufacturing, creating demand for project managers with specialized technical expertise. Devin Bell, Associate Economist at ConstructConnect, highlights this trend:
"The Northeast's construction outlook is defined by proactive infrastructure investment, robust commercial redevelopment, and steadily advancing industrial projects".
The healthcare sector is also making a notable impact. For example, Northwell Health has proposed a significant upgrade to Lenox Hill Hospital, aiming to enhance community healthcare services by 2025. Additionally, the ongoing trend of converting office spaces into residential units - especially in cities like New York - has opened up opportunities for professionals experienced in managing complex renovations and adaptive reuse projects.
These developments are not without their challenges. The rapid pace of growth is intensifying wage pressures and exposing skill shortages throughout the region.
Despite the surge in construction activity, the labor market remains tight. In New York City, construction spending is projected to reach $69.6 billion in 2026, yet private sector construction employment is expected to hold steady at around 140,000 jobs through 2027. This means the industry is accomplishing more with a workforce that isn’t growing proportionately.
The numbers illustrate a significant shift in productivity. The number of construction jobs per $1 million in spending in NYC has dropped from a pre-pandemic average of 2.7 to a projected 1.9 for the 2025–2027 period. This decline reflects the dual impact of technological advancements and the reliance on fewer, highly skilled workers to manage increasingly complex projects.
Costs are also climbing. Residential construction costs in NYC have risen sharply, from $120,500 per unit in 2020 to $179,000 per unit in 2025. Coupled with high interest rates and escalating material costs, these financial pressures are squeezing project margins. Many firms are delaying expenditures or postponing starts until economic conditions become more favorable. At the same time, the competition for specialized talent is heating up, making it harder for companies to offer competitive wages.
The demand for specialized skills is particularly acute in industrial projects, which are increasingly focused on advanced manufacturing and automation. White-collar roles like construction managers, architects, and engineers now make up 21.5% of the total construction workforce in New York State. Gary LaBarbera, President of the Building and Construction Trades Council of Greater New York, reflects on the workforce recovery:
"With New York's construction workforce on track to nearly fully recover to pre-pandemic levels, we're expanding in both size and diversity, offering robust wages that secure middle-class careers for New Yorkers of all backgrounds".
However, the challenge goes beyond simply filling positions. Companies need managers who not only understand traditional construction but also bring expertise in areas like automation, MEP systems, and complex project delivery. This talent gap is particularly evident in mission-critical projects such as data centers, logistics hubs, and high-tech manufacturing facilities. Nationwide, the shortage of project managers stands at 23,000, and the Northeast's labor market is feeling the strain. Partnering with specialized recruiters like iRecruit.co can help bridge this gap by connecting firms with pre-qualified candidates who possess the necessary technical skills and experience.
The Southeast has emerged as the nation's largest construction market, with nonresidential starts projected to hit an impressive $293.7 billion by 2025. This surge is fueled by population growth, low operating costs, and business-friendly policies, making the region a magnet for industrial occupiers and investors. Key sectors driving this boom include energy infrastructure, semiconductor plants, and data centers - industries that require project managers with expertise in MEP coordination and high-security builds. With the energy and tech industries expanding rapidly, the region faces increasing pressure to meet recruitment demands.
Federal funding is playing a critical role in this growth. The Inflation Reduction Act is accelerating the development of renewable energy facilities such as solar, wind, and battery storage. By 2033, renewable power generation capacity is expected to soar from 340.7 GW to 823.8 GW, marking a 141.8% increase. Healthcare construction is also on the rise, with spending forecast to grow 46%, climbing from $13.7 billion in 2025 to $19.9 billion by 2027. Meanwhile, data center investments are projected to reach $1 trillion by 2030, with a 7% growth rate anticipated for 2026 alone.
Patrick Ryan, Executive Vice President of the Americas at Linesight, highlights the urgency of proactive planning:
"As mission-critical projects accelerate, the organizations that plan early will be best positioned to succeed. Power constraints, labor shortages, and equipment delays require proactive strategies".
While the region's growth presents exciting opportunities, it also magnifies a critical challenge: a persistent shortage of skilled labor.
The construction industry in the Southeast must recruit at least 500,000 workers to meet 2026 demand. Yet, as of late 2025, approximately 94% of contractors are struggling to fill open roles. The competition for experienced project managers is particularly fierce, as the region vies for a limited pool of talent.
Urban hubs like Texas and Atlanta are feeling the heat, with intense competition driving "bidding wars" for skilled professionals. Salaries for civil engineers in these cities have risen by 15–20%, fueled by high demand for infrastructure and institutional projects. Some companies are even offering 20–30% completion bonuses to retain project leaders through the entire lifecycle of major builds. In Texas, data centers are taking extraordinary measures, such as constructing their own gas-fired power plants to sidestep local grid constraints. This creates a unique demand for infrastructure-savvy project managers.
In contrast, rural areas face different challenges. While gaps in basic trades are less pronounced, finding certified equipment operators and civil engineers remains a significant hurdle. These disparities are prompting companies to rethink recruitment strategies, including exploring remote management for projects in less populated regions.
Adding to the complexity, stricter immigration enforcement is creating disruptions. In 2025, several construction sites in Florida experienced shutdowns due to immigration raids. Kenneth D. Simonson, Chief Economist at The Associated General Contractors of America, warns:
"The major cost concerns for contractors center on availability, quality, and wage rates for craft workers. Aggressive deportations and immigration enforcement will hit construction much harder than they will most industries".
The Southeast's labor market is being reshaped by the energy transition. Between 2023 and 2033, total U.S. electric power capacity is expected to grow by 42.3%, with much of this expansion concentrated in the region. Energy and utilities construction grew by an estimated 4.1% in 2025, maintaining strong demand for skilled managers into 2026. By 2030, data centers alone are predicted to consume up to 9% of total U.S. electricity generation, up from 4% in 2024.
This surge in mission-critical infrastructure is driving up wages. Chad Littell, National Director of U.S. Capital Markets Analytics at CoStar Group, explains:
"High-tech manufacturing and data center development are intensifying this competition, requiring higher wages to recruit and retain experienced workers".
Specialized skills like data analytics and BIM are commanding significant salary premiums. Public and megaprojects are also pushing private-sector wages higher, with double-digit increases for specialized roles. Construction inflation is expected to remain in the 4% to 5% range in 2026, driven by labor shortages and subcontractor scarcity.
To attract talent, companies are going beyond competitive salaries. Many now offer tailored benefits, including mental health support, financial wellness programs, and flexible project opportunities. For firms struggling to fill specialized roles quickly, partnering with recruiters like iRecruit.co provides a valuable edge, offering access to pre-qualified candidates with the technical expertise needed for mission-critical projects.
The Midwest construction market is projected to hit $145.5 billion in nonresidential starts by 2025, with nearly 45% of that - $65.3 billion - coming from civil construction projects. But this booming growth comes with a significant hurdle: a workforce shortage. By late 2025, a staggering 92% of construction firms in the region reported struggling to hire workers. And it’s not just about finding people to fill roles - it’s about finding experienced project managers who can tackle the complexities of large-scale infrastructure and industrial projects.
One of the biggest factors driving this shortage is the wave of retirements looming over the industry. By 2031, 40% of the construction workforce is expected to retire, with one in five workers already over the age of 55. This trend threatens to drain the industry of vital institutional knowledge, as 57% of Midwest firms have already noted a decline in labor quality after losing veteran workers to retirement. The National Center for Construction Education and Research has warned that these retirements will only deepen the labor shortage.
To keep up with demand and replace retiring workers, the industry will need to bring in roughly 1.9 million new employees over the next decade. In 2026 alone, an estimated 349,000 new workers will be required just to maintain the current labor balance. Anirban Basu, Chief Economist at Associated Builders and Contractors, explained:
"A majority of new worker demand in 2026 will be attributable to retirement rather than increased demand for construction services".
The challenge is even more pronounced in states like South Dakota, where the unemployment rate is an exceptionally low 1.9%, making it incredibly tough to find replacement talent.
To address the loss of seasoned managers, many Midwest firms are doubling down on mentorship programs. These initiatives allow younger project managers to shadow experienced superintendents before they retire. In addition, companies are adopting advanced project management technologies to streamline operations. As J.B. Donaldson put it:
"Training and mentorship programs also play a vital role. Encouraging younger workers to learn from experienced foremen and project superintendents builds internal capacity while preserving institutional knowledge".
These efforts are particularly crucial as the region shifts toward more complex industrial projects.
Although the Midwest market is expected to cool slightly after its 2025 peak - dropping to an estimated $126.9 billion in 2026 - the demand for specialized project managers remains intense. Civil infrastructure continues to dominate, fueled by steady federal and state investments in highways, bridges, and energy grids. At the same time, industrial megaprojects are adding to the pressure on an already strained labor market.
Major investments highlight the scale of this demand. Intel’s $28 billion project near Columbus, OH, Microsoft’s $7.3 billion investment in Mount Pleasant, WI, Meta’s $800 million project in Rosemount, MN, and Turner/McCarthy’s $15 billion Lighthouse project in Port Washington, WI, are just a few examples. These high-stakes projects require skilled project managers who can navigate both conventional construction and the unique demands of advanced industrial builds.
This labor shortage is also driving up costs. Construction inflation is expected to hover between 4% and 5% in 2026, fueled by a lack of subcontractors and high demand for mechanical and electrical work. Rising labor costs (reported by 59% of firms) and skill shortages (noted by 38% of firms) are pushing bid prices higher and forcing firms to accelerate material purchases. For companies struggling to fill specialized roles quickly, partnering with recruiters like iRecruit.co offers a way to connect with pre-qualified candidates who have the technical expertise needed for these critical projects.
The construction landscape on the West Coast is undergoing a significant transformation. While office projects are tapering off, there's a surge in mission-critical infrastructure projects. Forecasts show commercial construction in this region climbing 13.9% by 2025, reaching $32.1 billion - almost double the national growth rate of 7.4%. Data centers and transportation hubs are stepping in to compensate for declines in other nonresidential sectors, paving the way for a wave of tech-driven infrastructure projects.
Data centers are fueling much of the West Coast's growth. Spending in this sector is projected to jump 32% in 2025, with another 26% increase expected in 2026. The AIA Consensus Construction Forecast Panel emphasized this trend:
"In the strong category, data centers stand alone. Spending increased by an estimated 32% last year, and our forecast panelists are expecting additional gains of 26% this year".
This boom is largely driven by the rise of artificial intelligence and cloud computing. AI-related investments now account for over half of recent U.S. economic growth. By 2030, data centers are expected to consume 9% of the country’s total electricity - up from 4% in 2024. These facilities demand highly skilled project managers who can handle intricate cooling systems, high-power densities, and the coordination of specialized subcontractors for electrical and HVACR systems.
The expansion of power infrastructure is also a key factor. Renewable energy installations, grid modernization, and EV charging networks are growing at a steady 6.6% annual rate through 2033. According to economists William Lawhorn and Stanislava Ilic-Godfrey from the U.S. Bureau of Labor Statistics:
"The fastest growing construction industries are directly related to the expansion of power generation, data centers, and EV infrastructure".
Beyond data centers, substantial investments are being made in reshoring manufacturing, particularly for semiconductor fabrication, as well as civil engineering projects like water treatment facilities, dams, and canals. With the region's population of nearly 49.4 million expected to grow by 2.7% over the next five years, the demand for long-term infrastructure remains robust. However, high labor costs and strong union activity, especially in California, are pushing firms toward automation and tech-driven facilities. This shift increases the need for project managers adept at running technology-focused job sites.
Construction managers on the West Coast enjoy some of the highest salaries in the country, with a +25% premium compared to the national median. Cities like San Jose ($136,250), San Francisco ($132,530), and Seattle ($125,390) lead the pack, far outpacing the national median salary of $106,980. Salaries for construction managers and superintendents are expected to grow by 10–15% through 2026, significantly exceeding the U.S. average wage increase of 3.5–3.8%.
Professionals with Building Information Modeling (BIM) certification can boost their earnings by an additional $8,000–$15,000 annually. Digital skills are becoming a major differentiator, with AI-powered estimating tools and mobile inspection apps giving managers a competitive edge. These tools not only help them advance their careers but also increase their earning potential. Meanwhile, construction workers have seen their average hourly earnings rise 4.7% to $37.13 as of May 2025, with unemployment for experienced workers dropping to 3.5%.
Despite strong demand, hiring has slowed. Ken Simonson, Chief Economist at the Associated General Contractors of America, explained:
"Nonresidential construction firms added employees in May for the 13th month in a row. However, constant changes in tariffs and other policies that are affecting the cost and demand for construction have led to a significant slowdown in hiring".
For companies struggling to fill specialized roles, partnering with recruiters like iRecruit.co can help connect them with pre-qualified candidates for data center and tech infrastructure projects.
| Region | Average Salary Premium | Primary Drivers |
|---|---|---|
| West Coast | +25% | High project demand (Data Centers), regulatory compliance |
| Northeast | +20% | Complex commercial & institutional projects |
| Southeast | +18% | Rapid growth in urban construction |
| Texas & Florida | +15% | Population growth, infrastructure expansion |
| Midwest | +5% | Stable demand, manufacturing investment |
The West Coast's demand for specialized skills reflects broader national trends, where complexity and wage pressures are reshaping the construction industry. This underscores the importance of strategic hiring and talent acquisition across all regions.
The construction industry is bracing for a labor crisis in 2026. With a projected need for 500,000 new workers and 94% of contractors struggling to fill roles, the challenge is enormous. This shortage is more than a staffing issue - it's costing the industry $10.8 billion annually in lost productivity due to delays and budget overruns. For companies working on data centers, power facilities, and other essential infrastructure, securing skilled talent is no longer a competitive edge - it’s a matter of survival. This urgency underscores the importance of adopting creative hiring and upskilling strategies.
In 2026, the most sought-after project managers are "hybrid workers" - professionals who bring a mix of traditional field expertise and advanced digital skills in AI, BIM, and data analytics. As Brian Binke, Founder & CEO of The Birmingham Group, puts it:
"The talent gap in 2026 isn't just about headcount. It's about skills... The hybrid worker is now the most valuable person on the site".
These hybrid professionals come at a premium. BIM-certified workers, for example, earn 25%–30% more than their peers. To attract and retain such talent, companies are offering 20%–30% completion bonuses, profit-sharing opportunities, up to $5,000 annually in student loan assistance, and flexible work schedules.
Adding to the challenge, many experienced professionals are nearing retirement, leaving companies scrambling to preserve decades of institutional knowledge. To bridge this gap, firms are turning to mentorship programs enhanced with AR/VR tools. These technologies are speeding up onboarding while ensuring that critical expertise is passed on to the next generation of workers.
Given the complexity of today’s labor market, many firms are turning to specialized recruitment services to fill their most critical roles. Partnering with construction-focused recruiters has become a necessity. These services provide access to pre-screened candidates, significantly cutting down on the time and costs associated with labor shortages. This is especially vital in mission-critical sectors like data centers, where spending is expected to grow by 26% in 2026 and another 17% in 2027.
Take iRecruit.co, for instance. This recruitment firm focuses on connecting construction companies with project managers skilled in areas like cost estimation, scheduling, MEP systems, and commissioning. These are exactly the roles in highest demand for complex infrastructure projects. By maintaining relationships with specialized recruiters, companies can secure the right talent before breaking ground on new projects. For firms struggling to find workers with the digital expertise and industry-specific experience needed for data center construction, this approach is proving invaluable.
Adopting these strategies is critical to keeping mission-critical projects on track and meeting the demands of 2026’s challenging labor market.
The construction labor market in 2026 paints a picture of a "split economy". On one side, capital is pouring into essential sectors like data centers, infrastructure, and healthcare. On the other, speculative commercial projects are seeing little movement. This divide is shaping hiring patterns, with regions such as the Midwest, Southeast, and Ohio Valley experiencing a surge in demand for project managers. Meanwhile, secondary markets like Nashville, Phoenix, and Richmond are grappling with a shortage of advanced technical specialists.
The numbers are striking: the industry will need an additional 500,000 workers and 23,000 project managers by 2026. Meeting this demand means prioritizing professionals who are fluent in digital tools like AI-driven scheduling systems, BIM modeling, and real-time data analytics. These hybrid roles are commanding salary increases of 15% to 20%, with firms also offering completion bonuses ranging from 20% to 30% to attract and retain top talent.
Industry experts emphasize the importance of strategic hiring. Brian Binke, Founder & CEO of The Birmingham Group, underscores this point:
"2026 will not reward contractors who chase volume. It will reward firms that choose the right sectors, lock leadership early, and price risk before the market forces their hand."
To stay ahead, companies must treat hiring as a critical part of preconstruction planning. This involves mapping leadership needs 12–24 months in advance and collaborating with specialized recruiters who can connect them with pre-qualified talent. For example, with data center spending expected to grow by 26% in 2026, working with recruiters like iRecruit.co can ensure access to project managers skilled in MEP systems, commissioning, and cost estimation.
In 2026, construction companies are tackling the labor shortage with a mix of focused strategies. A major emphasis is on targeted recruitment for specialized roles, especially in critical areas like data center projects. These roles often require experienced project managers who can navigate complex demands. To bring in fresh talent and address issues like an aging workforce and supply chain challenges, companies are also turning to workforce development initiatives. These include training programs and partnerships designed to build a more robust talent pipeline.
At the same time, many firms are turning to digital tools and technologies to increase efficiency and lessen the need for manual labor. By using tools like AI and data analytics, they’re finding ways to streamline operations, improve scheduling, and align workforce planning more effectively with project needs. Combined, these approaches are helping construction companies recruit smarter, work more efficiently, and stay agile in a rapidly changing labor market.
The growing need for specialized skills in construction is pushing wages higher across various U.S. regions as we approach 2026. Persistent labor shortages in key roles like project management, cost estimation, and technical positions are leading employers to boost pay in an effort to attract and retain skilled workers. This is especially evident in areas like data center construction, large-scale infrastructure projects, and renewable energy, where advanced expertise is critical.
Regional wage differences stem from factors such as local economic conditions, the complexity of current projects, and the availability of skilled workers. Areas experiencing rapid growth, particularly those investing heavily in infrastructure or technology-focused projects, are seeing sharper wage increases. On the other hand, regions with a steadier demand or larger labor pools tend to have more moderate wage growth. Together, these trends highlight how labor shortages and the demand for specialized skills are reshaping pay structures across the country.
Federal funding is playing a key role in driving construction demand across the Southeast, backing major infrastructure and public works projects. Billions are being funneled into efforts like highway expansions, transportation upgrades, and community development, propelling growth across the region. Take, for example, large-scale projects such as interstate widening and urban redevelopment in states like South Carolina - these initiatives underscore the critical partnership between federal and state governments.
These funds are also being channeled into areas like renewable energy projects, data center construction, and urban infrastructure upgrades. Often aligned with broader federal economic goals, these investments are doing more than just fueling construction activity. They're also generating a steady demand for skilled labor and project management expertise, creating a reliable stream of job opportunities for the region's workforce.
