The construction industry plays a crucial role in shaping a state’s economy and infrastructure. However, not all states are created equal when it comes to providing an ideal environment for construction growth. From labor laws to workforce development, many factors determine which states are thriving hubs for builders and developers. Wisconsin and West Virginia rank among the top states for a favorable construction environment, while states like New York and Illinois fall behind.

What makes a state ideal for construction?

Specific policies, programs, and conditions can make a state highly attractive for construction projects. These factors not only impact the cost and efficiency of construction but also determine the industry’s long-term sustainability. Here are the top ones to consider:

• Project labor agreements (PLAs): PLAs are agreements that lay out the rules for labor on specific projects before work even begins. They can prevent disputes and keep timelines on track. States that allow flexibility with PLAs, rather than requiring them, often attract more contractors, encouraging competition and keeping costs down.
• Prevailing wage laws set a minimum pay rate for workers on public construction jobs. They protect employees from underpayment and help maintain a level playing field for contractors. States with fair wage laws, like Arkansas, see quality work without dramatically increasing costs.
• Right-to-work laws: These laws give workers the choice to join a union or not. This makes hiring more flexible and often reduces employers’ costs. States like Florida have seen job growth in construction thanks to this worker-friendly flexibility.
• Public-private partnerships (P3s): P3s bring the public and private sectors together to tackle big projects. They’re a win-win because they reduce the strain on taxpayer funding while delivering large-scale infrastructure like highways and bridges. States like Virginia, with active P3 programs, are leaders in completing critical infrastructure projects efficiently.
• Workforce development programs: These programs train workers and help keep the construction industry stocked with skilled labor. For example, Wisconsin offers apprenticeship programs through the Wisconsin Technical College System, giving workers the skills they need while meeting the state’s demand for high-quality construction.
• Career and technical education (CTE): CTE programs teach high school and college students trade skills, preparing them for success in industries like construction. For instance, Arkansas’s Build Your Future initiative provides students with hands-on training and direct paths to construction careers.
• Job growth rate: A state’s job growth rate in construction is a direct indicator of its industry health. High growth signals a strong demand for new projects and steady employment opportunities. States like Texas and Florida often top rankings due to their rapid population growth and booming economies. 

Top 5 states with a thriving construction industry

The Associated Builders and Contractors (ABC) Merit Shop Scorecard ranks states based on policies that support fair competition, workforce development, and growth in the construction industry. Factors include project labor agreements, prevailing wage laws, right-to-work laws, public-private partnerships, workforce development initiatives, career and technical education (CTE) programs, and job growth rates.

5. Florida

Florida ranks fifth on the 2024 Merit Shop Scorecard thanks to its right-to-work laws, workforce development programs, and strong job growth in construction. The state’s focus on apprenticeship training through the Florida Department of Education helps ensure a steady supply of skilled workers. Florida also emphasizes career and technical education (CTE) programs, such as those offered under the CAPE Act, which connect students with industry certifications in construction trades. With a 5.7% increase in construction jobs over the past year, Florida remains a hotspot for builders and developers seeking opportunities in a growing market.

4. West Virginia

West Virginia’s construction industry has experienced significant growth, with a 6% increase in construction employment from August 2023 to August 2024, adding 500 jobs. This expansion is supported by substantial infrastructure investments, including the state’s Roads to Prosperity program and the federal Infrastructure Investment and Jobs Act, which are expected to inject over $8 billion into the state’s economy in the coming years. The value of construction projects in West Virginia during the first ten months of 2023 exceeded $5.8 billion, more than triple the $1.8 billion recorded during the same period in 2022, marking a 244% year-to-date increase. The state’s commitment to fair and open competition policies and investment in workforce development has fostered one of the best environments for the construction industry.

3. Kentucky

Kentucky’s construction industry has shown impressive growth, with employment rising by 3,000 jobs (3.3%) from August 2023 to August 2024, totaling 93,000 positions. This marks a 14% increase from pre-pandemic levels in February 2020. The state also offers competitive wages in the construction sector, with four of the five most common construction occupations boasting median annual pay rates above the state’s median for all occupations. Additionally, Kentucky’s construction employment growth rate of 16% since February 2020 nearly doubles the national average, highlighting the state’s strong demand for construction projects.

2. Arkansas

Arkansas ranks second in the nation on the Associated Builders and Contractors Inc.’s 2024 Merit Shop Scorecard, reflecting its favorable business environment for construction. Arkansas has experienced remarkable growth in its construction sector, with employment rising by 6% from August 2023 to August 2024, totaling 67,200 jobs. This marks a 26% increase from pre-pandemic levels in February 2020. The state’s construction jobs have expanded by 32.7% during the current economic expansion, nearly double the state’s total employment growth rate of 17.4%. Additionally, the construction industry contributed $5.8 billion to Arkansas’ Gross Domestic Product, highlighting its significant role in the state’s economy.

1. Wisconsin

Wisconsin takes the top spot on the 2024 Merit Shop Scorecard, and it’s no surprise why. The state creates an environment where construction thrives by promoting fair competition. It bans government-mandated project labor agreements, giving all contractors an equal shot at public projects. Wisconsin also has right-to-work laws, allowing workers to choose whether to join a union. These policies make it easier for contractors to hire and grow their teams.

What really sets Wisconsin apart is its investment in workforce development. The state has nearly 2,500 apprentices actively training in skilled trades, and its career and technical education (CTE) programs are unmatched. With a 97.4% graduation rate and a 91.4% placement rate for CTE students, Wisconsin is building a strong pipeline of talent for the construction industry. Construction jobs have been growing steadily, too, with employment up by 4% in the past year, totaling 142,200 workers. Whether supporting education or fostering job growth, Wisconsin has earned the place of being the best state for construction.

Worst states for construction

Not all states create a favorable environment for the construction industry. Some struggle due to high costs, strict regulations, or challenges unique to their location. Here’s a look at five states where construction faces significant hurdles:

• Washington: Washington’s construction industry faces challenges due to its prevailing wage laws, which require contractors on public works projects to pay wages comparable to local standards. While these laws aim to ensure fair compensation, they can increase labor costs for contractors, potentially affecting project budgets and timelines. Additionally, the state’s stringent environmental regulations, such as the custom residential energy code, add complexity and expense to construction projects.
• District of Columbia: The District of Columbia is known for its complex regulatory environment and high construction costs. Navigating its intricate permit processes often leads to delays and increased developer expenses.
• Illinois: The state is experiencing financial instability and high taxes, which are discouraging construction investment. The state’s labor laws and regulatory requirements can also increase the cost of doing business. The state has also experienced a decline in construction jobs, losing 2,700 positions over the past year, reflecting broader workforce shortages.
• New York: New York has some of the nation’s highest labor and material costs. Strict building codes and lengthy approval processes add to the burden, making it challenging to complete projects on time and within budget. In August 2024, construction employment in the state totaled 385,600, a decrease of 4,700 jobs (1%) from August 2023, indicating a contraction in the workforce.
• Hawaii: Hawaii’s geographic isolation leads to exceptionally high material and labor costs. Strict environmental regulations and a shrinking workforce, with an average worker age of 42, further complicate construction projects, making it one of the most difficult states for developers. Honolulu’s Planning Department consistently faces backlogs, with some permits taking nearly two years to approve, delaying residential and commercial projects.

Bottom Line

The construction industry across the U.S. shows big differences—some states are thriving, while others face serious challenges. Wisconsin and Arkansas stand out with strong policies, steady job growth, and solid workforce programs. On the other hand, states like Hawaii and New York struggle with high costs, strict regulations, and labor shortages that make construction more difficult. Understanding these contrasts can help contractors and developers make smarter decisions about where to invest and grow.

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