Data Centers, Immigration Action Add To Construction Labor Shortage

The persistent construction labor shortage in the U.S. will only ramp up in the coming years due to a potent combination of demographic changes, a booming data center market and escalated immigration enforcement.

A new Associated Builders and Contractors report predicts the construction industry will need to attract 349,000 net workers to meet demand in 2026, then 456,000 more in 2027, when construction spending growth is predicted to resume. 

“The industry will need even more workers than the model predicts should current spending projections prove overly conservative,” ABC Chief Economist Anirban Basu said in a release. “That is a distinct possibility, especially if project financing costs decline unexpectedly or if lingering policy uncertainty resolves itself quickly and favorably.”

Employment in the industry only grew by 14,000 in 2025, according to ABC.

The industry needs to attract fewer overall workers than in past years due to modest spending growth forecasts in 2026 and 2027, Basu said. 

What may be particularly challenging is that outside of data center construction, demand for building is down. If other sectors start bouncing back, it will become even harder and more expensive to build with the widening labor shortage. Another ABC report earlier this month found that 13% of the association's members are under contract for data center projects.

Basu attributed the turnover and new worker demand to retirement, as opposed to the boom in artificial intelligence infrastructure build-out.

But those two issues are intertwined. ABC found that in the midst of a massive data center boom, which has created vast demand for electrical work, nearly 1 in 5 electricians are older than 55. 

The industry’s repeated challenges in recruiting and ending the labor challenge suggest it won’t be easy to maintain employment equilibrium.

“Failing to do so will worsen labor shortages, especially in certain occupations and regions, placing further upward pressure on labor costs,” Basu said.

JLL predicts construction employment growth will only hit 0.2% in 2026, lagging behind historical norms. 

ABC used data from the Census Bureau and the Bureau of Labor Statistics to conclude that every $1B in construction spending results in approximately 3,450 jobs. That means predicted data center spend in 2026, estimated to be $86B, would account for 296,700 jobs, or 85% of the total need predicted by ABC.

“Most contractors are still having a hard time finding qualified people,” said Brian Turmail, Associated General Contractors of America vice president of public affairs and workforce. “It will remain a top issue in 2026.”

The increase in Immigration and Customs Enforcement activity and a sharp decrease in cross-border migration into the U.S. have dramatically cut into the country’s foreign-born construction workforce.

Data from Construction Coverage shows that the nation’s foreign-born construction workforce, just over one-quarter of the overall total, has grown in recent years, from a low of roughly 2 million in 2013 to nearly 2.8 million in 2023. ABC estimates one-third of the industry’s workforce is foreign-born.

“Inevitably, increased immigration enforcement will affect construction workers and their families,” Workers Defense Action Fund Organizing Director Laura Perez-Boston wrote in an email to Bisnow. “ICE has already targeted many worksites, apartment complexes, and whole communities, like Colony Ridge in the Houston area.”

Perez-Boston said that among residential, commercial and nonunionized workers, those at the lower end of the pay scale face more risk. 

The Trump administration’s policies have shrunk the workforce in the last year, Turmail said, with the biggest impact coming from the rescission of temporary protected status, as opposed to ICE action.  

Turmail estimated that 1.2 million people have lost TPS, and roughly 20% to 25% of those work in construction. This can become especially challenging in areas with larger populations of different immigrant groups that previously had TPS, such as Somalis in Minneapolis or Venezuelans in South Florida.  

ABC’s Bellaman said the industry’s “chronic, massive worker shortage” could be addressed by a federal push for market-based worker visas, more reskilling and upskilling on new tech and innovation, and more training programs, including industry and government apprenticeships.

He said ABC has been working on legislation with allies in Washington, D.C., to address the worker visa question. 

“The construction industry does not have to fall off the workforce shortage cliff,” Bellaman said.