The Construction Sector Continues to Defy Gravity

• Despite interest rate hikes in 2022 and 2023, the construction sector has experienced robust growth, outpacing the overall U.S. workforce growth rate. This acceleration, particularly following the passage of the Inflation Reduction Act in August 2022, is driven by surging demand in infrastructure and residential construction subsectors.

• Southern and Midwestern states have been pivotal in driving the surge in demand for construction workers since mid-2022. States like Illinois, Georgia, and Ohio have benefited significantly from the Bipartisan Infrastructure Law, which has boosted infrastructure construction projects and created substantial workforce opportunities.

• The construction sector has emerged as a key driver of blue-collar job opportunities, particularly for workers without college degrees. This growth helps address labor market disparities, creating pathways for economic mobility.

The U.S. construction sector has shown remarkable resilience in recent years, consistently driving employment growth. In 2024 alone, construction added 223,000 jobs (a 2.8% increase in job growth from 2023), positioning it among the top contributors to employment, just behind sectors like education and healthcare, government, and leisure and hospitality. While construction is generally sensitive to interest rate hikes, the sector has remained robust despite interest rates reaching decade-high levels. In this week's newsletter, we dive into Revelio Labs' workforce data to examine the key trends and developments shaping the U.S. construction workforce.

Since June 2023, the growth rate of the construction workforce has consistently outpaced the overall workforce growth rate, averaging 2.2%. This acceleration in the expansion of the construction workforce follows the passage of the Inflation Reduction Act (IRA) in August 2022, which directed substantial funding toward infrastructure and clean energy projects. Despite the interest rate hikes that began in March 2022 and continued through July 2023, the construction sector has experienced robust growth, well above the overall U.S. workforce growth rate.

The expansion of the construction workforce is largely driven by growth in infrastructure and residential construction subsectors. The Inflation Reduction Act has spurred numerous new infrastructure projects, resulting in a surge in hiring in infrastructure and utilities. Meanwhile, residential construction has been bolstered by factors such as millennials reaching prime home-buying age and the rise of remote work, which has increased housing demand. At the same time, elevated interest rates since mid-2022 have reduced the supply of existing homes, as homeowners with low pandemic-era mortgage rates have been hesitant to sell. This housing shortage has created an opportunity for residential builders to address the demand, further fueling workforce growth in the construction sector.

Southern and Midwestern states have played a key role in driving the surge in demand for construction workers. Georgia, for instance, has secured significant funding from the Bipartisan Infrastructure Law (BIL) to expand electric vehicle charging infrastructure and upgrade public transportation with cleaner buses. Similarly, Illinois has launched the Multi-Year Improvement Program, the largest-ever program committing $41.42 billion over six years (2024–2030) to modernize its transportation infrastructure, which is expected to create thousands of jobs. The Columbus metropolitan area (Ohio) has also received nearly $500 million from the BIL to support the rapid growth of Intel's $20 billion "Ohio One" semiconductor facility. This investment is driving the modernization of roads, water systems, and electricity grids, creating thousands of construction jobs both during the build phase and long-term, once the plant is operational. Notably, even non-metropolitan areas in these regions have seen a significant uptick in construction labor demand since January 2023.

The construction sector has emerged as a key driver of job opportunities for blue-collar workers, particularly those without a college degree. In fact, over the past 18 months, the most in-demand roles in construction have been those that do not require a formal degree, highlighting the industry’s accessibility and potential for workers seeking stable, well-paying careers. As the demand for skilled labor continues to rise, construction offers an increasingly viable path for those looking to build a successful career without the need for a traditional four-year degree. This trend underscores the sector's crucial role in providing upward mobility and long-term job security for individuals entering the workforce.

Thanks to the Inflation Reduction Act, the construction sector has remained resilient despite the economic slowdown. The sector has been a key driver of job creation and supporting critical infrastructure projects. While President Trump has vowed to dismantle the Inflation Reduction Act, arguing it being detrimental to businesses and economic growth, such a move could jeopardize the gains seen in key industries like construction. Moreover, with many red states benefiting from the act’s funding, Trump's position is facing growing political resistance. As we look ahead to 2025, the sector's continued strength will largely depend on how policies unfold, including the fate of the Inflation Reduction Act.