The most recent American Community Survey (ACS) data show
that, including self-employed, 8.9 million people worked in construction in
2013. NAHB estimates that out of this total, close to 3.5 million people worked
in residential construction, accounting for 2.4 percent of the US employed
civilian labor force. These numbers reflect modest job gains that took place
since 2011 when construction employment bottomed out. Nevertheless, the
industry employment levels remain far below the peaks reached during the housing
boom when more than 11 million worked in construction, and home building
employed more than 5 million people, including self-employed workers.
New NAHB estimates also allow analyzing the distribution
of home building jobs across states and congressional districts. Congressional
district estimates are particularly useful to highlight the importance of home
building to voting constituency residing in the district. The NAHB estimates
show that the average congressional district has close to 7,900 residents
working in residential construction but that number is often significantly
higher and actually exceeds 16,000 in Montana’s single Congressional district.
New NAHB home building employment estimates only include workers
directly employed by the industry and do not count additional
jobs created through the ripple effect when building material suppliers,
furniture producers, landscaping and other dependent industries hire workers in
response to shifting demand for their products and services triggered by
residential construction.
Data Sources and Methodology
NAHB estimates of residential construction employment by
state and congressional district rely on the two main sources of data: the
American Community Survey from the US Census Bureau and the Quarterly Census of Employment and Wages (QCEW)
compiled by the U.S. Bureau of Labor Statistics (BLS).
The ACS surveys households rather than businesses and,
consequently, covers self-employed workers in addition to workers employed by
private companies, government and non-profit groups. Because of this broader
employment definition, the ACS employment numbers exceed the estimates based on
surveys of businesses with payroll employees, such as the QCEW, but count
voting constituencies and reflect the political importance of home building
more accurately. In addition, the ACS employment estimates are available not
only by state and metro area but also by congressional district, something that
no other employment data source can offer.
Counting self-employed is particularly important in the
construction industry where they traditionally make up a larger share of the
labor force. In fact, the construction sector registers one of the highest
shares of self-employed among all industries. According to the 2013 ACS, one
out of four construction workers is self-employed, while an economy-wide
average does not reach 10 percent of the employed labor force.
The drawback of the ACS is its limited construction
industry information, particularly, it does not differentiate between
residential and non-residential construction. In contrast, the Quarterly Census
of Employment and Wages data specify whether employees work in commercial or
residential building. Furthermore, the QCEW differentiates between residential
building construction, land subdivision and residential specialty trade
contractors. The QCEW data come from quarterly tax reports filed by employers
covered by various unemployment insurance programs, and, in essence, amounts to
a “virtual census” of businesses with payroll employees. However, it completely
misses self-employed workers.
The 2013 QCEW data show that residential specialty trade
contractors account for close to 71 percent of all private payroll jobs in the
home building industry (see Figure 1). This is consistent with a 2012 NAHB survey showing
that two-thirds of single-family builders subcontract out at least 75 percent
of their work. Residential building construction (which includes single-family
and multifamily builders, whether they build on their own land or land owned by
a homeowner or investor, and residential remodelers) accounts for 27 percent.
The remaining 2 percent are in land subdivision.
To account for self-employed workers and, at the same
time, have access to the detailed industry structure information, NAHB
Economics combines data from the ACS and QCEW. First, the share of residential
construction is estimated for each state based on the QCEW data. Residential
building construction, residential specialty trade contractors and land subdivision
are combined to form “residential construction”, or “home building”. The
resultant state shares are then applied to the ACS data to break construction
workers into residential and non-residential. The estimates assume that, within
each state, the share of construction workers who work in the home building
industry is the same whether they are self-employed or working as employees of
a construction company. This, probably, results in a somewhat conservative
estimate, because the self-employed share in residential construction,
especially, in remodeling, is likely to be greater than in non-residential.
Construction Self-Employed through the Housing Boom
and Bust
The 2013 ACS shows that 8.9 million workers were employed
by the construction industry in 2013. This is still 2.2 million fewer jobs than
in 2006, at the peak of the housing boom, but, nevertheless, reflects the
second year of steady albeit minor job gains (see Figure 2).
The ACS data also highlight the high reliance of the
industry on self-employed workers. The high self-employment rates in
construction reflect a common practice of builders and remodelers to maintain
relatively small payrolls and rely on subcontractors for a large share of the
construction work. Interestingly, self-employment rates in the construction
industry were rising during the housing downturn and increased from 24 percent
in 2006 to more than 26 percent in 2010. Once the situation stabilized and
construction started gaining jobs, the self-employment rates reversed their course
in 2011 and fell below 25 percent by 2013 (see Figure 2).
During the downturn builders and remodelers who were no
longer able to maintain a steady work flow may have tried to manage costs by
eliminating payroll positions and joining the ranks of the self- employed. It
is also possible that some construction employees laid off during the downturn
were able to stay in the industry by striking out on their own. The most recent
data suggests the opposite hiring trends started to emerge, with construction picking
up new payroll jobs but losing self- employed construction workers. The ACS
data show that from 2011 to 2013, construction gained close to 400,000 private
payroll jobs but lost self-employed workers. This helps explain why builders
have reported more extreme labor and subcontractor shortages than commonly
cited numbers based only on payroll employment suggest.
Residential
Construction Employment across States
NAHB estimates that, out of 8.9 million people working in
construction in 2013, close to 3.45 million people worked in residential
construction, accounting for 2.4 percent of the US employed civilian labor
force. This represents the second consecutive year of modest employment gains
for home building. However, the number of residential construction jobs remains
well below the peak levels the industry reached in 2006 when, according to the
NAHB estimates, more than 5 million people worked in residential construction.
Not surprisingly, the most populous state—California—also
has the most residential construction workers. Almost half a million California
residents worked in home building in 2013, accounting for 2.9 percent of the
state employed labor force. Both numbers are still significantly down from the
2006 cyclical peak. At that time, California was home to more than 788 thousand
residential construction workers. This translates into a loss of more than
290,000, or 37 percent of home building jobs since 2006.
Despite being one of the states most severely affected by
the housing downturn and losing almost half of its home building jobs (see
Figure 3), Florida still comes in second with 295 thousand residential
construction workers. Florida has fewer residents than Texas and about as many
as New York but owing to its large vacation and seasonal housing stock,
employs more residential construction workers. In Florida, residential
construction workers account for a relatively high 3.5 percent of the employed
state labor. Even though this share is well above the national average, it is
drastically lower than in 2005 when Florida registered the highest share among
all 50 states and the District of Columbia, 6.2 percent.
Among the states hardest hit by the housing downturn and
slowest to restore home building jobs are Nevada, Arizona, and New Mexico still
showing job losses of 57.3, 51.5, and 49.7 percent, respectively. Despite these
significant job losses, home building in Nevada and Arizona continues to employ
a relatively high share of local workers – 2.9 and 2.5 percent of the employed
civilian labor force.
Job losses across the states look massive but, in
general, reflect the scale of the unprecedented housing downturn that the
industry went through in recent years. Other measures of residential
construction activity, such as total housing starts and permits, all capture
the same familiar pattern with home building activity peaking in 2006 or 2007
in some states, plummeting to a historic low by 2010 -2011 and only showing a
modest level of recovery in recent years.
While most states were not yet able to recover home
building jobs lost during the housing downturn, residential construction in
North and South Dakota, fueled by the local oil fracking boom, employed more
people in 2013 than in 2006. The positive job creation momentum even spilled
over to neighboring Nebraska where home building generated more jobs in 2013
than in 2006, even though the 2013 level remained below the local employment
peak Nebraska reached in 2007.
Similarly to Florida, states with high prevalence of
seasonal, vacation homes, top the state list with the highest share of
residential construction workers in 2013. Idaho with almost 4 percent of the
employed labor force working in home building takes the top spot on the list.
In addition to Idaho and Florida, five other states register shares of
residential construction workers that exceed 3 percent: Vermont (3.8 percent),
Montana (3.3 percent), Maine (3.2 percent), Utah (3.2 percent) and New
Hampshire (3.1 percent).
Interestingly, construction workers in these states are
more likely to be self-employed. Notably, Vermont, Montana, New Hampshire and
Maine have the highest shares of self-employed construction workers in the
nation, with more than a third of their construction workforce being
self-employed. In Vermont the share of self-employed actually exceeds 40
percent. It is likely that long distances between home building sites in these
states make moving workers between job sites logistically difficult and
expensive and force local builders to look for subcontractors more conveniently
located to a particular job or housing start. The New England states are also know for taking the longest
time to build a house. With economies of scale hard to reach on
construction sites that are spread geographically and take longer to complete,
the builders are less likely to keep payroll workers but rather outsource a
larger share of the construction work, thus explaining high self-employment
shares in these states that go together with elevated shares of residential
construction workers in local labor force. Nevertheless, these high shares are
below the self-employment peak levels these states registered in the midst of
the severe housing downturn.
Residential Construction Workers in Congressional
Districts
The detailed geographic coverage in the ACS also allows
RC employment to be estimated by Congressional district (see Table 2). In 2013,
the average Congressional district had around 7,900 residents working in
residential construction, considerably down from the average of more than
11,000 workers in 2005. Figure 4 helps visualize the distribution of RC workers
across the Congressional districts. Perhaps somewhat surprisingly, many areas
that were once booming and consequently hardest hit by the housing downturn
still show higher than average numbers and shares of residential construction
workers.
Montana’s lone Congressional district (Rep. Ryan Zinke –
R) registers the record number of residential construction workers among all
districts (excluding Puerto Rico) – 16,165. Idaho’s 1st (Rep. Raul Labrador –
R) comes second with more than 15,000 employed in home building. Texas’s 29th
District (Rep. Gene Green – D) that serves the eastern part of the Greater
Houston area is a close third with just under 15,000 residential construction
workers residing there. The top ten list also includes two districts in the
state of Florida. The 9th district (Rep. Alan Grayson – D) that includes
Eastern Orlando has 14,882 and the 18th (Rep. Patrick Murphy – D) in
Southeastern Florida has 14,066 residential construction workers. Two districts
from California also made the top ten list – the 29th district (Rep. Tony
Cardenas - D) and 50th (Rep. Duncan D. Hunter - R) register 14,244 and 13,756
residents working in the home building industry. The remaining districts on the
top ten list are Colorado’s 7th (Rep. Ed Perlmutter – D) and Utah’s 4th (Rep.
Mia Love – R) each registering around 14,000 residential construction workers.
New York’s 1st district (Rep. Lee Zeldin – R) concludes the top ten list with
more than 13,000 home building workers residing there.
By design, Congressional districts are drawn to represent
roughly the same number of people. So generally, large numbers of residential
construction workers translate into high shares of RC workers in their district
employed labor forces. The 29th District of Texas has the highest share of
residential construction workers in its employed labor force, 4.8 percent.
Florida’s 18th and 19th Districts are close behind with 4.7 and 4.5 percent.
At the other end of the spectrum there are several
districts that contain parts of large urban areas: the District of Columbia
(Rep. Eleanor Holmes Norton – D), the 12th of New York (Rep. Carolyn Maloney –
D), located in New York City, and Illinois’s 7th District (Rep. Danny K. Davis
– D) that includes downtown Chicago. Most residents in these urban districts
tend to work in professional, scientific, and technical services. The District
of Columbia stands out for having the lowest number of RC workers residing in
the district, less than 1,600. At the same time, it has a disproportionally
large share of public administration workers. The 12th District of New York, as
well as the 7th District of Illinois are home to a very large group of finance
and insurance workers.
Conclusion
The new estimates show that despite losing thousands of
jobs during the housing downturn, the home building industry employs a
substantial number of workers in most parts of the country. The average
Congressional district has close to 7,900 residents working in residential
construction but the number can be twice as high or higher, and actually
exceeds 16,000 in Montana’s At-Large Congressional District.
Considering that the estimates only include workers
directly employed by the industry and do not count jobs created in related
industries through a home building ripple effect – such as design and
architecture, furniture making, building materials, landscaping, etc. - the
true impact of residential construction on local employment is underestimated.
For more information about this item, please contact
Natalia Siniavskaia at 800-368-5242 x8441 or via email at nsiniavskaia@nahb.org.
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Source: NAHB.org
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