Published August 8, 2024
Arizona construction wages among fastest-growing in nation
Arizona construction wages among fastest-growing in nation
Arizona is one of the national leaders in construction wage growth, with Phoenix ranking as one of the top metros with the fastest-growing wage increases.
According to a report released by Construction Coverage, Arizona saw the No. 7 highest construction wage growth of any state with a 3.2% increase in mean earnings from 2018 to 2023, adjusted for inflation. Among the top large metros with populations in excess of one million, Tucson recorded a 5.7% increase in the same span — the seventh highest of any large metro in the United States. Metro Phoenix ranked No. 15 with a 3.2% growth.
Construction Coverage used data from the U.S. Bureau of Labor Statistics to determine the rankings.
Phoenix ranked No. 39 among large metros in Construction Coverage's 2022 wage growth report, with a decrease of -1.4% in inflation-adjusted annual wage. Even though inflation has worked against construction wage growth, Phoenix has managed to increase compensation for workers by nearly $12,000 from 2018 to 2023.
The wage growth is largely driven by the tech sector, said Clay Creaser, vice president and Phoenix business unit leader for JE Dunn Construction.
"With the rise of companies like TSMC, Intel, Meta, and other mission critical and semiconductor firms, there has been an exponential increase in the demand for skilled trades. I would argue that a 3.2% growth rate is low," Creaser said in an email. "Larger companies in the area have been offering incentive pay to laborers to retain their workforce and maintain project schedules."
The high cost of labor has provided workers with opportunities to move between jobs for wage increases of $1 to $2 per hour, Creaser added. While material cost escalation is stabilizing, labor demand remains strong.
Grant funding targets labor needs
A recent grant awarded to one of the state's largest construction workforce pipelines aims to address worker shortages.
On July 23, the Maricopa County Community College District announced it will receive $1 million in funding from the Lowe’s Foundation Gable Grants program. The grant will be divided between Mesa Community College, South Mountain Community College, and Rio Salado College and will allow the colleges to expand construction trade programs and facilities, give access to more resources and hire additional staff to improve education.
The MCCCD, which will receive the grant in partnership with Maricopa Community Colleges Foundation, is the largest community college system in the U.S. and expects to serve 1,180 individuals in its skilled trades programs during the two-year Lowe’s Foundation Gable Grants period.
That would be a 31% increase in the district’s output of skilled tradespeople flowing into an industry that is projected to add 37,000 new construction jobs state-wide by 2031, according to MCCCD’s Workforce Development Department. As one of the state’s largest funnels for construction workers, this could balance out the wage growth with the larger output.
The MCCCD’s Workforce Development Department also noted an 18% shortage of construction professionals in the region during 2023 that contributed to the wage growth. The department added that wage growth will “accentuate recruitment into these high-demand and high-wage construction trade careers in the short term,” and wage growth might flatten out as more positions are filled.
The funds are part of Lowe’s Foundation Gable Grants, which is a five-year, $50 million commitment to give support to 50,000 people in training for skilled trade careers. Over $25 million in Gable Grants have been awarded since 2023.
The ultimate impact of the grant funding will depend on the skill level of the new workers entering the market, Creaser said.
"Historically, people have been leaving the trades faster than they have been replenished, leading to a predicted labor shortage in the coming years," he added.
