Construction Employment: A Tale of Two Cities

The construction industry, a cornerstone of economic growth, has seen a mixed bag of results in recent months. According to the Associated General Contractors of America, construction employment increased in 180 out of 360 metro areas between May 2024 and May 2025, marking a 50% growth rate. However, this growth has been stymied by growing uncertainty surrounding tax, tariff, and labor policies, leading to a stagnation in many regions.

The metro areas leading the charge in construction job gains are Arlington-Alexandria-Reston, Va.-W.Va., which added 8,000 jobs (9%), and Las Cruces, N.M., which saw a 17% increase (700 jobs). Other notable gains were seen in Cincinnati, Ohio-Ky.-Ind. (5,400 jobs, 10%), Washington, D.C.-Md. (4,900 jobs, 10%), Boise City, Idaho (4,700 jobs, 13%), and Miami-Miami Beach-Kendall, Fla. (4,500 jobs, 8%). These areas have benefited from a combination of government investments, private sector projects, and a robust demand for infrastructure.

On the other hand, the metro areas experiencing the worst declines in construction employment include Riverside-San Bernardino-Ontario, Calif. (-6,200 jobs, -5%), Los Angeles-Long Beach-Glendale, Calif. (-5,100 jobs, -3%), Nassau County-Suffolk County, N.Y. (-4,300 jobs, -5%), New York City (-4,100 jobs, -3%), and Baton Rouge, La. (-4,000 jobs, -7%). The largest percentage decrease was in Niles, Mich. (-13%, -300 jobs), followed by Elizabethtown, Ky. (-9%, -200 jobs), and Sherman-Denison, Texas (-8%, -300 jobs).

The decline in construction employment in these areas can be attributed to several factors. One of the primary reasons is the mismatch between the demand for construction projects and the availability of skilled workers. The Associated General Contractors of America noted that contractors consistently struggle to find enough qualified workers despite offering wages that far exceed the private sector average. This labor shortage is exacerbated by the federal government's disproportionate spending on college education compared to career and technical programs, limiting the pool of trained workers available for construction jobs.

Another significant factor is the economic uncertainty and policy changes that affect the construction industry. The recent policy announcements on Liberation Day introduced new challenges for the construction industry, leading to a rocky 2025 despite promising circumstances. The financial market reaction reflects the broader macroeconomic cost of increased policy uncertainty surrounding recent trade decisions. This uncertainty has a chilling effect on economic activity, impacting the data and leading to delays in construction project timelines.

To reverse this trend, metro areas experiencing a decline in construction employment can adapt their strategies in several ways. First, they can focus on increasing funding and publicity for career and technical education programs. This approach can help address the labor shortage by providing more individuals with the necessary skills to enter the construction workforce.

Second, metro areas can work on reducing economic uncertainty and policy changes that negatively impact the construction industry. This can be achieved through better communication and coordination with policymakers to ensure that trade policies and other economic decisions do not create unnecessary barriers for the construction sector.

In conclusion, the construction industry's employment landscape is a tale of two cities. While some metro areas are thriving with significant job gains, others are struggling with declines. The underlying factors contributing to these trends include labor shortages, economic uncertainty, and policy changes. To ensure the continued growth and stability of the construction industry, it is crucial for policymakers and industry stakeholders to address these challenges and create a more favorable environment for construction employment.