After hitting a 5-year low at the start of the COVID-19 pandemic, the construction industry is booming. An average of 135,500 building permits were issued in the months of Q1 2021, compared to only 96,000 in April of 2020, according to the Census.
In spite of the pandemic, there were a total of 1,415,600 building permits issued in the U.S. in 2020: the highest number of building permits issued since 2007.
As we enter a post-COVID world, it’s worth examining which cities are poised for explosive growth in residential markets – and where construction workers are in demand and paid a respectable wage.
We looked at four factors to rank each of the 49 most populous metros in the U.S.:
- Opportunity: How many building permits were authorized recently?
- Demand: How many construction workers are employed in this area relative to permits?
- Pay: How much will a construction worker make in this area?
- Cost of living: How expensive is it to live in this area?
- Six out of 10 of the top cities for construction workers are in the South due to a boom in building permits and a relatively low cost of living
- Three out of the top five cities for construction workers are in Texas: Dallas, Houston, and Austin are quickly growing
- Demand for construction workers in these cities is incredibly high, and there’s a notable shortage of laborers in the top cities.
Why Each City Made The List
We took into account the opportunity, demand, pay, and cost of living for each city in our ranking. Let’s take a closer look at why the top 10 cities have booming constructions markets with interesting opportunities for constructions workers.
- Dallas, TX
- Houston, TX
- Minneapolis, MN
- Austin, TX
- Phoenix, AZ
- Seattle, WA
- Philadelphia, PA
- Tampa, FL
- Jacksonville, FL
- Nashville, TN
Dallas made our list for several reasons:
- The most new building permits of any major metro in February
- A 4:1 worker-to-permit ratio
- A below average cost of living
A sharp rebound from the early months of the pandemic has result in strong demand for workers, and construction is booming in Dallas. This trend has led to shortages in supply — 25% of construction firms said they experienced building material shortages and delays on projects in June. A competitive market like this creates demand for not just construction materials and assets but also laborers.
Houston wasn’t far behind Dallas in our rankings: It had the second highest building permits issued in February — marginally edging ahead of the much larger New York City.
This growth speaks to the unprecedented population boom Texas has experienced over the last 10 years: According to the Census’ early estimates, Texas will rank first among all states in population gains for the past decade. Houston construction laborers also enjoy relatively higher wages than the other two Texas cities on our list despite the modest cost of living.
Minneapolis isn’t seeing the same growth as the Texas cities on our list, but it still boasts above average building permits. What truly stands out about Minneapolis is the above average salaries of construction workers: $57,100 on average. Only New York City workers are paid more, and the cost of living is significantly more affordable in The North Star State.
Minneapolis also only has a 4:1 worker-to-permit ratio. Combined with the growth in residential housing, demand for construction workers is quickly growing in a post-COVID world.
Austin is the third and final Texas city on our list. Austin is an exciting metropolitan area for construction laborers for two reasons:
- It authorized the third highest building permits in February 2021
- There’s an incredible shortage of construction workers
Labor shortages are nothing new to Austin’s booming town – the Austin Business Journal described Austin as having “a desperate need to build homes.” The striking lack of construction workers presents an opportunity for contractors and construction companies to take advantage of the high demand and low supply of laborers.
The Phoenix construction market has exceeded the national U.S. average significantly since 2016, and 2020 was no exception, expanding by 15% and driven by a strong residential market according to a Cumming research report.
Phoenix had the 5th most building permits issued in February, and it still has a significant shortage of construction workers relative to the construction boom it has enjoyed for the last several years.
Seattle, much like Minneapolis, boasts favorable salaries for construction laborers, averaging $52,710 according to the Census. It’s also enjoyed steady construction growth above the U.S. average since 2015.
Despite the industry laying off almost 50,000 people in April 2020, employment has bounced back to above and beyond pre-pandemic levels, demonstrating the resilience of Seattle’s healthy commercial and residential construction markets.
Much like the other cities on this list, Seattle needs construction workers and will likely continue to hire back workers — Seattle has a 7:1 worker-to-permit ratio.
Philadelphia is a similar story to Seattle: A mature construction market that’s proven resilient in spite of the COVID-19 pandemic. Philadelphia approved 2492 building permits in February, and it has a 6:1 worker-to-permit ratio.
Also noteworthy: the average salary for a Philadelphia construction worker is $50,320, which is significantly higher than the $42,000 national average.
There’s a lot for construction workers to like about Tampa’s construction market. While it’s not the largest market, there’s a strong demand for construction laborers, and Tampa is one of the most affordable cities on our list.
Florida saw massive population growth over the last decade, second only to Texas according to the Census’ early estimates.
Local construction leaders have noted workers are retiring faster than they’re able to replace them, creating an urgent demand to meet the growing residential market.
Jacksonville is another Florida city that’s ideal for construction workers, boasting a higher salary than Tampa, albeit with less construction overall. Demand is high, as there aren’t enough workers to support Jacksonville’s growing economy. This trend has been seen across Northeast Florida: Duval, Clay, Nassau and St. Johns county single-family residential building permits are up 21.4% from 2019.
Much like Tampa and the Texas cities, Jacksonville’s construction industry is driven by an influx of demand for residential homes and apartments.
Nashville slides in at number 10 on our list. Despite only having 1,580 building permits issued in February, Nashville is booming – the overall construction market grew 10.2% driven by residential, healthcare, and infrastructure. Most importantly for construction workers, there’s a strong demand for laborers in this market.
Construction spending in Nashville has far exceeded the U.S. since 2013, and it’s expected to continue to grow well into the future. In fact, the National Association of Realtors believes Nashville will become a top 10 market for commercial construction in 2021 despite lower demand nationwide.
We gathered and compiled the following data for each city:
- The number of newly authorized building permits in February 2021 per the Census
- The mean salary of construction workers according to the BLS
- The demand for construction workers – which we calculated by dividing the number of employed construction workers by the number of newly authorized building permits – according to the BLS
- The cost of living per city according to the Census
We weighed the demand for construction workers twice as much as other factors, because demand for laborers can impact the other variables (e.g. salaries of construction workers will rise with demand).
Data were downloaded from the Census and BLS and analyzed in Microsoft Excel.