Construction job market tightens as demand slows, costs rise

“Normally, if more people are quitting, you’d expect job openings to increase – contractors would want to replace those workers,” Basu told The Center Square. “Instead, we see the opposite: the lowest job openings in nearly a decade. That tells me employers are not eager to replace departing workers, which points to a weakening construction industry.”

Basu attributed the rising number of quits to immigration policies.

Job openings in construction dropped by 115,000 from July and are down 116,000 compared to August 2024, a 38.2% decline. The labor bureau defines a job opening as any unfilled position for which an employer is actively recruiting.

According to Basu, the demand for construction services is declining, which he attributes to a variety of factors.

"After all, there's lots of uncertainty in the economy," Basu said. "Interest rates are stubbornly high, and the cost of delivering construction services has been rising, including because of tariffs. That renders fewer projects financially viable, and that produces fewer construction starts. And we observe that both residentially and nonresidentially."

Job openings were relatively stable over the past year – 204,000 in August 2024 and 203,000 in July 2025. In August, openings fell to 188,000. 

And while labor shortages have long defined construction, Basu said demand appears to be the bigger issue now. 

Rather than resorting to mass layoffs, employers appear to be “embracing” the quits because “it's shrinking their payroll.” 

“And so rather than rehire another worker, presumably a documented one, they're simply allowing their staffing to decline, and since they're providing less in construction services, that actually makes complete and utter sense” Basu said.

He contrasted construction with industries like home health, landscaping, or hospitality, where immediate replacement is unavoidable. 

“Construction is discretionary,” he said.

In other words, unlike services people rely on every day – such as health care, hospitality, or food – many construction projects can be postponed or canceled depending on financing, costs, and economic confidence.

Construction spending declined for the fourth straight month in May, slipping 0.3% from April and 3.5% from a year earlier – the steepest annual drop since 2019, according to the Associated General Contractors of America. 

Analysts say steady public-sector gains were not enough to counter sharp private-sector pullbacks, as uncertainty over tariffs, taxes, and labor policy has led many developers to delay or cancel projects. Industry officials warned that greater clarity on trade, tax, and workforce issues is needed to restore confidence and revive private construction activity.

“Uncertainty about tariffs, tax rates and labor availability are making it hard for many developers to risk moving forward with planned construction projects,” said Ken Simonson, chief economist of the Associated General Contractors of America. “While public sector demand remains solid, it just isn’t enough to offset the private sector pullbacks in activity.”

Private nonresidential construction has also been under pressure: in March 2025 nonresidential spending dropped 0.5%, according to a May release from the Association.