The construction industry has recently experienced a significant increase in wages, largely due to persistent labor shortages. It is important to understand the factors contributing to this wage inflation and its implications for the industry.

The Labor Shortage Crisis

The construction sector is grappling with a notable labor shortage, a trend that has been intensifying in recent years. As of December, there were approximately 449,000 unfilled construction jobs, a slight decrease from the previous month but still a substantial number. This shortage is not a transient issue; the industry averaged around 445,000 job openings per month in the last quarter of 2023, the highest quarterly level recorded​​.

Drivers of the Labor Shortage

Several factors contribute to this shortage:

  1. Aging Workforce: A significant portion of the construction workforce is nearing retirement age, with more than 1 in 5 workers being over 55 years old. This demographic shift is leading to a contraction in the available workforce​​, and hiring now instead of later is critical.
  2. The Great Resignation: Influenced by the pandemic, many workers have reevaluated their career choices, leading to early retirements and shifts to other industries.
  3. Competitive Wages in Other Industries: Industries such as transportation and warehousing began offering better wages, drawing labor away from construction​​.

Impact of the Labor Shortage: Wage Inflation

In response to the labor shortage, construction wages have seen a significant increase. From 2021 to 2023, construction wages rose by an average of 20%. This increase is a direct consequence of the high demand for skilled labor amidst a shrinking pool of available workers. The wage rise is not just a short-term trend; it’s expected to continue as the industry struggles to fill positions.

Addressing the Challenge

To mitigate these challenges, the industry is exploring several strategies:

  1. Reskilling and Upskilling: Encouraging current employees to enhance their skills to meet the evolving demands of the industry.
  2. Attracting New Talent: Drawing in workers from other sectors and focusing on bringing younger people into the construction workforce.
  3. Adopting Automation: Embracing new technologies such as modular construction and 3D printing to offset the shortage of human labor​​​​.


The construction industry is at a critical juncture. The labor shortage and the consequent wage inflation reflect deeper structural issues within the sector.

Addressing these challenges requires a multifaceted approach, including workforce development, embracing new technologies, and potentially reforming immigration policies to replenish the labor pool. As the industry navigates these challenges, the increase in wages is a symptom of a sector in transformation, grappling with the changing dynamics of the modern workforce.

For construction companies looking to thrive in this competitive landscape, partnering with a seasoned recruiter is not just an option; it’s a necessity. Contact us today.