Contractors’ pay strategies hint at stabilizing job market

Core Insights - The strict immigration policies under the Trump administration are beginning to significantly impact the construction industry, affecting both the supply of labor and the demand for various types of construction projects [3][8] - A report from accounting firm Moss Adams, which merged with Baker Tilly, surveyed 267 firms across several states, revealing that immigrants constitute a major portion of craft workers in states like California and Texas [4] - Construction employment saw a 2.5% increase from August 2023 to August 2024, outpacing the 1.2% growth in total nonfarm payroll employment, but is projected to slow to 0.7% annual growth by August 2025 [5] Employment and Wage Trends - The report indicates a stabilization in wage growth, with salary increases moderating in 2024 and continuing to ease in 2025, suggesting a stabilization of the tight labor market [6] - A majority of surveyed firms (65%) did not alter their salary strategies from 2024 to 2025, indicating a cautious approach amid market uncertainties [6] - Compensation strategies have seen a decline, with pay bumps based on cost-of-living adjustments decreasing by 7% compared to 2024, and the percentage of companies using such adjustments to attract talent falling by 3% [7] Future Projections - Despite the slowdown in wage growth in 2025, projections for 2026 indicate an expected increase in construction project volume and labor demand, as more companies are offering merit pay and cash incentives [8] - The ongoing impact of immigration policy is expected to continue influencing both the supply of construction workers and the demand for certain projects [8]