Across the U.S., builders are beginning to feel the ripple effects of a labor force in transition. For decades, small and mid-sized homebuilders have relied on a deep network of subcontractors—many powered by immigrant labor—to frame, roof, and finish their homes.
That model to be tested and strained. A combination of subcontractor demographic “aging out of the industry,” tighter immigration enforcement, and rising compliance requirements is reshaping how builders get homes built.
Aging Out: The Shrinking Labor Base
The construction workforce has been contracting for years. According to the Home Builders Institute’s Spring 2024 Construction Labor Market Report, the U.S. will need roughly 723,000 new construction workers per year just to meet current demand in residential construction.
The average age of skilled tradespeople continues to rise, with many nearing retirement and too few younger workers entering the pipeline. Many who exited during the Great Recession never returned. Meanwhile, vocational and technical programs—critical sources of new trades talent—remain underfunded and unable to expand enrollment at the pace required.
Immigration: A Critical Pressure Point
Immigrants make up about 25% of the national construction workforce, and roughly 31% of trades workers such as carpenters, roofers, and drywall installers are foreign-born, according to the National Association of Home Builders.
In Texas and other high-growth Sun Belt states, that share exceeds 40%, particularly in labor-intensive trades such as drywall, stucco, roofing, and flooring (HBI Regional Workforce Analysis, 2024).
Yet immigration enforcement and verification mandates are now shaping labor availability as much as market demand. Expanded I-9 audits, E-Verify requirements, and heightened documentation scrutiny are increasing compliance costs while reducing the pool of qualified crews.
Even fully documented workers are relocating or shifting trades to avoid regulatory friction, leaving builders scrambling to staff jobs. As availability tightens, wages rise, cycle times lengthen, and scheduling reliability erodes—margins are under pressure for the small and mid-sized builders, who are least equipped to absorb volatility.
A Forced Evolution in the Subcontractor Base
As these enforcement efforts reduce the pool of authorized workers—or drive more activity into the underground economy—subcontractors will face fewer available crews, higher turnover, and rising wage pressures. Builders will face increased costs, project delays, and challenges scaling up as demand rebounds.
The message is clear: while housing activity may be moderate today, the underlying risk is structural. When volume returns, a constrained labor supply could amplify existing shortages, driving up costs and slowing delivery. Builders who fail to plan for that transition could see their production pipelines stall.
A New Workforce Model
I see our industry moving toward a more formal, technology-enabled labor structure. Stricter immigration enforcement is only one part of the equation. The opportunity for consolidation of these trade groups is picking up speed.
The traditional network of small, family-run subcontractors is giving way to structured labor firms, factory-based crews, and integrated builder–supplier partnerships.
Subcontracting itself is becoming more professionalized. Mid-sized specialty firms increasingly operate like small enterprises rather than informal trade crews. They carry insurance, employ W-2 labor, and use project management platforms to interface directly with builders’ systems.
For builders, this may bring greater scheduling discipline, consistent safety practices, and stronger compliance…. but at the cost of higher pricing and reduced flexibility. Smaller operators who once relied on informal local relationships now compete against national builders able to secure long-term trade partnerships.
Investment-backed firms are also reshaping the culture of subcontracting. By acquiring regional trade businesses and standardizing technology—digital estimating, scheduling apps, GPS-based workforce tracking—they create efficient, data-driven enterprises. Yet these firms often lack the community ties and loyalty of traditional local subcontractors.
Flexibility replaces allegiance: trades increasingly choose projects based on payment speed, reliability, and predictability rather than longstanding relationships.
The Bottom Line
The changing face of labor in residential construction is both a challenge and an opportunity. Builders who adapt—by investing in workforce partnerships, maybe embracing offsite construction, and leveraging digital compliance tools—will gain resilience in an era of demographic and regulatory disruption.
Those who don’t risk being left behind as the industry redefines the “vendor partner” and what it means to “get homes built.”
