Big Projects Confront a Dearth of Skilled Labor

Driven by an explosive demand for artificial intelligence and cloud computing, the Midwest hosts a massive influx of data center projects—a movement described by AI developers like Nvidia as the next trillion-dollar wave in construction.

This surge in physical infrastructure is fundamentally reshaping the region’s traditional corporate footprint, according to Ryan Powers, senior vice president and head of construction at QBE North America. “We’re seeing corporations establish satellite offices in the Midwest and in the outer exurbs of major cities,” he says. “These hybrid-friendly hubs have become essential for the modern workforce.”

These changes come with challenges, including a protracted skilled labor shortage. To keep pace with construction services demand, the industry must attract nearly 349,000 net new workers this year and then 456,000 in 2027 as “demand spending growth resumes for the first time in years,” according to a January 2026 analysis by the Associated Builders and Contractors (ABC).

While these are national figures, the construction industry’s skilled labor shortage in the Midwest has reached a state of localized crisis. States like Ohio and Michigan have achieved record-breaking employment highs, surpassing their prepandemic levels, yet they simultaneously face a widening workforce gap because the demand for new projects is outstripping the available supply of workers.

The scale of this disconnect is evident in 2025 data from the Associated General Contractors of America, which shows that Ohio added 14,300 construction jobs—a 5.7% increase—while Illinois and Michigan added 7,900 and 6,300 jobs, respectively.

Despite these significant hiring gains, the region’s labor pool remains insufficient to keep pace with the expanding project pipeline of data centers and other construction projects. The unsatisfied demand is illustrated in Iowa, which in 2025 recorded an 8.6% year-over-year increase in construction employment that has yet to satisfy the total demand. A tsunami of retiring tradespeople and a reported $6.2 billion industrial pipeline—including massive defense and renewable energy projects—further widens the gap by competing for the same limited pool of skilled technical workers.

This human capital deficit is most acute in the Silicon Prairie, where a massive build-out of data centers and logistics hubs is straining an already depleted labor pool. While national unemployment in the sector fluctuates, Midwestern states are facing structural imbalances; for instance, Wisconsin has recently averaged a monthly shortfall of over 93,000 workers due to low labor force participation and high retirement rates. Despite record U.S. construction spending of $2.19 trillion, ABC reports an eight-month project backlog fueled by the skilled labor shortage, though this was a four-year low for the metric. This shortage is further compounded by a cultural shift toward four-year degrees and an aging demographic where one in five workers is over 55, creating a critical human capital deficit as the industry’s most experienced veterans retire.

With no single region possessing a local workforce large enough to support current megaprojects, the industry is forced to innovate. “In many respects, the Midwest and exurbs have become a testing ground for unique techniques born out of necessity,” says Powers, noting that many contractors are increasingly turning to modular construction, “manufacturing complex components off-site so they can be erected on-site like a complex Lego set.”

Microsoft, for example, is using modular building blocks for its new data centers in Licking County, Ohio, while AWS is deploying factory-integrated power and cooling modules to accelerate its multibillion-dollar campus in St. Joseph County, Indiana. Compared to traditional on-site construction, modular construction can reduce project timelines by as much as 30% to 50%, according to industry reports, as site preparation and building fabrication occur simultaneously.

While Powers acknowledges that this technological alternative will not bridge the labor gap in its entirety, he says it is becoming key to initiating these megaprojects to keep the Midwest’s digital transformation going forward.