Construction Labor Shortages & Their Impacts
Labor shortages are becoming a commonplace issue, impacting construction timelines and bottom lines.
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6 Impacts of Labor Shortages on Construction & One Cost-Effective Solution
The construction industry is a backbone of economic growth, contributing to infrastructure development, residential housing and commercial projects. However, it currently faces a significant challenge: labor shortages. According to labor shortage statistics in a 2023 Associated General Contractors of America (AGC) survey, nearly 90% of the construction companies polled said they had difficulties filling positions. This issue has grown more pronounced in recent years, leading to profound impacts on construction companies. This article explores the reasons behind these labor shortages and how this issue often interferes with business growth.
Construction Labor Shortage FAQs
What is causing a labor shortage in the construction industry?
Labor shortages in the construction industry are being driven by several factors, including:
- Aging workforce
- Impacts of COVID-19
- Increased project starts
- Rising wages & salaries
- Lack of interest in trades
- Geographic accessibility
How does a labor shortage affect a construction project?
A labor shortage in construction can affect a project by increasing labor costs due to higher wages, creating competition for specific tradespersons. This can result in hiring less-skilled laborers — lowering the quality of work — and adding to safety concerns, ultimately resulting in project delays and abandoned budgets. Labor shortages also pressure companies to use automated tools to compensate for the lack of staff.
Is there a solution for the construction labor shortage?
Many companies in the construction industry have been investing in new technologies and training programs in response to the labor shortages. Companies are also offering higher wages and comprehensive benefits to attract new crews. Other measures to offset the lack of skilled workers include creating employee-centric work cultures and prioritizing jobsite health and safety.
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What’s Causing the Labor Shortage?
Aging Workforce
A significant percentage of the current construction workforce is nearing retirement, with a shortage of younger workers entering the trades. The U.S. Bureau of Labor Statistics (BLS) says one in five construction workers is age 55 and older.
Pandemic Impact
COVID-19 disrupted training programs, internships and apprenticeship opportunities, further widening the skills gap. Many construction trade workers left the industry for more widely available and higher-paying tech jobs, among other fields.
Economic Recovery
According to Construction Dive, project starts in the U.S. jumped 6% year over year in 2024. In 2023, the industry employed over 8 million people, with an estimated 500,000 new workers needed to keep pace with demand.
Geographical Limitations
Rural and remote jobs often require longer lead times for equipment rentals, labor staffing and execution of the job itself. With worker availability an issue, many regions experience crew shortages due to local, economic conditions.
The 6 Effects of Labor Shortages in the Construction Industry
1. Project Delays
Since construction often means working as a team on strict deadlines, fewer workers available means project delays. These delays can strain client relationships, impact a company's reputation and lead to contract fulfillment issues. They even sometimes lead to fines and other penalties.
"The shortage of skilled labor can create bottlenecks, especially for specialized trades, resulting in missed deadlines, unnecessary rework and higher overhead costs for site management."
2. Increased Labor Costs
As demand for skilled workers increases, companies may need to offer higher wages and more benefits to attract the right crews. However, construction jobsites often run on tight budgets. Higher pay drives up the costs of completing a project and can make bidding for jobs more challenging, especially for smaller businesses.
3. Reduced Quality of Work
The lack of skilled labor has affected the overall quality of construction projects. Workers on limited crews might feel pressure to do more and push through instead of taking the necessary time to complete tasks. This can lead to safety concerns, costly mistakes and completely reworking entire stages of jobs.
"Errors and inefficiencies frequently result in excess waste, further complicating project logistics. We help minimize project delays and prevent disruptions caused by overflowing waste, which is especially critical when labor shortages extend project timelines."
4. Inexperienced Workforce
The high demand for tradespersons also affects readiness to join the workforce and results in poorer labor quality. Vocational schools push students through programs quicker to meet industry needs, which leads to unprepared workers in an industry that desperately requires skill.
5. Talent Wars
Limited access to skilled workers has resulted in increased competition between construction companies — and companies in different industries. When staffing their jobsites, construction crews may have to pay more for trade laborers with specific abilities. This affects budgeting and planning, leaving many companies facing delays and project abandonments.
6. Adopting AI & Other Technologies
In response to worker shortages, construction companies may feel pressured to use automation technologies to maintain productivity. This could result in increased efficiency but also requires investment in new equipment and training for existing staff — a challenge if you have budget constraints.
Many construction companies have adopted strategies like enhancing employee benefits or investing in new technology and training to combat staffing issues. However, these efforts can be very time-consuming and costly. Instead, what if you had a team that served as an extension of your business to help you get the job done?
Navigate the Risks of Labor Shortages With Dumpsters.com
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“By working closely with local partners and utilizing innovative logistics strategies, our dedicated account managers can overcome delivery challenges, enabling operations for customers in both rural and urban settings to remain seamless.”
Keeping the Momentum — Even During Labor Shortages
Construction companies looking for solutions to the current and ongoing labor shortages face significant challenges. To meet industry demand without sacrificing quality, construction crews must plan strategically and work with the right partners to ensure projects keep moving, budgets remain intact and workers feel safe and appreciated. With those pieces in place, a stronger workforce can grow because, together, we can clear the way for what’s next.
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Expert Contributors
Joe Quebodeaux
Joe Quebodeaux is the Director of Enterprise Sales at Dumpsters.com. With over 10 years of experience in the industry, Joe specializes in building lasting customer relationships and developing innovative solutions. He leads efforts to enhance customer satisfaction, improve retention, and drive sales growth, ensuring businesses nationwide can streamline waste management, reduce costs, and achieve their sustainability goals.
Other Sources
ABC. 2024 Construction Workforce Shortage Tops Half a Million. (January 31, 2024). Retrieved from ABC.org.
AGC & Autodesk. 2023 Workforce Survey Results. (September 2023). Retrieved from AGC.org.
BLS. Labor Statistics from the Current Population Survey. (January 26, 2024). Retrieved from Bureau of Labor Statistics.
North Carolina State Staff. Did COVID Permanently Change the Labor Market? (July 26, 2024). Retrieved from CALS News.
Obando, Sebastian. How U.S. Construction Left the World Behind. (September 30, 2024). Retrieved from Construction Dive.
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