Demand for construction workers is at an all-time high across the country, driving up wages at the same time builders are wrestling with escalating construction materials costs. 

Construction firms added 22,000 jobs in August and the industry’s unemployment rate hit a record low of 3.1% according to the Associated General Contractors of America. Average hourly earnings for many onsite or office employees in construction, increased to $39.36 per hour last month. That’s a 5% gain over the past year and 21% higher than the $32.53 average for all private-sector production employees.  

At the same time, the producer price index for inputs to new nonresidential construction is up 8.9%, with the largest price increases in petroleum products, with the cost of diesel up nearly 78%. However, metal prices have also increased by 20% or more depending on the metal. 

“Construction firms are being squeezed by tariff- and war-induced materials cost increases, even as they boost wages to attract personnel,” said Ken Simonson, the association’s chief economist. “Those cost increases, according to our latest survey, are a major reason project owners are cancelling, postponing or scaling back projects.”