Evaluating the Current State of Labor in Construction

A lot of my recent conversations with industry professionals have revolved around labor concerns. The economic headwinds caused by tariffs and the ripple effects of immigration reform have led to deep uncertainty.

Contractors have many questions about how these policies will impact them, their operations and their workforce. So, I’d like to take the time to examine what’s happening in the labor market, why it matters and how you can respond effectively to meet your needs.

Slower Hiring Rates

Right now, the 50% tariffs on imported aluminum and steel and 10% tariffs on all Chinese imports have given many pause, and the potential for additional tariffs has only led to more economic anxiety. This has caused a massive hiring freeze across the commercial sector.

According to data from the U.S. Bureau of Labor Statistics, hiring rates plummeted to just 3.6% in March, the lowest rate ever recorded. Additionally, according to analysis of BLS data, job openings decreased by 38,000 in April.

It seems business owners are taking a bit of a “wait and see” approach. That means many contractors aren’t hiring more workers until they can either guarantee more work or see more consistent price stabilizations across trades.

However, while hiring and job openings declined in number, labor churn — or the rate in which workers leave their current place of employment — also decreased over the same period.

The reason for this is twofold: employees are opting for the stable choice of remaining at their current job, and employers are proactively preparing for a return to normal backlog rates by retaining their current workforce.

Shifting Approach to Immigration

In addition to economic stressors, a stricter approach to immigration has led to uneasiness in the labor market. Both employers and employees are feeling the pressure of these new guardrails.

Shifts in Temporary Protected Status (TPS)

For non-citizen job seekers who face unsafe conditions in their home countries, TPS awards temporary immigration status, allowing them to remain in the US without the fear of deportation. It also provides them with legal authorization to work.

TPS workers are employed in many different fields, including commercial construction. According to data from Indeed, nearly 30% of construction workers in the US are non-citizens as of March 2025.

However, there’s been a significant push to change the TPS designation for several countries. Because of this, employers are nervous that changes to TPS designations would reduce the available workforce, forcing them to scale back their workload.

From an employee standpoint, there’s an equal level of concern about how the current approach to TPS could impact the desirability of commercial jobs.

According to data from Indeed, interest in US jobs has dropped by 29% over the past year. So even when the construction industry stabilizes, the number of available workers for hire will still be in question.

All Eyes On I-9s

In accordance with an executive order from January, Immigration and Customs Enforcement (ICE) have started auditing  I-9 forms more frequently in recent months.

These forms serve as employment eligibility verification for all workers to prove that they are legally authorized to be employed in the US. If any I-9 form is missing or found to be non-compliant, construction companies face fines and suspensions.

Keeping up with the volume of I-9 forms can be an extensive, stressful process for employers because I-9 forms are required for every employee — regardless of citizenship status. So, more employees means more I-9 forms and right now, as time savings is of the essence, employers are trying to not add to their plate (or risk financial penalties while work is scarce).

Strategies to Navigate the Current Labor Market

Hiring rates in recent months reached an all-time low and job listings decreased by 27% year over year, according to data from the US Bureau of Labor Statistics . However, while some may see this as a huge red flag, context is crucial.

It’s important to note that even as economic uncertainty slows down projects and reduces labor demand, a massive need for workers remains because the work never truly stops.

The construction industry is always struggling to meet project demand with available labor. Even with the 27% decrease, there were still 248,000 job openings in March 2025.

So, with that in mind, what can you do to navigate the current labor market?

Addressing Labor Concerns

One of the most important things you can do is to retain your current talent. The first step is to maintain a company culture that supports loyalty. Keep jobsites safe, make sure paydays are always accurate and offer opportunities for growth. If your company has the time, allow your team to receive additional training — their new skills could improve company operations in the long-run.

With the constant shifting of immigration policies, you also need to ensure you have a process in place for you and your new hires to complete I-9 forms and that you secure, accessible storage in case of audits. This way if your business is ever inspected, you won’t lose workers to incorrect paperwork.

As changes continue to occur stay informed using trade organizations — like ABC and Associated General Contractors of America (AGC) — and publications so you can make the best possible decisions for your business.

Addressing Rising Material Costs

As material costs continue to fluctuate, it’s important to reassess how you track costs. You should ensure you have an effective structure in place to track job costs and productivity to identify and address unnecessary costs and overruns.

Many contractors choose to invest in construction accounting software to give them unmatched visibility so they can identify overruns quickly and note how, where and when money is being spent to avoid cash flow issues.

Looking Ahead

Even amidst the challenges we’re currently facing across the industry, demand is expected to rebound in the coming months.

According to ABC’s Chief Economist, Anirban Basu, ABC’s data points to two in three ABC members increasing their hiring efforts in the next six months to meet project demand. So now is the time to be proactive so you’re prepared.

I believe by taking the steps outlined above and remaining vigilant, you’ll be able to navigate this time of uncertainty and put your business in a place for success.