The construction industry is currently experiencing a skilled labor shortage, meaning there aren’t enough qualified and trained construction workers to meet the demand of construction projects nationwide. Homeowners are feeling the crunch as they encounter increased home renovation project costs and work completion timelines. During the Great Recession, the U.S. construction sector lost 2.2 million of its employees—over a quarter (29%) of the total workforce—and hasn’t fully recovered since, according to the University of California, Berkeley’s Haas School of Business.
The research team at This Old House analyzed data from the Home Builders Institute (HBI), the National Association of Home Builders (NAHB), and the University of California, Berkeley’s Haas School of Business to explore the current skilled labor market and the causes and ramifications of the construction labor shortage. We also spoke to experts to gain insight into what homeowners can expect regarding home renovations and related construction labor costs.
While many homeowners took to improving their spaces during the pandemic, inflation has dampened some of that DIY spirit. However, even if your 2025 plans don’t include budgeting for common home renovation costs like updated plumbing, a new roof, or window replacement, emergency home repairs may also cost more due to the skilled labor shortage. Fewer plumbers, HVAC specialists, and electricians may be available for urgent service calls.
Key Takeaways
- A total of 3.4 million residential construction workers were employed in the U.S. in 2024, per the HBI Construction Labor Market Report.
- Although the construction industry requires roughly 723,000 new hires annually (60,250 new workers monthly) to meet demand, the monthly average as of August 2024 was only 5,667 new hires, per the HBI’s report.
- From 2005 to 2022, the share of tradesmen fell from 71% to under 61%, while the share of computer, engineering, and science occupations doubled, according to HBI.
- Housing affordability and supply are correlated to the labor market, so homeowners can expect higher renovation costs and longer wait times, according to Dayin Zhang’s research.
What Is the Current State of the Skilled Labor Market for Home Services and Construction?
There were 3.4 million residential construction workers in 2024, according to the HBI Construction Labor Market Report. To keep up with the demand—based on a 1.5 million-home national housing deficit, as estimated by the NAHB—the industry must hire approximately 723,000 new construction workers annually, or the equivalent of roughly 60,250 new workers monthly.
In August 2024, the average number of job gains was only 5,667 new hires per month—less than a tenth of what’s needed to support the construction industry. In addition, the share of tradesmen also declined from 71% to under 61% from 2005 to 2022, while the share of engineering, computer, and science occupations doubled.
The average hourly wage in the construction industry increased by 4.3% from 2023 to 2024, according to HBI’s report. Workers 25 years old and under comprised 10.8% of the workforce in 2022, up from 9% in 2015. However, the share of workers aged 35–54 fell from 72% in 2015 to 67.3% seven years later.
Hispanic people comprised 31.1% of the construction labor force, while the share of immigrant construction workers totaled 24.7%, according to HBI’s report. “The construction labor shortage is primarily driven by demographic shifts and immigration policies,” says Dayin Zhang, assistant professor at the University of Wisconsin-Madison. Housing affordability and supply are correlated to the labor market, according to Zhang’s research, so a continued construction labor shortage could mean higher renovation costs and longer wait times for homeowners.
How Is the Labor Shortage Affecting Homeowners?
The effects of the construction labor shortage can be measured by the reduced number of housebuilding permits and new construction homes entering the housing market, according to Zhang’s research. Specifically, in 2013, a total of 633 fewer buildings were permitted, and 1,178 fewer new houses entered the market.
Anthony Perrenoud, department chair of the construction management department at Boise State University, sums up the relationship between the construction labor shortage and the housing market’s affordability: “Less skilled workers, higher labor costs. Higher labor costs, higher construction costs. Higher construction costs, more expensive housing.”
“Similarly, a shortage of skilled labor can lead to longer project lead times,” says Minerva Bonilla, assistant professor at Texas A&M University. Construction companies must account for the lack of manpower necessary for faster project completion times. However, “due to the amount of work available, construction companies have more leverage today to tell a homeowner when they will or can get to the project,” says Perrenoud.
Construction businesses can also raise prices to account for their lack of skilled labor, as new construction parcels average an additional $50,000—a 16% increase relative to the baseline price, per Zhang’s data. “When the demand for construction projects is high, but the supply of skilled labor is low, an increase in cost is observed,” says Bonilla. In addition, “Supply chain disruptions, worsened by labor shortages, drive up both material and labor costs, making home improvements even more expensive,” says Denise Rutledge Simmons, associate dean for workforce development at the University of Florida.
Homeowners who want to escape rising labor and material costs often use their own skills to tackle home improvement projects—or at least seriously consider what projects they hire a professional to complete. “The rise of social media content creators who share step-by-step DIY guides has made home improvement projects more accessible than ever,” says Hisham Said, associate professor of construction engineering and management at Santa Clara University. “While DIY projects can be cost-effective and rewarding, homeowners should carefully assess their skills, the complexity of the work, and any legal or safety considerations before proceeding. When in doubt, consulting a professional is always the safer choice.”
Why Is There a Labor Shortage?
Significant factors influencing the construction industry’s skilled labor shortage include shifting cultural perceptions, workforce evolution, and a desire to achieve financial success, among many others. “My research specifically highlights the impact of immigration enforcement policies, such as the Secure Communities program, which significantly reduced the availability of undocumented workers in the construction industry,” says Zhang. Below are additional aspects influencing the skilled labor shortage in the construction industry.
Cultural Perceptions
“First, the lack of skilled labor is a multifaceted problem that is partly attributed to the mental shift that the country underwent in the 1960s and 1970s when the workforce transitioned towards more professional and service-oriented jobs, while blue-collar jobs became less prevalent,” says Bonilla.
Said echoes this sentiment, pointing out that “the societal perception that construction jobs are less prestigious than white-collar careers has further contributed to the shortage. Parents and educators often encourage students to pursue four-year degrees rather than vocational training, leading to a decline in apprenticeships and trade school enrollments.”
Workforce Evolution
Most workforces require a steady inflow of younger workers to replace those retiring from the industry, and the construction workforce is no exception. However, “Similar to many other industries, the average age of construction workers is increasing and there are not enough people entering the industry to reduce the shortage gap,” says Perrenoud.
Simmons and Bonilla highlight the insight that younger generations may lack when considering a career in construction. “In my opinion, the younger generations are not aware of the vast opportunities that exist within construction and see that specializing in a trade can be very lucrative and rewarding for their lives,” says Bonilla. Simmons says, “Younger workers are increasingly drawn to tech and office-based careers, reducing interest in hands-on trades without realizing a career in construction can involve tech and office-based work.”
Living Wage
In conjunction with cultural stigmas regarding construction jobs, “concerns about job stability, work conditions, and benefits deter new workers,” says Simmons. Bonilla notes that “wages are not necessarily appealing to the physical and mental demands that come with them.”
“Additionally, rising living costs make it difficult for workers to sustain a comfortable standard of living on traditional construction wages, further discouraging new entrants into the field,” says Said.
Our Conclusion
“Without strategic action, the labor shortage will continue to challenge the industry’s ability to meet growing construction demands,” says Said. However, skilled labor shortages can provide homeowners with greater opportunities to fix their own homes and encourage friends and family to pursue construction careers if they’re interested and qualified.
If you plan on tackling some home improvement projects of your own, save money on your next renovation with our in-depth guides that cover everything from the foundation to roofing to curb appeal. The key to making your home renovation budget work is educating yourself on every aspect of your project—before you start purchasing tools and materials.
Expert Insights
Are homeowners increasingly turning to DIY projects in light of the shortage? What potential risks should they be aware of?
– Safety hazards: Electrical, plumbing, and structural work pose injury risks without proper training.
– Code and permit issues: DIY projects may not meet building codes, causing problems when selling a home.
– Costly mistakes: Improper work can decrease home value and require expensive corrections later.”
Projects involving specialized skills, such as electrical work, plumbing, or HVAC installation, require trained professionals. Mistakes in these areas can lead to serious safety hazards, costly repairs, or even violations of building codes.”
How do labor shortages relate to rising construction and renovation costs?
– Supply and demand pressure: With fewer workers available, wages have risen construction wages increased 4.3% in 2023 to $38.30 per hour.
– Extended timelines = higher costs: Project delays increase rental equipment costs, overhead, and material storage expenses.”
