Which States Are Best for Construction Businesses To Thrive in 2025?

The U.S. Construction Outlook for 2025

Construction businesses across the U.S. are preparing for a year of steady demand, but with sharp differences by region. On a national level, three major trends are shaping the construction industry:

• Federal infrastructure funding is flowing into transportation, broadband, and energy projects.

• Labor shortages continue to affect project timelines and wages.

• Population growth is reshaping local demand, especially in the South and Mountain West.

Construction activity is healthy overall, but location has never mattered more. Some states are attracting significantly more infrastructure projects than others, and the cost of doing business varies widely. According to the U.S. Bureau of Labor Statistics, employment in the construction sector continues to rise, but contractors need to be strategic about where they set up shop.

Industry Trends and Labor Market Projections

Federal initiatives, clean energy goals, and private sector investment are driving construction opportunities in 2025. The Bureau of Labor Statistics (BLS) data shows above-average job growth for construction occupations, especially in:

• Infrastructure and transportation projects

• Renewable energy developments

• Tech-driven builds like data centers and advanced manufacturing facilities

At the same time, the industry is constrained by labor shortages and rising costs. Policy decisions around immigration, workforce training, and trade will influence the pace of construction employment.

Contractors who get ahead of these shifts, by entering growth markets and securing qualified construction workers, will be best positioned to scale.

Why State Selection Matters for Construction Businesses

Picking the right state can mean the difference between strong profit margins and constant setbacks. Here's why it matters:

• Licensing requirements vary by state and can impact how fast you get started.

• State-level incentives and tax structures affect long-term profitability.

• Access to skilled labor influences how quickly you can grow.

• Regulatory environments determine project approval timelines and labor laws.

The best states offer a mix of construction activity, affordable operations, and strong pipelines for job growth. Whether you're a solo contractor or running a large firm, your construction management strategy should account for local rules and workforce dynamics.

Top 9 States With the Most Construction Work in 2025

These are the top states for contractors looking to grow, ranked by job volume, growth rate, and business conditions.

1. Texas: A Booming Infrastructure and Housing Hub

Texas remains the top state for construction jobs in 2025, adding 28,700 new positions between March 2024 and March 2025. Major infrastructure projects, housing developments, and tech sector builds are driving demand. With low taxes, business-friendly regulations, and a strong labor pool, Texas is the go-to for construction business expansion.

2. Florida: High Demand and Rapid Urban Growth

Florida added 11,400 construction jobs during the same time period. Urban expansion in cities like Miami and Tampa, coupled with climate resilience and coastal infrastructure projects, is creating steady demand. Thanks to population growth and pro-business policies, Florida remains a top destination for construction employment.

3. California: Market Size and Sustainability Trends

California leads in the total number of construction workers, with 672,280 employed as of early 2025. Los Angeles and the Bay Area continue to see major residential and commercial construction, along with state-driven sustainability mandates. High wages and a large market make California attractive, though business costs remain higher than in other regions.

4. Ohio: Strong Growth and Affordable Business Climate

Ohio added 16,600 jobs, a 6.7% growth rate, thanks to ongoing infrastructure projects and an affordable cost of living. It's one of the best states for construction businesses looking for growth without the costs of coastal cities.

5. New Mexico: Fastest Job Growth in the Nation

New Mexico leads the country in construction job growth, with a 12.0% increase year-over-year and 6,400 jobs added. While its total job volume is smaller, the rapid growth signals a major opportunity for early entrants, positioning New Mexico as one of the top states for percentage growth in construction employment.

6. Idaho: Strong Gains in a Growing Market

Idaho saw a 10.4% increase in job growth, adding 7,300 construction jobs. Infrastructure development and population increases are fueling a high-demand environment for expanding construction businesses.

7. Kentucky: Solid Job Creation and Growth Momentum

Kentucky added 7,500 jobs, an 8.0% growth rate, and offers a more affordable base for contractors than larger states. Residential and public sector construction projects are on the rise, making it a smart alternative to other higher-cost-of-living areas.

8. Virginia: Steady Growth and Expanding Project Demand

Virginia offers a solid blend of job creation and economic stability, making it an appealing state for construction business owners in 2025. With 8,700 construction jobs added and a 4.0% growth rate over the past year, the state shows reliable demand across both public infrastructure and private development projects. Contractors looking for moderate growth with lower competition than top-tier states may find Virginia a smart choice for expansion.

9. South Carolina: A Balanced Mix of Growth and Affordability

South Carolina stands out in 2025 for its combination of strong construction job growth and favorable business conditions. With 7,800 construction jobs added and a 6.7% year-over-year increase, the state is proving to be a rising opportunity for contractors targeting markets with consistent demand but lower barriers to entry. Its growing population and infrastructure investments make it an attractive location for both established firms and new construction businesses.

States With the Highest Average Construction Worker Salaries

Wages vary widely across the country, and for construction professionals, where you work can significantly impact your earning potential. Higher salaries don't always mean more profit, especially when the cost of living and job availability come into play. Still, understanding where construction workers earn the most can help you evaluate where to seek work or expand your construction business.

According to Indeed salary data, here are the top five states offering the highest average annual pay for construction workers:

1. Hawaii: $72,960

2. Illinois: $70,430

3. Massachusetts: $67,920

4. New York: $67,580

5. California: $67,000

Where Construction Jobs Are Growing Fastest (2024–2025)

Knowing where construction jobs are growing fastest can help contractors and business owners prioritize expansion plans or enter new markets with confidence. Job growth reflects both current demand and long-term opportunity, especially when backed by infrastructure spending and state-level development programs.

The following snapshot from Utility Contractor Magazine highlights the states leading the way in both total jobs added and percentage growth in construction employment between March 2024 and March 2025:

Other States Showing Construction Potential

In addition to the top-performing markets, several other states are showing solid construction momentum heading into 2025. While they may not lead in total job growth, these states are benefiting from infrastructure funding, population shifts, and supportive business conditions that make them attractive for contractors exploring new opportunities.

States worth watching include:

• Washington: Forecasted 13.8% increase in new-home construction for 2025, with a shift toward smaller, affordable homes

• Georgia: Ranked 7th in per-capita commercial construction spending, at $2,498 per person annually.

• Arizona: Building construction employment in the Phoenix metro averaged 40,700 workers in early 2025—a 5% increase compared to the same period in 2024.

• Connecticut: Developers added 6,569 apartment units in 2024—the most in a decade—as multifamily construction surged statewide.

• Kansas: Kansas City area had 6,500 units under construction at end of 2024, about 3.4% of current inventory, with Johnson County expected to account for 40% of metro completions in 2025.

• Louisiana: Meta's $10 billion AI data center in Richland Parish is expected to employ up to 5,000 construction workers at peak, marking a major project for 2025.

• Minnesota: Residential building construction employment stood at 15,400 workers in March 2025.

• Nebraska: All employees in construction of buildings totaled 11,600 in March 2025.

• New Jersey: Record $29.7 billion in construction spending forecast for 2025, a record high for the state.

• North Carolina: Added 94,000 housing units in 2024—the 4th largest growth in the nation.

• Oklahoma: Total construction value of contract projects in Oklahoma City MSA forecasted to increase by 19% in 2025, well above the national average.

• Rhode Island: The $410 million Route 6/10 Interchange Reconstruction project is the largest single construction contract ever awarded in the state.

• South Dakota: Construction workforce increased by 4.0% in 2022, with strong demand for both residential and commercial buildings.

Economic and Regulatory Factors to Consider

Running a construction business successfully depends on more than project volume. Economic conditions, tax policies, and legal requirements vary state by state, directly affecting profitability and growth potential for construction companies. Understanding the structural and regulatory environment is essential for evaluating which markets offer the best long-term opportunities in the construction sector.

State Tax Structures and Incentives

Tax policies can have a major impact on a construction business's bottom line. States like Texas and Florida offer low or no income tax, making them attractive to small contractors looking to maximize profit margins. These states also tend to provide more generous state incentives for construction companies, such as property tax abatements, fast-track permitting, and infrastructure development grants.

In contrast, high-cost states like California and New York often come with a heavier tax burden and more expensive compliance processes. While these markets offer large-scale project opportunities, the higher cost of doing business may reduce your overall profitability, especially for firms with slim margins or those just starting out.

Contractors weighing expansion should carefully compare tax rates, business incentives, and ongoing operating costs when evaluating new markets.

Licensing Requirements and Labor Laws

Contractor licensing and labor regulations can vary widely between states, affecting how quickly you can begin operating and the level of oversight your business must manage. In some of the best states for construction, licensing is straightforward and processing times are fast, allowing contractors to launch projects with minimal delay.

Other states in the construction industry may require more documentation, additional exams, or specialty classifications before work can begin. Local and state labor laws also impact day-to-day operations, including wage requirements, overtime policies, and safety compliance.

Strong construction management practices are key to staying compliant. Whether you're managing subcontractors or bidding on public works projects, understanding a state's licensing requirements and labor rules is essential to avoiding costly delays or penalties.

Cost of Doing Business

The cost of doing business in construction doesn't stop at taxes. Regional differences in labor rates, insurance premiums, materials pricing, and permitting fees all influence your profit margins.

For example, states like Oregon, Pennsylvania, and Michigan tend to offer more affordable operating conditions compared to coastal markets. Lower average wages and accessible supply chains can help smaller firms compete and grow.

In contrast, high-demand states may offer more construction activity, but also come with steeper costs, especially in terms of skilled labor and commercial insurance. Contractors need to strike the right balance between revenue opportunity and overhead when choosing where to operate.

Understanding the full financial picture upfront helps construction businesses plan smarter and stay competitive.

Deciding Where To Open a New Construction Business

Choosing the right location to launch or expand your construction business can make a major difference in long-term success. Beyond project demand, factors like tax policies, labor availability, and regulatory requirements all play a role in determining profitability and ease of operations. Whether you're relocating from a high-cost state or entering your first market, these considerations will help you make a smarter, more strategic move:

• Look for sustained job growth. Markets like Colorado, Idaho, and Utah are expanding quickly.

• Balance demand with affordability. States like Nevada and South Carolina offer both.

• Evaluate local incentives and tax structures. This can help you protect your margins.

• Review licensing requirements. Staying on top of these will help you avoid project delays.

Business Funding Options To Fuel Your Expansion

Access to fast, flexible capital can make all the difference when you're ready to grow your construction business. Whether you're taking on larger projects, expanding into a new state, or hiring more workers, the right financing allows you to move quickly and confidently.

Clarify Capital helps small business owners and contractors secure the funding they need to scale. With access to more than 75 lenders, Clarify offers tailored contractor loans designed for real-world business needs, from purchasing equipment to covering payroll during slower seasons. These construction funding solutions can be especially valuable when you're targeting states with strong job growth or pursuing new initiatives like public infrastructure or clean energy projects.

No matter your credit score or experience level, Clarify's advisors work with you one-on-one to find financing that fits your goals and timeline.

Make Your Move: Grow Your Construction Business With Confidence

The construction industry is full of opportunities in 2025, but smart growth depends on more than just finding the right project. Understanding where construction activity is rising, how state regulations impact your margins, and where the best states for expansion are can give your construction business a major edge.

By factoring in local job trends, tax structures, and funding access, contractors can position themselves for sustainable job growth in high-demand regions. Whether you're chasing new construction jobs or looking to expand into a more business-friendly state, preparation and support are key.

Ready to take the next step? Speak with a Clarify Capital advisor to explore your best funding options and apply today to get matched with the right loan for your goals.