The Association of General Contractors (AGC) in partnership with Sage, a market leader in cloud business management solutions for the construction industry, released “The 2025 Construction Hiring and Business Outlook,” reporting the expectations of commercial construction firms for 2025. The survey included a total of 1,109 firms across 48 states and the District of Columbia. Contractors are overall optimistic, but labor challenges, materials costs and the incoming administration’s policies pertaining to immigration and trade are listed as top concerns. 

According to the report, respondents were more optimistic for 2025 than they were in 2024, however, there has been considerable movement in terms of the project types that will be in demand in the new year. Data centers were at the top of the list at 42%; healthcare landed at number five with 27%; hospital projects took seventh at 24%; education: K-12 at 13% and higher education at 12%; multifamily hit 12% and retail was in last place with -5% compared to -15% last year. 

Labor and Immigration

Approximately 80% struggled to find qualified skilled craftsmen, and 88% predict hiring will continue to be a struggle or become even more challenging in 2025 as project needs continue to grow, thusly increasing the need for more workers. Two-thirds (69%) of contractors indicate they expect to add more employees in 2025 compared to only 10% who feel they will face a decrease. Additionally, rising labor costs were listed as well as worker quality. 

Many of the respondents focused on attracting and retaining skilled workers in 2024 by raising the base rate of pay over the rate for 2023, providing incentives or bonuses, and increasing benefit contributions and/or improved employee benefits. 

“We also see the same pressures in terms of the labor force, ranging from craft through professional construction management and those pressures we don't expect to alleviate anytime soon,” said Norbert Schulz, vice president of business development, J.R. Filanc Construction Company in San Diego, California. 

Further complicating the labor force issue is the Trump administration’s approach to immigration. The AGC sees issuing temporary work visas as a possible solution and are urging the new administration and Congress to develop a program to make this happen. In addition to the visa program, they are asking for funding to build and train a new construction workforce. 

“We have a hardworking labor force, but it's a very unskilled labor force and so it takes a lot more supervision on our part to get the work done and to make sure the work's done properly,” said Rex Kirby, president, Verdex Construction in West Palm Beach, Florida. “We have a largely immigrant workforce, and they'll ask our teams in the field frequently, ‘What's going to happen here? [Are they going to] try to send me home?’ I’m trying to find ways to keep these work visas in place and hopefully make a more efficient process to keep these hardworking people here.” 

Materials Costs and Tariffs 

Forty-five percent of firms reported no supply chain issues in ’24. According to the report, they, instead, found ways to circumvent the challenges they were facing by accelerating their purchases after winning contracts, turning to alternative suppliers, specifying alternative materials or products, and stockpiling supplies prior to winning contract bids. Despite these workarounds, materials costs were listed among the top concerns at 54% for ’25. 

Regarding the materials prices sentiment, the report states: “That is likely a reflection of concerns the industry has about the potential impacts of the various tariffs the President-elect has promised to impose. If put into place, these tariffs have the potential to boost costs for the many construction components that are sourced, at least in part, via the global supply chain.” 

“We are certainly making our clients aware of anything, whether it be the tariffs or rising costs of materials,” said Andy Heitman, vice president and operations manager, Turner Construction in Kansas City, Missouri. “We are preparing them for the potential of their overall project being more expensive.”

Tech Solutions

Last year 30% of construction firms indicated they plan to increase investment and/or invest in AI, and for 2025, that number jumps to 44%. Construction firms expect to see more investments in various types of business software including document management, accounting, estimating, or project management. Additionally, they believe their firms will purchase software to manage fleet tracking, human resources, building information modeling (BIM) or client relationship management (CRM). 

Conversely, 59% of respondents do not expect to invest in any software while some have plans to swap out current systems.  

To read the report in its entirety, go to agc.org.