The U.S. engineering and construction (E&C) industry is entering 2026 facing an acute labor crisis—one that threatens project delivery, cost efficiency, and long-term growth unless new workforce models are adopted.
According to Deloitte’s 2026 Engineering and Construction Industry Outlook, the sector will need 499,000 new workers in 2026, up from 439,000 in 2025, to keep up with demand, underscoring how persistent and intensifying labor shortages have become.
The Workforce Challenge: A Growing Gap
Deloitte highlights that structural demographic trends are squeezing labor supply, with 41 % of the construction workforce expected to retire by 2031 while only 10 % of current workers are under the age of 25.
This imbalance signals a critical shortfall of younger entrants into an industry where only 7 % of potential job seekers consider construction careers—an alarmingly low figure that poses long-term workforce sustainability challenges.
Meanwhile, wage pressures and rising costs reflect the strain on the labor market: construction wages grew 4.2 % year-over-year by August 2025, driven by competition for scarce workers.
Should the labor gap persist, Deloitte warns the industry could lose nearly US $124 billion in construction output due to unfilled positions—a tangible economic consequence of workforce shortfalls.
Complicating matters further, skilled labor shortages could exceed two million craft professionals by 2028 if current trends continue, especially for roles such as electricians, welders, and HVAC technicians—all critical to modern construction and infrastructure delivery.
Rethinking Workforce Models for 2026
Addressing such a deepening labor crisis requires innovative and multi-faceted workforce strategies. Based on the outlook’s insights, leading firms are reconceptualizing how they attract, train, deploy, and retain talent.
1. Integrate Digital Transformation with Workforce Development
One of the most notable workforce strategies highlighted in the report is the integration of digital tools with talent development.
As firms adopt technologies like AI-powered scheduling, autonomous equipment, and augmented reality workflows, the demand shifts toward new skills—data analytics, digital management, and technology operation.
Firms that invest in upskilling existing workers to use these tools can not only enhance productivity but also broaden career pathways, making construction careers more appealing to younger talent.
For example, “learn-as-you-install” digital workflows enable craft workers to build both practical and digital skills on the job, helping bridge the gap between traditional construction roles and the growing demand for tech-savvy professionals.
2. Build a Pipeline Through Strategic Recruitment and Retention
Given the poor perception of construction careers among young job seekers, firms must expand recruitment channels beyond conventional outreach. This includes:
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Partnerships with vocational schools and community colleges
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Apprenticeship and mentorship programs
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Targeted campaigns to raise industry visibility and perceived career value
Embedding structured career paths with clear progression and earning potential can make construction more attractive compared with other sectors.
In an industry where only 10 % of the workforce is under 25, creating clear entry pathways is essential.
Retention is equally vital. With experienced workers nearing retirement, transferring knowledge and formalizing mentorship schemes can preserve institutional expertise and combat the loss of veteran labor.
3. Leverage Flexible Workforce Models
To adapt to fluctuating project demands and evolving skill requirements, more agile workforce models are emerging:
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Gig and project-based labor pools for non-core tasks
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Cross-training employees to work across disciplines
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Collaborations with staffing firms and ecosystem partners to supplement in-house teams
Flexible models allow firms to scale skills up or down without the rigid constraints of traditional employment structures—helpful at a time when the industry may face not just labor scarcity but mismatches between available skills and project needs.
Why Leadership Must Act Now
The demographic pressures driving labor shortages are structural and long-term, meaning delay risks more than just temporary workforce gaps.
With nearly half of the current workforce projected to retire by 2031, and a shrinking share of young workers entering the industry, firms that wait risk being unable to deliver on the rising demand for infrastructure, data centers, housing, and energy projects.
Moreover, immigration and policy environments will play an increasingly prominent role. Roughly 10 % of E&C workers are foreign-born, and potential shifts in visa regulations could either ease or further constrain labor availability.
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