The U.S. construction industry is losing billions of dollars a year due to labor shortages, reducing the number of homes that can be built per year and exacerbating the nation’s affordable housing crisis, according to a research study released this week.
The study, produced by the University of Denver in collaboration with the Home Builders Institute (HBI) and the National Association of Home Builders (NAHB), found that the annual economic impact due to longer construction timelines associated with the lack of skilled labor totals approximately $10.8 billion per year.
The researchers estimate that the labor shortage led to about 19,000 fewer single-family homes being constructed in 2024. For construction projects that did move forward, the average increase in construction time due to the scarcity of skilled workers was 1.98 months, with smaller home builders experiencing an average increase of 2.36 months.
“This study underscores the urgent need for strategic interventions to address the skilled labor shortage,” NAHB Chief Economist Robert Dietz said in a press release. “The economic implications are vast, affecting not only the home building industry but also the broader economy.”
The construction industry’s labor woes are partially due to the lingering effects of the COVID-19 pandemic. The industry lost nearly a million jobs in April 2020 alone, according to Statista data, and many of those workers never returned.
But the study also cites contractors’ reliance on immigrant labor and recent restrictive shifts in immigration policies as reasons for construction delays and ballooning budgets.
An NPR report that aired Wednesday highlighted how the Trump administration’s recent crackdown on undocumented immigrants and mass deportations may worsen the construction labor situation. George Carrillo, CEO of the Hispanic Construction Council, told NPR that his nonprofit think tank estimates that between 700,000 and 1 million workers in the construction industry are undocumented.
“What people really need to understand is, we have a workforce shortage in this country, period,” Carrillo said. “Now, if you take out about a million Hispanics that are undocumented, it would devastate the construction industry.”
To help mitigate the impacts of labor shortages, the joint report from the HBI, NAHB and the University of Denver noted that construction companies are investing in workforce development and training programs to turn unskilled laborers into skilled workers. Builders have also begun relying more heavily on technology and automation, and some have turned to alternative housing designs, such as modular construction.
Both the HBI, which is a nonprofit provider of trade skills training and education for the building industry, and the NAHB, which is one of the country’s largest trade associations, have training programs in place that aim to narrow the skilled worker gap.
“The Home Builders Institute is proud to be part of the solution to the nation’s skilled labor shortage,” Ed Brady, HBI’s president and CEO, said in a press release. “Through hands-on training programs and industry-recognized certifications, HBI is equipping the next generation of construction professionals with the skills needed to meet growing demand.”
