Data Center Boom Strains Labor Pool, Squeezes Subcontractors
Contractor revenue across ENR’s Top 400 list climbed 11.8% to $671.4 billion in 2025, but the number masks a labor squeeze that is reshaping how subcontractors decide which jobs to take, according to ENR’s annual Top 400 review. The telecommunications sector, driven almost entirely by the data center buildout for hyperscalers like Amazon, Alphabet, Apple, Meta and Microsoft, surged 86.4% year over year to top $100 billion in revenue, jumping from just 4.5% of total Top 400 revenue in 2021 to 15.1% in 2025.
Background
ENR reports that cloud service providers are expected to spend nearly $7 trillion bringing AI operations online, and contractor executives describe the moment as a rare growth opportunity layered with real risk. Rob Blalock, CEO of Brasfield & Gorrie, told ENR that “labor constraints, supply chain variability and faster timelines” are putting pressure on execution even as opportunity expands. Ampirical CEO Matthew Saacks said his firm hit a record backlog but warned that “growth is outpacing the supply of people required” in the electric power space tied to data center demand.
The strain isn’t confined to firms chasing data center contracts directly. KBE Building Corp CEO Mike Kolakowski told ENR that data centers aren’t a core market for his firm, but the sector is “absorbing a significant share of skilled labor, tightening the overall workforce available for other construction sectors.” Materials costs are compounding the problem. ENR cites an Associated Builders and Contractors report showing construction materials prices rose 7% in the year through April, attributed largely to the Iran War, while the Associated General Contractors of America warned that materials and energy costs are outpacing bid prices industry-wide.
ABC Chief Economist Anirban Basu, quoted in the ENR report, said the data center gold rush is concentrated: 42% of contractors with more than $100 million in annual revenue are under contract for data center work, meaning the benefit is flowing mostly to the largest firms even as smaller subs absorb the labor drain.
Analysis
This is a classic tight-labor-market trap, and it hits subcontractors harder than general contractors. When a hyperscaler-backed data center project offers premium rates and multi-year backlog certainty, it’s tempting for electrical, mechanical, and E&I subs to pull crews off existing commitments to chase it. But ENR’s numbers suggest that’s exactly the dynamic straining the broader industry: skilled labor is being absorbed by telecom and power-sector work at a rate that’s leaving general building, education, and health care projects short-staffed.
Uprite Construction’s Brad Kollar put it bluntly to ENR: growth that outpaces “availability of truly experienced talent” creates strain on teams and, if unaddressed, hurts performance. That’s a warning subcontractors should take seriously before overcommitting to a hyperscaler project on the promise of volume. A data center contract that requires doubling headcount in six months, in a market where 72.3% of Top 400 firms already report rising backlog, is a bet that experienced supervision and safety oversight can scale just as fast. History in this industry says it usually can’t.
There’s also a cost-volatility trap layered on top of the labor one. With materials prices up 7% and owners increasingly cautious about approving budgets amid that volatility, per ENR, preconstruction cycles are lengthening. A subcontractor that walks away from a steady client relationship to chase data center work could find that project’s start date slips repeatedly while the client they left behind fills the schedule gap with someone else. Poettker Construction’s approach, engaging owners, utilities, and trade partners early to confirm power availability and realistic schedules before construction starts, is one way GCs are trying to de-risk this for their sub base, but it also signals that data center schedules are less predictable than the headline dollar figures suggest.
The sector split in ENR’s data reinforces the risk-reward calculus. Water supply and hazardous waste work rose 21% for Top 400 firms in 2025, sewer and waste rose 17.4%, and power climbed 14.2%, all steady, less glamorous markets that aren’t facing the same labor bidding war as telecom. Manufacturing fell 28.5% and oil and gas dropped 4.8%. For a sub weighing options, those numbers suggest infrastructure and water/wastewater work may offer more stable, less oversubscribed backlog than jumping into a hyperscaler feeding frenzy where 42% of the biggest firms are already competing for the same crews.
What It Means for Subcontractors
- Electrical, mechanical, and E&I subs considering data center work should audit current crew commitments before bidding. ENR’s data shows 72.3% of Top 400 firms already report rising backlog, meaning the labor pool for new projects is shrinking industry-wide, not just in telecom.
- Firms with existing relationships in health care, education, or general building should weigh the risk flagged by KBE Building Corp’s CEO: data center absorption of skilled labor is tightening availability for every other sector, so losing key trades mid-project to a hyperscaler job could jeopardize current client deadlines.
- Given the 7% materials cost increase ENR cites (through April, tied partly to the Iran War), subs should lock in material pricing and lead times in contracts before committing crews to new data center bids, since lengthening preconstruction cycles mean approved budgets may not hold.
- Smaller subcontractors should note ABC’s finding that data center work has “almost exclusively benefited” contractors above $100 million in annual revenue, per economist Anirban Basu. Firms below that threshold may find more stable, less competitive backlog in water supply, sewer/waste, or power sector work, which posted double-digit growth in 2025 without the same labor bidding war.
- Before pulling crews for a hyperscaler project, get specific commitments on power availability, procurement timelines, and schedule certainty from the GC, following the model Poettker Construction described to ENR, since data center schedules are only as reliable as utility and permitting timelines that subs don’t control.
