Year-to-date construction starts have more than doubled in Arizona, creating urgent demand for labor.
Public and private sector institutions are launching workforce development initiatives to address labor gaps.
Construction firms may face labor force pressure amid this year’s weak construction employment growth.
Year-to-date construction starts through September have more than doubled in Arizona compared to the same period last year, according to ConstructConnect Insight Forecast. The $25 billion TSMC fabrication plant, which broke ground earlier this year, accounts for a significant portion of this increase. However, the state has also seen a handful of other megaprojects start construction across the manufacturing and data center sectors.
The increase in construction comes during a relatively weak year for the construction labor market. Job growth has stalled mainly due to heightened immigration enforcement, which has reduced the available workforce.
Without adequate labor, even well-funded projects can become unfeasible. This reality has pushed state agencies and private investors to launch workforce initiatives aimed at creating pathways into construction careers. The effectiveness of these programs could shape the industry’s future labor force trajectory.
According to data from the Arizona Office of Economic Opportunity, construction employment in the state sits roughly 34% higher than pre-COVID levels. Despite this growth, the state projects a need to fill an additional 20,000 jobs over the next five years.
The current labor market is struggling to meet this demand. Construction has historically relied on immigrant labor for a significant portion of its workforce; however, federal immigration enforcement has constrained this pipeline.
This gap has pushed business and state leaders to invest in workforce development programs. In April, Arizona Governor Katie Hobbs announced a new apprenticeship and grant program aimed at filling the gap in construction workers by creating pathways for workers who might not have otherwise considered a career in construction.
Private investment is following a similar path. Blackstone, the world’s largest asset manager and a growing construction investor, announced $3 million in awards in October to Arizona State University, Maricopa Community College, and local nonprofit organizations. The program will expand access to training and workforce development opportunities to grow the skilled construction and manufacturing labor force in the state.
These training initiatives represent a shift in how the construction industry thinks about labor. Rather than relying solely on experienced workers moving between projects, some in the industry are building their own pipeline from the ground up. However, the scale of demand could suggest that even these combined efforts may not be sufficient on their own.
Considerations for Construction Firms
The uncertainty in the construction labor market makes business planning more difficult. If immigration enforcement remains heightened and employment growth stays muted, there is likely to be an increasing struggle to find labor.
The firms that will be positioned to succeed in this environment will be those that invest in their own workforce development. Blackstone’s approach of partnering with educational institutions to create a pipeline of skilled workers is ambitious, but it demonstrates the scale required to keep up with demand.
Smaller firms may not have the resources for multi-million-dollar initiatives, but they can adopt similar principles on a local scale. Working with local schools, community colleges, and vocational programs can help firms reach candidates who might not have considered construction careers.
Retention becomes just as important as recruitment. Losing experienced workers in a tight labor market means replacing them with less-experienced ones, if replacement workers can be found at all. Firms that invest in training, competitive compensation, and career development will potentially have an advantage over firms struggling to find labor.
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