Labor Shortages Mount Under Tariffs, Immigration Crackdown

Construction firms nationwide are facing a hiring crisis, with 92% reporting difficulty finding qualified workers, according to a new survey by the Associated General Contractors of America (AGC) and the National Center for Construction Education and Research (NCCER). The shortages are delaying projects, raising costs, and straining an industry already grappling with immigration enforcement and tariffs, industry leaders warned Thursday.

The survey of more than 1,300 contractors found that 80% of firms employing craft workers have openings, while four-fifths are also seeking salaried staff.

“We can’t get people,” said NCCER President and CEO Boyd Worsham. “We’re pushing more work onto fewer teams, and it creates fatigue and higher costs.”

Contractors say the challenge isn’t just numbers but quality: 57% report candidates lack basic skills, 48% say hires no-show or quit quickly, and 41% cite missing credentials like driver’s licenses or work permits.

Immigration Enforcement Adds Pressure

Immigration enforcement has become a growing stress point. Twenty-eight percent of firms report being affected directly or indirectly in the past six months, with 5% experiencing jobsite visits from immigration agents and 10% losing workers due to raids or rumors.

The impact varies by state: 75% of contractors in Georgia reported being affected, compared to 46% in Alabama and 35% in Nebraska.

The labor crunch is already extending project timelines. Forty-five percent of firms cited worker shortages as the cause of delays, while 78% experienced at least one delayed project in the past year.

Roofing contractors may feel the pinch more than most. Census data show that 61% of workers in roofing and insulation are foreign-born, making them especially vulnerable to stepped-up enforcement actions and worker shortages.

Tariffs and Uncertainty Drive Costs

Trade policy is adding another layer of disruption. Sixteen percent of contractors said tariffs directly caused a project delay or cancellation, while two-thirds raised prices or accelerated material purchases to avoid higher costs.

Steve Levy, chief operating officer of McCon Gordon Construction in Kansas City, said his company is feeling the squeeze from copper tariffs on electrical equipment.

“The construction industry has always been averse to uncertainties, and the level of uncertainty coming from tariffs is a real challenge,” he said.

Survey respondents reported a range of coping strategies: 41% raised prices, 39% accelerated purchases, 23% added price-sharing terms to their contracts, while 26% stated that they had not yet been affected.

Industry Response: Recruitment, Pay and Policy

Despite spending declines, most contractors still plan to expand their workforce if they can find employees. To cope, firms are raising pay, investing in training, and stepping up recruiting.

The survey shows 95% of firms raised wages last year, with 53% boosting craft worker pay beyond the prior year’s increases. In July 2025, average construction wages have climbed to $39.69 an hour, about 9% higher than the national private-sector average, according to the Bureau of Labor Statistics.

More than half of firms are turning to social media and targeted digital advertising to reach younger workers, while 52% are partnering with high schools and trade programs to build pipelines. Larger firms are leading the shift — three-quarters of companies with more than $500 million in revenue use these strategies, compared to fewer than half of smaller firms.

Industry leaders argue that federal policy must also change. Four-fifths of U.S. workforce development funds currently go to four-year college degrees, despite only 38% of adults holding such credentials. AGC is urging Congress to double funding for career and technical education and to restructure the Workforce Innovation and Opportunity Act so at least half of funds go to training. Leaders are also pressing for new, construction-specific visa programs to relieve immediate labor shortages.

“Rebuilding the domestic workforce development program will take time,” said AGC Chief Economist Ken Simonson. “Boosting funding and supporting more training programs focused on construction will expose more people to career opportunities in construction and provide them with the basic skills they need to be employable. But it will take at least a few years before any new investments translate to significant numbers of new, qualified workers.”

U.S. Construction Outlook

Simonson predicted construction activity will remain essentially flat over the next year, as high financing costs, workforce shortages, and project uncertainty weigh on the market. As previously reported, employment gains have slowed to only a few thousand workers monthly, and construction spending has decelerated across most sectors.

Bright spots remain in data centers, energy infrastructure, and federally funded highway and airport projects, but Simonson expects sharp declines in university, research, and hospital construction.

“Eliminating market uncertainty will help boost demand for many types of construction projects,” Simonson said. “Our goal is to make sure the construction industry remains a driver of economic growth in this country. The best way to do that is to ensure it has the workforce, and the demand, needed to continue building the American economy.”

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