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Construction costs have , pushing homeownership further out of reach for many Americans. But this isn't a new concern: In 1978, the U.S. Government Accountability Office warned that —at a time when the median home price was just US$44,300, the median household income. Today, that figure has , what the median American makes.

One often-overlooked factor behind this surge? Labor costs.

We are , and in our latest study, we analyzed wages and workforce trends across from 1999 to 2023. Interestingly, we found that unskilled workers—those in the lowest-paid roles—saw the largest wage gains. And the effects of these gains have rippled across the entire construction industry.

A changing construction landscape

A lot can change in 25 years, which is the last time researchers analyzed construction labor trends at this scale. Back then, , driven in part by the rise of affordable trade schools and in part by falling union membership.

Today, the landscape looks very different. The construction industry is grappling with a persistent labor shortage, facing an annual shortfall of more than . At the same time, wage dynamics have shifted greatly.

The biggest gains go to the lowest-paid roles

Construction projects rely on a wide range of roles—from highly skilled professionals like engineers and electricians to lower-skilled or unskilled workers. Unskilled workers handle physically demanding tasks like trench digging, concrete mixing and site preparation, and earn lower wages. As a result, contractors often hire more of them.

While contractors tend to focus on expensive skilled labor when estimating project costs, our found that unskilled workers have seen the largest wage gains in recent decades. Their wages rose by 2.75% to 3.5% per year—compared with under 2.5% for most skilled roles.

The size of the construction workforce is also changing, with 88% of U.S. construction firms reporting . The shortage is especially severe among unskilled labor. For example, half as many people work as unskilled helpers now than in 1999.

Given these trends, to avoid budgeting shortfalls and project risks, we encourage contractors to plan for higher costs for low-skilled workers. Our study also offers , which contractors can use to estimate future labor costs.

Wage hikes have a ripple effect

Interestingly, not only did unskilled occupations see the biggest wage jumps, but they also influenced wage changes in other trades.

Using , we analyzed these occupations as part of an interconnected system. We found that trades typically involved early in a project tend to influence wages for trades that come later. In particular, unskilled construction laborers—who handle tasks like site preparation and material handling—emerged as the leading drivers of wage trends across the industry. When their wages rise, others' tend to follow.

These insights suggest that contractors should monitor early-stage wage trends closely. When wages start rising among early-trade or unskilled workers, that is often a signal that broader labor costs are about to rise too. Planning ahead can help firms manage costs more effectively.

Recent world events—such as COVID-19, the Russia-Ukraine war and the —brought major challenges to the construction industry, which is still dealing with their aftermath. On top of that, worsening labor shortages, new tariffs and global supply chain disruptions mean the industry will continue to face significant challenges.

However, tracking market data offers a valuable opportunity to understand emerging trends and develop strategies to respond effectively. Our —working closely with major U.S. contractors through the —is exploring solutions across a range of issues, including , , and persistent , among other critical topics.

This article is republished from under a Creative Commons license. Read the .