Construction wages rose 21% between 2021 and 2024, significantly outpacing the 8.2% growth across all occupations.
But what is good news for hourly construction workers may not be such good news for new homebuyers. With higher wages comes higher home prices as builders struggle to hold their bottom lines.
The “massive” jump in labor costs over such a short period is also a sign that labor shortages persist – and are particularly worrisome in some markets – meaning that houses are likely to take longer to build and come with more cosmetic defects than what is considered normal.
Despite the huge jump in wages, according to an analysis by LendingTree, the borrower-to-lender matching service, construction employment itself increased by only 8.8% from 2021 to 2024. That’s slower than the 9.4% growth rate across all industries.
The field has long struggled with a shrinking labor force. Along with the aging of skilled workers and a lack of younger people to fill their slots, many jobs that would be taken by immigrants have gone wanting because of the Trump administration’s crackdown on undocumented immigrants. It has been estimated that 30% to 50% of the workforce in some trades are made up of undocumented immigrants.
Then, too, there’s been a concurrent boom in urbanization, infrastructure investments, and private construction projects, particularly in fast-growing areas, that have siphoned off people who would ordinarily work in the housing sector.
Going forward, LendingTree expects job growth in the residential sector to outpace overall job growth over the next decade. It noted that overall construction employment reached an all-time high, overcoming losses caused by the Great Recession. And between 2023 and 2033, the Bureau of Labor Statistics estimates a 4.7% increase in construction jobs, compared with 4% for all industries.
For now, though, construction companies and their subcontractors continue to scramble to fill positions. According to the National Association of Home Builders (NAHB), the number of open construction sector jobs was 245,000 in May.
And that means higher prices, longer build time, and more mistakes. “When the cost of building a new home goes up, the price of that home is probably going to go up, too,” Schulz says.
“That’s true whether you’re talking about the costs of labor, supplies or anything else that goes into building a home. It all adds up to make homebuilding more expensive, which means higher home prices for consumers.”
Pennsylvania’s construction industry is struggling the most, according to the LendingTree analysis. Construction wages in the commonwealth grew 13.4 percentage points faster than overall wage growth, while industry employment was 7.4 points slower than total job growth, all trends that indicate a tightening labor market.
The District of Columbia and Massachusetts tied for the next highest level of strain. D.C. saw a healthy 1.5 percentage point difference between its construction median hourly wage increase and overall median hourly wage increase. Nevertheless, construction employment fell by 5.3% between 2021 and 2024.
Massachusetts had the third-highest percentage point difference in construction wage growth compared to all industries at 22.8% versus 6.4%, a 16.4 percentage point gap.
At the other end of the spectrum, Idaho’s construction industry appears to be the healthiest in the country. Wage growth in the state’s construction sector was substantially lower than the overall wage growth. Yet, the growth rate in construction was in the double digits and over twice the state’s overall job growth rate.
Utah, Texas, and Arizona all tied for the second-healthiest construction industries.
