Data Centers Take the Trades That Housing Just Lost

Nonresidential specialty trade contractors added 12,300 jobs in September as data center work pulled electricians and heating crews away from housing sites. Construction as a whole added 11,000, because residential builders and subcontractors cut 4,900 in the same month.

The people collecting those hours are union locals that can fill a call, and buyout firms that can bond a campus. The shops still chasing kitchen remodels are bidding against a customer that pays more, waits longer, and has a deeper credit line.

September Split Construction Down the Middle

The Bureau of Labor Statistics jobs report released on October 2 shows the split in plain payroll counts. Nonresidential firms added 16,100 employees in September and 142,000, or 2.9%, in the 12 months through September. Combined residential builders and subcontractors fell 32,800, or 1.0%, over that year.

Ken Simonson, chief economist at the Associated General Contractors of America, said the pattern is already visible in pay as well as headcount.

Nonresidential contractors are adding employees and raising hourly pay at rates far exceeding the broader economy. But filling positions remains a major concern as the pool of jobseekers with recent construction experience continues to shrink.

Ken Simonson, chief economist, Associated General Contractors of America

AGC’s rundown of the same government tables is the cleanest cut of who hired and who shrank.

SEPTEMBER 2026 CONSTRUCTION PAYROLLS

Those specialty-trade gains added 12,300 employees for the month, which is larger than construction’s net 11,000 because housing fell. St. Louis Fed series built from the same survey put the nonresidential specialty-trade payroll at 2.94 million nonresidential specialty-trade jobs in September, up from 2,927,300 in August. Total nonfarm payrolls rose 0.3% over the year, so the building trades that serve campuses are running well ahead of the rest of the labor market.

Union Halls and Buyout Firms Collect the Work

The constraint is not a generic labor shortage. It is a shortage of people who can pull high-voltage work, set switchgear, and stay on a site that may run 10-hour days. In March, Microsoft president Brad Smith said the company’s biggest obstacle to U.S. data center expansion was electricians, ahead of power, land, and permits. Microsoft has been bringing electrical crews from more than 75 miles away and moving some workers for stretches of a job.

The International Brotherhood of Electrical Workers puts electrical systems at 45% to 70% of what it costs to build a data center, which is why a hall that can dispatch hundreds of hands suddenly sits at the center of a hyperscale schedule. In the Washington, D.C., Maryland, and Virginia corridor, IBEW Local 26 has more than doubled its membership since 2018, to about 14,700. Don Slaiman, the local’s political coordinator, said it took in 615 apprentices in 2025, up from 510 the year before, with apprentices around $27 an hour and about $60 an hour after training.

Andrew Mason, 53, an electrician in that same market, said the work changed his pay. He makes more than $200,000 overseeing about 325 workers at six data centers. The Bureau of Labor Statistics counted 565,430 electricians on specialty-trade payrolls in 2025, a base that still has to cover hospitals, factories, and houses while campuses bid it away.

Winning a slice of that work is less about wanting it than about being able to staff it.

WHO CAN ACTUALLY STAFF A CAMPUS

• Union dispatch: Locals that doubled their books, as Local 26 did, can put large electrician crews on a single job without emptying every other call in the hall.
• Balance-sheet shops: Private-equity platforms can post bonds, fund payroll for a crew that triples, and wait on a hyperscaler’s invoice cycle.
• Incumbent backlogs: Contractors already on data center sites are carrying about 11 months of work, against 8.5 months for everyone else, so the next award often stays inside the same small group.
• Mission-critical records: General contractors now ask for data-center hours, testing experience, and working-capital reserves that a kitchen-remodel shop never had to show.

The Information Technology and Innovation Foundation, in a January note, put a 439,000-worker construction shortage against more than 400 data centers then under development. That gap is what the halls and the roll-up firms are selling into.

Housing Crews Are Paying for the Same Shortage

The other side of the September table is not a mystery. Housing still needs electricians, plumbers, and HVAC techs. It cannot match campus overtime, per diems, or the chance to run a 300-person crew. Savanna Mendoza, a commercial superintendent for Wyatt Management in Central Texas, watched a contracted plumber stop showing up on a restaurant job and send a replacement crew. She later learned he had taken a data center call. “He kind of just left our job because it was B.S. money compared to what he was making,” she said.

That is happening on union jobs too. Tyler Shelton, 29, an apprentice electrician in Detroit, put the drain in one lunch-break line: “We have work to do, but we’re also losing a good chunk of manpower to these data centers.” OpenAI’s Michigan project, which the state has called its largest single investment, is one of the magnets. It wants hundreds of electricians on 10-hour days, seven days a week.

Other builders are now competing with that customer for the same materials, not only the same people. A loan officer watching new construction described the fight as one for electricians, transformers, switchgear, and concrete, against a buyer with a deeper balance sheet. In Phoenix, renovation bids have stopped coming in lower as data center and chip-plant work in the West Valley soaks up electricians and HVAC crews. Strip data centers out of the ledger and the rest of private nonresidential work is already going the other way.

Private Equity Is Buying the Cooling Shops

The financial winner is not only the journeyman on overtime. It is the platform that can buy the contractor. PitchBook’s construction and engineering tally put private-equity deal count at a record 529 in the second quarter, up 56.5% from a year earlier. Data center construction spending was up 46% from a year earlier in June. Take those projects out, and private nonresidential spending fell 7.9%, per Associated Builders and Contractors’ reading of Census figures.

Jim Corridore, PitchBook’s lead industrials analyst, did not treat that as a rate-sensitive fad.

Interest rates are not going to affect deals in data centers. The money is there. The demand is there.

Jim Corridore, lead industrials analyst, PitchBook Q2 Construction and Engineering report

The buying has clustered in the trades that cool, wire, and wet a hall, which is why HVAC led and electrical followed.

PE DEALS IN THE TRADES THAT BUILD CAMPUSES

Plumbing is the lagging column, not the leading one. HVAC had already beaten a full prior year before July. Electrical was ahead of 2025 with six months left to run. Cory Markling, who leads private-equity deal services at EisnerAmper, called the data-center inning the first or maybe the second, and pointed next at boring, fiber, and the other work that has to happen around a campus. The independent shop that still runs on a card and a paper receipt is not the buyer in that inning. It is the add-on.

Hyperscalers Can Float a Delay That Crews Cannot

Microsoft can fly electricians. Oracle can argue about a date. The subcontractor still meets payroll on Friday. In December 2025, people close to Oracle’s OpenAI sites described some completion dates moving from 2027 to 2028, with labor and materials cited. Oracle said the work remained on schedule.

The newer fight is not labor. On September 24, Oracle sent a force majeure notice on Project Jupiter, a Stargate campus in Doña Ana County, New Mexico, that is supposed to come online in 2028. The notice is about power and permits, including a gas line and an air permit, not about a missing electrician crew. Oracle said Project Jupiter remains on its planned schedule. The company also said more than 3,600 construction workers were already on that campus. Those crews do not get paid in force majeure language.

HOW THE SQUEEZE SHOWED UP ON THE CALENDAR

1. December 2025: Oracle is described as sliding some OpenAI completion dates from 2027 to 2028, with labor and materials named; the company says projects stay on schedule.
2. March 2026: Brad Smith calls the electrician shortage Microsoft’s top U.S. data-center constraint and confirms crews are being drawn from more than 75 miles out.
3. June 2026: Data center construction spending runs 46% above a year earlier, while the rest of private nonresidential work, once those projects are removed, is down 7.9%.
4. August 31, 2026: PitchBook records 529 construction and engineering buyouts in the second quarter, with HVAC already past a full year of deals.
5. September 24, 2026: Oracle sends the New Mexico force majeure notice tied to power timing, and still says the 2028 date holds.
6. October 2, 2026: September payrolls show nonresidential specialty trades hiring and residential shops cutting.

A hyperscaler can wait out a permit and still keep its models in another hall. A 12-truck electrical shop that staffed up for a campus invoice cannot wait the same way. That is the quiet sort in this boom. Delay is a legal tool at the top of the stack and a cash problem at the bottom.

Payroll and Bonding Now Decide Who Gets the Bid

The financial filter is easy to miss if you only watch capex headlines. A contractor that lands a data-center subcontract is not collecting like a software firm. It buys fuel, copper, and rent for a crew that may triple for one job, then waits on a pay app set by the owner. The business can show a profit and still need a line of credit to cover the weeks between Friday payroll and the hyperscaler’s calendar.

Bonding capacity does the same sorting on the way into the bid room. A shop that once competed for remodels is now being asked for surety limits and working-capital reserves sized for substation work. The general contractor is not being precious. Liquidated damages on a late campus are large, and the owner’s lawyer will not accept a personal guarantee and a hope. Private-equity platforms buy that paperwork along with the trucks. Smaller operators inherit the wage inflation without the credit.

Horizontal expense tools built for office firms do not map onto a job that spikes with overtime, fuel, and materials, then goes quiet. The result is a second shortage beside the electrician shortage: a shortage of contractors who can finance the electrician shortage. That is why the same names keep winning the work, and why a roll-up can look busy and still run a messy back office, only at ten times the payroll.

Building Trades Are Now Fighting to Keep the Projects

Once the hours showed up, the politics followed. On September 28, OpenAI, Blackstone, SoftBank, and a group of data-center developers launched the American Infrastructure Alliance with the IBEW, the iron workers, the union plumbers and pipefitters, the sheet metal workers, and the insulators, plus Ohio building-trades bodies. Kenneth Cooper, the IBEW’s international president, put the jobs claim in one sentence: “Blanket bans on necessary infrastructure projects would set back our economy and threaten good middle-class jobs.”

That is a winner defending the pipeline, not a charity pitch. Locals that doubled their membership need the next hall to stay legal. Contractors with an 11-month backlog need the next notice to bid. Jeffrey D. Shoaf, AGC’s chief executive, tied the two sides together after the September report: firms need people to do the work and projects to keep those people employed, including a permitting path that lets responsible data center jobs proceed.

THE PAY AND THE POOL

• Craft pay: Production and nonsupervisory construction workers earned $39.20 an hour in September, 20.2% above the $32.60 private-sector production average, after a 4.3% raise over 12 months against 3.3% for other private production workers.
• Jobless rate: Construction unemployment among people with recent industry experience fell to 3.5%, from 3.8% a year earlier.
• The bench: Only 359,000 people with recent construction experience were looking for work in September, down 45,000, or 11%, from September 2025.
• Industry scale: Construction employment was 8,364,000 in September, up 109,000, or 1.3%, over 12 months.

The experienced bench is shrinking while the campuses are still being poured. Housing already lost 32,800 jobs over that year. Independent shops that cannot bond a substation are watching the same electricians take a better call. Union halls and PE platforms are booking the hours. Hyperscalers can send a notice and keep the date on paper. The crew on the slab still has to be paid this week, and there are fewer of them left to hire.