These projections depend on the level of construction activity and do not take into consideration the impact of the COVID-19 pandemic, which has paused some construction projects and will assuredly affect what gets built and when. However, overall construction spending is likely to hold up over the next year or so based on ABC’s Construction Backlog Indicator data, and the industry still needs additional construction workers going forward. Construction Spending Source: Census Bureau Value of Construction Put in Place Survey Annual Historical Data and “Annual Total Table” Total Private Employment Source: Bureau of Labor Statistics, Current Population Survey , Table 42 Excludes the self-employed. Only annual data are available. Construction Spending Forecast Assumptions Starting with annual construction spending data for 2019 ($1.30 trillion), the estimate assumes 3% growth (to $1.34 trillion) for 2020 and 3% growth above the previous year’s construction spending level for 2021 and 2022, to $1.38 trillion and $1.42 trillion, respectively. Construction Spending and Job Creation According to a model developed by Markstein Advisors to calculate the relationship between the volume of construction spending and demand for private construction employment (excluding the self-employed), every $1 billion in extra overall construction spending generates an average of at least 6,500 construction jobs. Infrastructure construction—highways, bridges, airports, power plants, etc.—uses a lot of heavy equipment that does not require as many workers as other types of construction. Other types of construction involving the installation of drywall, plumbing, electrical wiring, HVAC systems and the like require more labor and thus create more jobs. Every $1 billion in extra construction spending on infrastructure generates an average of at least 3,300 construction jobs. Employment Demand Forecast According to a model developed by Markstein Advisors to estimate total private construction employment demand based on the amount of construction spending, contractors would like to hire 550,000 additional workers in 2020 compared to 2019. In 2019, ABC estimated the U.S. construction industry needed to hire 440,000 more workers compared to 2018. This figure is consistent with sources reporting employment and available jobs in construction (such as the BLS JOLTS report). The actual BLS 2019 year-over-year construction employment increase was just 325,000. The lower employment figure was due in part to the lack of available skilled labor, rising wages and increased use of labor-saving technologies including prefabrication and modularization. The workforce shortage has also contributed to reduced annual construction spending compared to the original ABC estimate, as the shortage of skilled labor forced some builders to slow the pace of construction to make the best use of their existing labor force or not to bid on projects because of high labor costs. At the same time, the increased cost of construction due to higher labor and materials costs resulted in clients scaling back or eliminating some contemplated projects. The model to estimate the demand for construction labor adjusts for expected increases in construction costs because construction spending is in nominal dollars (i.e., not adjusted for inflation). Also, the model includes productivity gains in construction, reducing the amount of labor needed to produce a certain dollar amount of construction output. At the same time, the model includes the shift in the mix of projects and added regulations that affect the number of workers needed to complete a project. Finally, the model is based on construction wages and salaries remaining at 2019 levels (last year’s forecast was based on 2018 wage levels). Higher wages and salaries would reduce the demand for labor. Wages are likely to increase in 2020 and beyond, particularly for skilled labor that is in greatest demand. That will further encourage the use of various technologies that augments or replaces labor and software that promotes better scheduling of labor and materials delivery and reduces the use of labor. The net result will be somewhat lower demand for labor than shown by the model. However, these adjustments take time, so the reduction in the demand for labor in a single year is fairly small (likely less than 5% of estimated demand). Hiring of construction workers will be limited more by lack of qualified workers than by employers reducing demand for these workers. Employment Demand Forecast with Additional Infrastructure Spending For the last several years, Congress and the administration have discussed the urgent need to pass a comprehensive infrastructure package with little success. Nonetheless, ABC remains hopeful that such legislation will be enacted into law, especially as the Highway Trust Fund will become insolvent in 2021 under current law. For the purpose of this estimate, a $250 billion-dollar infrastructure package spread out over three years would result in: $25 billion in additional construction spending the first year; $75 billion additional spending the second year; and an additional $150 billion the third year. As a result of this uptick in spending, demand for construction workers would total an additional 82,500 workers in the first year, 247,500 workers the second year and 495,000 workers the third year. ABC issues news monthly news releases on construction-related economic data and trends, including on federal construction spending , employment , GDP and the Producer Price Index data, as well as state-by-state construction unemployment estimates . In addition, ABC produces the Construction Backlog Indicator , the only economic indicator that reflects the amount of work that will be performed by commercial and industrial construction contractors in the months ahead, and the Construction Confidence Index , a diffusion index that signals construction contractors’ expectations for sales, profit margins and staffing levels.