The construction industry is a major driver of economic growth and employment in the U.S, especially as demand continues to increase for new infrastructure, commercial buildings, and housing.
However, several factors, such as limited advancement opportunities and physically demanding conditions, are contributing to an increase in labor turnover in the industry. In fact, in August 2025, the U.S. Bureau of Labor Statistics reported that the number of people who left their roles in the construction industry increased by 56,000.
This article will explore labor turnover and strategies for reducing it in the construction industry.
What Is Labor Turnover?
Labor turnover, also referred to as employee turnover, is a metric that measures the number of employees who leave a company within a specified period, typically a calendar or fiscal year. Turnover is often measured as a percentage, known as the turnover rate.
There are a number of ‘separations’ that contribute to an organization’s turnover rate, including:
- Quits: Quits are initiated by the employee, typically when they decide to leave the company for a better opportunity elsewhere.
- Layoffs and discharges: Layoffs and discharges are decided by the employer, usually due to misconduct, slow business, or overhiring.
- Other separations: Other separations include those who leave a company due to retirement, death, injury, or health issues.
It’s essential to note that some level of labor turnover is normal. The average voluntary turnover rate (excluding retirees, volunteers, and contractors) across all industries in 2025 is 13%.
5 Ways Construction Firms Can Reduce Labor Turnover in 2025
A high turnover rate indicates low employee satisfaction, while a low turnover rate indicates a relatively happy and productive work culture. This means that HR departments must employ several strategies to enhance employee satisfaction and increase employee retention.
Here are five ways construction firms can reduce labor turnover in 2025:
Offer workplace incentives
Incentives are a great way to boost productivity and morale in the workplace, as employees work harder towards a goal in order to receive a reward. These incentives could include birthday and holiday bonuses, gifts or gift cards, team outings, discounted gym memberships, referral commission, and extra time off.
In addition, you could offer your employees an incentive for being loyal to your construction company. For example, every year they are employed, their wage or annual leave allowance increases slightly. This encourages employees to remain with one company, as they know they can work their way up to a better salary and enjoy more annual leave.
Promote and hire internally
Whether you need to fill an existing position or hire someone for a new role, consider promoting current employees who have the right skills and experience. This enhances workplace morale and productivity, as ambitious employees will see a future with your construction company, which in turn reduces employee turnover.
In addition, promoting and hiring internally eliminates the costs associated with external hiring, such as listing the job online and paying for background checks.
Provide training and development opportunities
Providing training and development opportunities to employees enables them to reskill and upskill, so they never have to leave the company to gain more experience.
As highlighted in Build Review’s article on how to enhance employee training in the construction industry, a strategic approach to training can significantly improve productivity and retention.
When you invest in employees’ professional growth, they’re more likely to be productive and loyal, making it mutually beneficial to the employee and your turnover rate.
Process accurate and timely pay
Your employees rely on their wages to cover rent, mortgages, bills, and other expenses. Not paying them the right amount or not paying them on time can significantly impact their livelihoods. If this becomes a common occurrence, they are likely to leave the company, which will increase your turnover rate.
Construction management software, such as Access Coins Evo, automates payroll calculations, ensuring accuracy and compliance with taxes and benefits, regardless of whether employees are paid weekly, bi-weekly, or monthly.
Remain compliant with safety
Construction sites are riddled with hazards that can lead to injuries and fatalities. As a result, the industry has established a set of strict safety standards to protect workers. Build Review’s guide to best practices for safety on construction sites offers practical examples of how firms can strengthen their safety culture and protect their workforce.
HR departments are responsible for complying with these standards, thoroughly training all employees, and providing the necessary protective equipment.
By prioritizing safety, construction companies can prevent accidents and violations that lead to increased labor turnover, as well as project delays, fines, and damage to their reputation.
Ready To Reduce Labor Turnover In 2025?
With the demand for construction services on the rise, companies must reduce their employee turnover by enhancing employee satisfaction. By following the strategies outlined in this guide, HR departments can foster a reliable, safe, and engaging workplace culture.
