2025 August Economic Report

Washington state is suffering from a construction labor shortage, according to a report released Thursday by the Associated General Contractors of America, partially from ramped up immigration enforcement and compounded with chronic high building costs.

“Construction employment has stalled or retreated in many areas for a variety of reasons,” Ken Simonson, AGC chief economist, said in a statement Wednesday. “But contractors report they would hire more people if only they could find more qualified and willing workers and (if) tougher immigration enforcement wasn’t disrupting labor supplies.”

Washington has experienced some of the highest construction job loss levels in the country, according to an AGC analysis.

In July, the state had 8,200 fewer construction jobs, a 3.6% loss of total jobs reported a year earlier in July, according to AGC and federal data.

The U.S. gross domestic product (GDP) — the value of all goods and services produced in the country — totaled $29 trillion at a seasonally adjusted annual rate in the 2nd quarter of 2024; construction contributed $1.3 trillion (4.5%).

In Washington, construction contributed $36 billion (4.3%) of the state’s GDP of $851 billion, according to the report.

There were 943,000 construction establishments in the U.S. in the 1st quarter of 2024, including 25,300 in Washington. (An establishment is a fixed business location; about 99% of construction firms have only one establishment.)

Private nonresidential spending in Washington totaled $11 billion in 2023. State and local spending totaled $12 billion. (Totals are not available for residential, railroad, power, communication, or federal construction.) Construction employment in Washington in August 2024 totaled 232,800, an increase of 100 (0.04%) from August 2023 and an increase of 9,300 or 4% from February 2020.

Construction jobs pay well. In Washington, 4 out of the 5 most numerous construction occupations had median annual pay exceeding the median for all employees in 2023. (Half of workers earn more than the median; half earn less.)

And yet, general contractor companies are reporting a scarcity of qualified candidates.

Out of 37 surveyed companies in Washington in July and August, 76% reported open salaried positions. Hourly craft workers are even more in demand, according to the survey, with 89% of companies having open positions. Crane and heavy equipment operators, surveyors and pipe fitters/welders are some of the most difficult positions to fill, according to the survey.

The surveyed companies blamed a lack of qualified candidates, new hires leaving shortly after starting, and potential employees lacking required credentials, such as a clean background check or a work permit.

A quarter of Washington companies surveyed said their subcontractors lost workers in the last six months due to immigration enforcement actions.

But none of those companies reported job sites visited by immigration agents or their own workers failing to appear because of actual or rumored immigration actions.

In the AGC survey, Washington construction companies report they are most in need of carpenters and construction laborers, which require less formal education but make up some of the largest labor shortages nationwide. Immigrants make up a third of all carpenters and 42% of all construction laborers, according to the homebuilders association.

There have been few reports of immigration agents raiding construction sites in Washington. However, a raid at a Bellingham roofing company where 37 employees were detained made national headlines in April.

However, construction contractors are optimistic about certain private-sector segments and have high hopes for most types of public-sector work, according to survey results the Associated General Contractors of America and Sage released. Yet they have very low expectations for several private-sector market segments, remain concerned about labor shortages and are worried materials prices will climb amid threats of new tariffs, according to A Year in the Balance: The 2025 Construction Hiring and Business Outlook.

“2025 offers quite a few bright spots for the construction industry even as the outlook for some private-sector segments remains quite dire,” said Jeffrey Shoaf, the association’s chief executive officer. “Firms expect regulatory relief will help drive demand and they will continue to hire, when they can, and boost investments in technologies, particularly artificial intelligence.” Click here to watch a quick video about the results.

The net reading — the percentage of respondents who expect the available dollar value of projects to expand compared to the percentage who expect it to shrink — is positive for 15 of the 17 categories of construction included in the survey. The highest net reading, 42%, is for data centers.

Contractors are also very bullish about the prospects for water and sewer projects, with a net reading of 35%, and for power projects, with a net reading of 32%. They also are bullish about healthcare construction, with a net of 27%for non-hospital healthcare facilities, such as clinics, testing facilities and medical labs, and 24% for hospitals.

Survey respondents are largely positive as well about manufacturing plant construction, with a net reading of 25%. Contractors are also optimistic about the education sector with a net reading of 13%t for kindergarten-to-12th-grade schools and 12% for higher education construction.

Five other segments have readings that range from moderately positive to negative. The net reading for warehouse construction is 14%, while the reading for multifamily residential construction is 12%. Contractors have a slightly positive net reading, 7%, for lodging. Meanwhile, the net reading for private office construction is -3%. And the outlook for retail projects is -5%.

Association officials noted that contractor expectations are high for a range of infrastructure segments. The net reading for transportation structures, such as airport and rail projects, is 29%. Expectations for bridge and highway work are net 24% positive. The reading for federal contracts, for agencies such as the General Services Administration and the U.S. Army Corps of Engineers, is 22%t. One other public category — public buildings — drew a moderately positive net reading of 14%.

“One reason contractors have a relatively positive outlook for many public sector market segments is that more contractors are starting to see the effects of increased federal investments in infrastructure,” said Simonson.

He noted that 18% of respondents say they have worked on new federally funded infrastructure projects, double the 9% who said that was the case a year ago.

The construction economist noted that most firms anticipate adding workers in 2025 to accommodate the higher demand for most types of projects. More than two-thirds of the respondents expect to add to their headcount, compared to only 10% who expect a decrease.

Yet he cautioned that more than three out of four firms report having a hard time filling either hourly craft positions, 78%, or salaried openings, 77%. In addition, the majority expects that hiring craft workers will continue to be hard or will become harder. Only 12% say it will become easier or remain easy to hire.

Contractors continue to see a significant number of project postponements and cancellations. Roughly two-thirds of respondents say projects have been postponed or canceled. Forty-two percent of firms report projects were postponed in 2024 but rescheduled, while 34%t of respondents report projects were postponed or canceled and not rescheduled. Sixteen percent have already experienced postponement or cancellation of a project that had been scheduled for either the first half of 2025 or later.

Simonson noted that supply chains are coming back online, however. Nearly half of respondents report no supply-chain issues in 2024. Only 23% of respondents in 2024 and just 9% in 2023 said they had had no such problems. To cope with — or avoid — problems, 41% of respondents have accelerated purchases after winning contracts, while 32% have turned to alternative suppliers, and 25% have specified alternative materials or products.

Among contractors’ top concerns for 2025, the three most frequently listed are all workforce related. Sixty-two percent pick rising direct labor costs as one of their top three concerns, while 59% list insufficient supply of workers or subcontractors, and 56% name worker quality. The only other concern cited by a majority – 54% – of respondents is materials costs. Given the supply chain improvements, this concern is likely related to President-elect Trump’s threats to impose a broad range of new tariffs, Simonson observed.

Officials with Sage noted that construction firms are increasingly leveraging technology to address industry challenges such as labor shortages and productivity demands. Artificial intelligence leads the way as the technology with the biggest anticipated increase in investment, cited by 44% of firms. Other key areas for increased investment include document management software (40%), accounting software (36%), and project management software (35%.

“AI’s potential to revolutionize construction workflows is driving increased interest and investment,” said Dustin Stephens, global head of Sage. “Leading construction businesses are utilizing advancements in AI, cloud, and mobile technologies to operate more efficiently and tackle complex projects with greater agility.”

Stephens added that while cloud adoption remains steady — 61% of firms now use cloud-based project management tools — cybersecurity has emerged as the top IT challenge, cited by 41% of respondents, while finding the time to implement and train on new technology came in second with 38% of firms selecting it as a top IT challenge.

“As firms embrace innovation, addressing security concerns and streamlining implementation will be critical to sustaining growth in a rapidly evolving industry,” he said.

Association officials said they are urging the new administration to work with Congress to establish new programs for temporary work visas that are dedicated to the construction industry. They are also urging President Trump and Congress to pass the Stronger Workforce for America Act, which boosts funding for post-secondary construction training programs and to boost funding for high-school construction training programs.

They are also urging President Trump to revoke President Biden’s executive order imposing project labor agreements for any federal construction project worth $35 million or more. They are also urging the president to be sparing in his imposition of new tariffs and to implement many of the measures to streamline permitting that Congress authorized but President Biden largely ignored.

“It will be a good year for the construction industry if the Trump administration works with us to find a way to address materials shortages, avoid materials price inflation, remove limits on who can work on federal projects and streamline the permitting process,” Shoaf said.

— The Seattle Times contributed to this report

Hub City Supply in Centralia has put their application in and paid their dues, and are now the newest member of the Economic Alliance of Lewis County.

Co-owner Roger Moore said, “They support us and support businesses in the community. It’s a good partnership.”

Along with his wife Katie (a Realtor with John L. Scott), they bought the business in March after having worked with Hub City Supply, and hosted an open house last week. Roger worked in the construction industry out in the field for years, and with the purchase, now has expanded into an office setting.

Hub City Supply established itself in 2015 when owner, John Kuhn decided to take his 20-plus years of construction experience and apply it to a specialty driven business, focusing on flooring, windows and exterior doors, all with the attention to details. John branded the business name after “the hub” — the stop between Seattle and Portland.

The business works with residential and commercial clients all around the region, providing free consultations, helping customers finalize their designs, all with a respectful and personal experience.

Roger and Katie are proud to continue what John started — maintaining the personal service, small-town reliability and expert guidance Hub City is known for, while introducing new product lines and services. Their vision is rooted in supporting local builders and homeowners with integrity, knowledge, and a sincere commitment to helping each customer succeed.

One of their steady customers is the Lewis County PUD and its energy efficiency grant program which facilitates installing windows for energy savings, which also translates into lower power costs for their customers.

Hub City Supply sells Alpine windows and Simpson doors as well as all styles of flooring including Armstrong and National flooring for your home or office. Hub City Supply has their own team of professional installers plus additional contractors when needed to get your project done quickly and efficiently.

Hub City Supply has serviced high-profile businesses such as Centralia Beauty College, Coldwell Banker Voetberg, Chehalis Tribal Youth Center and the FOX Theatre in downtown Centralia. Hub City Supply has also helped the community by donating materials and labor when available. The Historic Borst Home/replica church, Southwest Washington Fairgrounds fountain, Centralia’s Police Department and Tumwater Timberland libraries/office are all examples.

Their in-house crew and sub-contracted installers bring 15-plus years of experience in their trade.

For fun, the Moores like to ride their quads and go camping in the great outdoors with their son.

You can visit their showroom at 2510 Sandra Ave. Suite A in Centralia.

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Contact
(360) 62-8036
[email protected]
Hours:
Monday through Friday, 9 a.m. to 5:30 p.m.
Saturday by appointment
Closed Sundays