Labor Shortages Threaten To Stall NYC's Massive Infrastructure Build-Out

New York City is on the verge of reinvigorating some of its major transit hubs and building out new rail infrastructure, but an ongoing squeeze on construction labor could derail some of those ambitions.

Multibillion-dollar infrastructure projects are underway throughout the city, from the Second Avenue subway expansion to modernizing John F. Kennedy Airport. But a national shortage of construction workers and competition from lower-cost areas across the country could strain labor supply, pushing project costs higher.

“Labor is really a key challenge,” SBI Consultants LLC President Wadji Atallah said Thursday at Bisnow’s New York Infrastructure, Public-Private Projects and Transportation event. “We have a real shortage of talent.”

New York and New Jersey have poured billions of dollars into airport renovations in recent years, from Newark Liberty International Airport’s $3B Terminal 3 upgrade and LaGuardia International Airport’s $8B makeover to JFK Airport’s ongoing $19B transformation.

The Gateway Tunnel project, which is creating a new tunnel between New York and New Jersey and rehabilitating one tunnel in operation since 1910, is projected to cost $17B and has restarted after a judge ruled against the Trump administration's withholding of funds for the project. It is now expected to deliver in 2035. 

There is also the Penn Station redevelopment, which the Metropolitan Transportation Authority predicts will cost $7B, and as of last year, there was a $10B Port Authority Bus Terminal modernization in the works, too.

“We're on the precipice of one of the most concentrated periods of capital investment in the region's history,” Joe Charczenko, partner at advisory firm The Baldwin Group, said onstage at the New York Marriott Marquis.

Within the five boroughs, there is also the long-awaited Second Avenue Subway expansion, which will extend the Q subway line into East Harlem and Harlem. It is expected to cost $7B and deliver by 2032.

And then there is the Interborough Express revival, a plan to turn an existing 14-mile freight line between Bay Ridge and Jackson Heights into a $5.5B light rail system that the state government is redesigning. 

Infrastructure projects require coordination from government agencies, private capital and the construction industry, Charczenko said. But they are also coming as construction workers are in short supply.

Demand for construction services means the industry needs to attract 349,000 new workers this year, according to a January estimate from trade group Associated Builders and Contractors. The industry will need another 456,000 workers in 2027, ABC estimated, citing expected increases in construction spending growth.

Part of the labor supply problem is the construction industry’s reliance on immigrant workers. Around 28% of jobsites reported workforce reductions in the first six months of last year during crackdowns by Immigration and Customs Enforcement, according to a survey from the Associated General Contractors of America.

But a longer-running issue is also headcount on construction sites, with an aging workforce, early retirements and little appetite among younger generations to enter the profession, civil contractor C.A.C. Industries President and CEO Michael Capasso said.

“Some of these bigger firms, with the data center proliferation across the country and a lot of these other big projects, there's a shortage of all these trade workers needed,” Capasso said.

The surge in data center construction is luring hordes of construction workers to jobsites all over the country with higher wages and bonuses. Between August 2024 and 2025, construction jobs grew the most in some of the states that have seen booms in data construction, including Texas, Virginia and Ohio, according to another AGC survey. 

“We read a lot of headlines about high-tax states versus low-tax states,” Capasso said. “You're seeing it on the trades-level people, too, where they say, ‘Well, when I can go work at a data center,’ and they're overpaying in some other locale with lower personal taxes. We're losing part of that workforce.”

New York construction labor peaked in 2023 with 396,000 jobs and fell to 385,000 in October, according to the Bureau of Labor Statistics. But alongside infrastructure spending, private construction has also picked up. There were 19M SF in new building filings in NYC in the fourth quarter, according to the Real Estate Board of New York, a 200% increase year-over-year and 50% above the historical average. 

If contractors want to rein in cost challenges posed by labor shortages, they need to have a more proactive approach, finding younger people interested in entering construction trades, Capasso said.

“Especially in this market where it's prevailing wage and heavily union-focused, especially in the public works arena, these are great careers for people to enter with significant pay packages,” he said. 

And while construction firms have wagered that investing in artificial intelligence-powered automation and robotics will lower some of their costs, technology has its limits, Grassi Construction Practice Leader Carl Oliveri said. 

“AI is not going to be swinging hammers,” he said.