Construction employment gains and wages accelerated in July, marking the sector as one of the bright spots in an otherwise cooling labor market—but industry officials are sounding a cautionary note. The momentum driving current hiring and pay increases is increasingly concentrated in infrastructure-related work, and if public funding or project pipelines weaken, the industry could see a sharp reversal in employment trends that would ripple through excavation contractors, dump site operators, and fill dirt suppliers nationwide.
According to the latest data from the Bureau of Labor Statistics, construction employers added 25,000 net new jobs in July, bringing total industry employment to approximately 8.09 million workers. That represents a year-over-year gain of roughly 200,000 positions, a growth rate that outpaced the broader private sector. Meanwhile, average hourly earnings for construction workers climbed to $35.62, up 4.3 percent from July 2023—well ahead of the 3.6 percent wage growth seen across all private-sector industries.
Infrastructure Demand Is Supporting Construction Hiring
The subsector breakdown reveals where construction employment growth is most robust—and most vulnerable. Heavy and civil engineering employment, which includes highway, bridge, utility, and public-works projects, added 8,400 jobs in July and has grown by more than 60,000 positions over the past year. This category now represents nearly 1.1 million workers, the highest level in more than a decade.
Nonresidential construction jobs also posted solid gains, with specialty trade contractors in commercial and institutional work adding approximately 14,000 positions. Building construction employment, which includes both residential and nonresidential general contractors, rose by 2,600 jobs. In contrast, residential specialty trade contractors saw modest losses, shedding about 1,000 positions as single-family and multifamily starts continued to soften under the weight of elevated interest rates.
What this means for excavation and earthwork contractors is clear: the work is there—for now. Heavy civil projects require massive volumes of fill dirt, borrow material, and engineered soil, while also generating surplus excavation material that needs cost-effective dump sites. Contractors report that bid activity for transportation, water, and sewer projects remains strong, particularly in states benefiting from Infrastructure Investment and Jobs Act (IIJA) allocations and state bond programs.
Why Construction Wages Are Accelerating
Construction wage growth is outpacing the broader labor market for several interconnected reasons. First, the unemployment rate for construction workers stood at just 3.5 percent in July, compared with 4.3 percent for all industries. With fewer available workers, employers are raising pay to attract and retain skilled labor, especially for roles such as heavy equipment operators, pipeline installers, and utility construction crews.
Second, the mix of work has shifted toward higher-wage segments. Heavy and civil engineering employment typically commands premium pay due to the technical complexity, safety requirements, and often remote or challenging jobsite conditions. As this subsector grows faster than residential construction, the overall wage average rises.
Third, union construction activity—which tends to offer higher base wages and benefits—has increased in recent months, particularly on large public infrastructure projects subject to prevailing wage requirements and project labor agreements. This union wage premium is pulling up the industry average, even in right-to-work states where union density is lower.
However, industry analysts caution that wage acceleration may not persist if demand weakens. If project starts slow and contractors compete for a shrinking pool of work, wage pressure will ease, and some specialty trades could see layoffs or reduced hours.
What Happens If Construction Infrastructure Work Weakens
The optimism reflected in July's employment and wage data is tempered by uncertainty about the durability of infrastructure demand. While IIJA funding is scheduled to flow through 2026, the pace of project lettings has been uneven across states, and some transportation departments have delayed major awards due to right-of-way acquisition, permitting bottlenecks, or cost overruns on earlier contracts.
Moreover, political and fiscal headwinds are mounting. Federal budget negotiations, potential changes in legislative priorities, and upcoming elections could alter the trajectory of infrastructure spending. State and local governments, meanwhile, face their own fiscal pressures as pandemic-era federal aid expires and property tax revenues soften in some markets.
If infrastructure work weakens, the impact on construction employment would be swift and significant. Heavy and civil engineering contractors often operate with lean overhead and rely on a steady pipeline of lettings to keep crews and equipment productive. A slowdown in project awards would force these firms to reduce headcounts, defer equipment purchases, and scale back their use of subcontractors—including earthwork and excavation specialists.
For contractors who supply fill dirt, accept excavation material, or operate dump sites, a weakening in infrastructure demand would mean fewer large-scale earthmoving projects, reduced volumes of surplus material, and tighter margins as competition for remaining work intensifies. Regional labor markets that have seen the strongest construction hiring—such as the Sun Belt states and major metro areas with active transportation programs—would be most exposed to a downturn.
Regional and Subsector Trends Worth Watching
While national data shows robust construction employment growth, the picture varies considerably by region and subsector. States such as Texas, Florida, North Carolina, and Arizona have posted outsized gains in heavy and civil engineering employment, driven by population growth, highway expansions, and utility infrastructure investments. Conversely, some Midwest and Northeast markets have seen slower growth or outright declines in residential construction jobs as housing starts lag.
Within nonresidential construction, the story is similarly mixed. Manufacturing plant construction—spurred by federal incentives for semiconductors, electric vehicles, and clean energy—has added thousands of jobs in states like Ohio, Georgia, and Michigan. Meanwhile, office and retail construction employment has stagnated as commercial real estate fundamentals remain weak.
Excavation and site-prep contractors should pay close attention to project pipeline data from state DOTs, water authorities, and utility commissions, as well as bid volumes posted on regional plan rooms. Leading indicators such as engineering services employment, constructionput-in-place reports, and state capital improvement budgets can provide early warning of shifts in demand.
Practical Takeaways for Contractors
For excavation contractors, dump site operators, and fill dirt suppliers, the current environment presents both opportunity and risk. Demand remains strong, labor is tight, and wages are rising—but the sustainability of these trends depends heavily on infrastructure funding and project flow.
Contractors should consider the following strategies:
- Diversify your customer base: Relying too heavily on a single type of infrastructure work—such as highway projects—can expose your business to funding volatility. Pursue opportunities in utilities, site development, and private nonresidential work to balance your revenue mix.
- Monitor public project pipelines: Track upcoming lettings from state and local agencies, and watch for signs of delays or reduced bid volumes that could signal weakening demand.
- Invest in workforce development: With construction wage growth outpacing inflation and unemployment near historic lows, retaining skilled workers is critical. Offer competitive pay, training opportunities, and clear career paths to reduce turnover.
- Optimize material logistics: As earthwork volumes remain elevated, efficiency in sourcing fill dirt and managing dump sites can be a competitive advantage. Leverage digital marketplaces and regional networks to reduce haul distances and material costs.
- Prepare for a potential slowdown: Build cash reserves, manage debt carefully, and avoid overcommitting to fixed costs that would be difficult to shed if project volumes decline.
The construction industry's employment and wage gains in July underscore the sector's resilience and the ongoing demand for infrastructure investment. But as industry officials warn, this momentum is not guaranteed. Contractors who understand how infrastructure demand is supporting construction hiring—and what could happen if it weakens—will be best positioned to navigate the uncertainties ahead and sustain their businesses through the next market cycle.