Chart: Immigrant Labor in Construction Trends Post-COVID

According to the most recent 2021 American Community Survey (ACS), the number of immigrant workers in construction, including self-employed, remained close to 2.8 million, on a par with the levels recorded by the ACS before the Covid-19 pandemic wreaked havoc on labor markets. The share of immigrant workers stayed at 24% of the construction workforce, slightly below the 2016 record high share of 24.4% but on a par with the 2019 pre-pandemic reading. The share of immigrants remained higher in construction trades, reaching 30%. The annual flow of new immigrant workers into construction slowed to the lowest levels since 2012 despite ongoing skilled labor shortages exacerbated by a pandemic boost to housing demand.

The latest ACS data show that 11.5 million workers, including self-employed, worked in construction in 2021. Out of these, 8.7 million were native-born, and 2.8 million were foreign-born. Due to the data collection issues during the early pandemic lockdown stages, we do not have reliable estimates for 2020 and omit these in the chart below. Regardless, the construction employment levels, both for native- and foreign-born workers, were back to the pre-pandemic levels by 2021.

The fact that construction employment was back to the pre-pandemic levels while single-family starts increased 27% from 2019 to 2021 illustrates how incredibly tight the construction labor market was at that time.

In the past, the annual flow of new immigrant workers into construction was highly responsive to the changing labor demand. The number of newly arrived immigrants in construction rose rapidly when housing starts were rising and declined precipitously when the housing industry was contracting. The response of immigration had been quite rapid, occurring in the same year as a change in the single-family construction activity. Statistically, the link was captured by high correlation between the annual flow of new immigrants into construction and measures of new home construction, especially new single-family starts. 

This connection first broke in 2017 when NAHB’s estimates showed a surprising drop in the number of new immigrants in construction despite steady gains in housing starts. The pandemic-triggered lockdowns and restrictions on travel and border crossings drastically interrupted flow of new immigrant workers and further damaged this link.

Similar trends are observed in the rest of the US economy, with the share of immigrants in the labor force stabilizing at record high levels but showing no further gains in recent years despite very tight labor market conditions. Excluding construction, where the reliance on foreign-born workers is greater, the share of immigrants in the US labor force increased from just over 14% in 2004 to 16.6%, the highest level recorded by the ACS, in 2018. The share of immigrants stabilized at these record high levels with no further increases in the post-pandemic market.