A data center construction boom is underway across the United States to meet surging demand for artificial intelligence (AI), but the industry is grappling with a severe labor shortage. While 800,000 new construction workers must be brought in between this year and next, the existing workforce is aging and young people are shunning construction jobs. As robots emerge as an alternative to fill the gap, construction automation companies are seeing their valuations soar.
According to data released in January by the Associated Builders and Contractors (ABC), an additional 349,000 workers are needed this year to meet construction demand. Next year, with construction spending expected to increase, the required workforce is estimated at 456,000. The minimum number of additional workers needed on top of the existing workforce between this year and next exceeds 800,000.
Blue Collar Recruiter, which supports hiring for production and skilled-trade companies including construction, cites aging as one of the causes of this supply-demand imbalance. More than half of the 349,000 new hires this year will be replacing retirees, underscoring how serious the aging trend has become. One in five construction workers is 55 or older, approaching retirement age.
As in Korea, young Americans' avoidance of construction work is severe. Fewer than one in 10 potential job seekers among young people considers a career in construction. The perception that construction is hard and dangerous work means that young people are not entering the field even with high pay. According to the National Association of Home Builders' (NAHB) analysis of the U.S. Bureau of Labor Statistics' May 2024 occupational employment and wage statistics, half of construction workers earn $60,320 (90.06 million won) or more annually, and the top 25% earn at least $81,510. Considering that the U.S. median annual wage is $49,500 and the top 25% earn at least $78,810, construction pay is relatively high.
The Trump administration's tougher anti-immigration policies have also had an impact. According to data released by Blue Collar Recruiter in March, 28% of construction firms had been directly or indirectly affected by immigration enforcement over a six-month period. Workers fleeing crackdowns or suddenly cutting off contact has deepened the supply shortage.
The labor shortage is expected to grow more severe next year as AI data center and other infrastructure construction ramps up in earnest. "If we cannot fill positions, labor shortages will intensify in specific occupations and regions, putting greater upward pressure on labor costs," ABC Chief Economist Anirban Basu said. "Infrastructure construction is actively underway, but the retirement of existing workers is having a greater impact on the labor problem than rising construction demand."
Among these issues, young people's avoidance of construction is the biggest headache. According to NAHB research released last month, the share of young people aged 18 to 25 expressing interest in construction-related occupations rose from 3% a decade ago to 6% this year, but that is still far from enough to meet demand. NAHB has gone so far as to estimate that an additional 2.2 million skilled construction workers are needed when factoring in a shortage of 1.2 million homes, rising construction demand, and the retirement of older workers.
Against this backdrop, companies seeking to address the construction labor shortage through automation are drawing significant attention. Autonomous equipment company Applied Intuition has developed semi-automated construction equipment such as compact track loaders (CTLs) and autonomous trucks, which it is deploying at sites including mines in Arizona. Founded in 2017, Applied Intuition is developing software that brings physical AI to transportation, defense, construction, mining, and agriculture. On the 13th, it announced a partnership with Heidelberg Materials to roll out an autonomous haulage system, beginning at the Clarence Sands quarry in Australia. The company is valued at $15 billion.
CEO Qasar Younis met with reporters at the company's headquarters in Sunnyvale, California, on March 31, saying, "Demand for critical minerals will quadruple by 2040, but jobs are under threat," and emphasizing that automation is the way to solve the labor shortage. For example, deploying autonomous trucks eliminates the need for workers to endure grueling 12-hour shifts in extreme temperatures inside underground mines.
Swiss equipment automation firm Gravis Robotics raised 19 million euros (33.1 billion won) in new funding last November. The investment was led by IQ Capital and Zacua Ventures. The company recently unveiled production-ready autonomous driving technology at the ConExpo event and announced its entry into the U.S. market. Built Robotics, a heavy equipment automation company founded in San Francisco in 2016, has raised $114 million.
Xpanner, founded in Korea and relocated its headquarters to the United States in 2023, is also drawing attention for its construction automation technology. The company has differentiated itself with a model that converts existing construction equipment into automated systems by adding hardware and software, eliminating the need to replace machinery. Xpanner recently secured $18 million in Series B funding, with participation from Korea Investment Partners and KB Investment. Its clients include Black & Veatch, Hanwha Qcells, and Mortenson.
