Labor Shortages Threaten US Data Center Construction Growth

The United States faces a potential bottleneck in data center expansion due to critical labor shortages in specialized mechanical, electrical, and plumbing trades. Sanford C. Bernstein analysts project that annual construction could increase from 12 gigawatts in 2026 to 35 gigawatts by 2030, but this ceiling falls short of the 40 gigawatts required to justify current planned manufacturing capacity for mid-scale power generators.

This gap creates a significant overbuild risk for power-equipment suppliers, specifically Caterpillar and Cummins. The risk is compounded by a geographic mismatch in the workforce, as only 30% of specialized workers live in the areas expected to host 70% of future projects.

To bypass these constraints, Sanford C. Bernstein suggests a shift toward modular construction. By moving work from project sites to factories, vertically integrated manufacturers and contractors such as Eaton, Schneider Electric, and Vertiv could mitigate labor shortages and maintain growth trajectories.