Residential Construction Employment across States and Congressional Districts

Special Studies, April 3, 2012 
By Natalia Siniavskaia, Ph.D.
Economics and Housing Policy Group
National Association of Home Builders
 
Report available to the public as a courtesy of HousingEconomics.com
 

The latest data from the American Community Survey (ACS) show that 8.7 million people worked in construction in 2010. NAHB estimates show that out of this total close to 3.4 million people worked in residential construction, accounting for 2.4 percent of the US employed civilian labor force. These numbers reflect significant employment losses that took place in home building during the housing downturn. In 2005, when NAHB Economics last estimated residential construction employment by state and congressional district, the industry employed 4.8 million workers and accounted for 3.5 percent of the US employed labor force.

 

Despite considerable employment losses the home building industry employs a substantial number of workers in most parts of the country. This article presents new estimates of residential construction employment by state and Congressional district. 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 around 7,700 residents working in residential construction but that number is often significantly higher and actually exceeds 17,000 in Montana’s At-large Congressional district.

 

Employment Data

When it comes to analysis of residential construction (RC) employment, as strictly defined, the Quarterly Census of Employment and Wages (QCEW) compiled by the U.S. Bureau of Labor Statistics (BLS) is the most comprehensive source of data. Their data even specify whether employees work in residential building construction, land subdivision or residential specialty trade contractors. As shown in Chart 1, residential specialty trade subcontractors account for 70 percent of all payroll jobs in the home building industry. Residential building construction includes new single-family and multifamily general contractors, residential remodelers, as well as new housing operative builders. All together they account for 28 percent of residential construction payroll jobs. The remaining 2 percent are in land subdivision.

 

Figure 1. Distribution of Payroll Jobs in Residential Construction

 

 

The QCEW data come from quarterly tax reports filed by employers covered by various unemployment insurance programs. The program covers 98 percent of US jobs and, in essence, amounts to a “virtual census”. However, as a survey only of businesses with payroll employees, it completely misses self- employed workers.

 

By contrast, the ACS surveys households rather than businesses and, consequently, covers self-employed workers. Counting self-employed is particularly important in the construction industry where they traditionally make up a larger share of the labor force. In fact, according to the 2010 ACS, the construction sector registers the second highest share of self-employed among all industries, more than 26 percent of the employed labor force, compared to a national average of 10 percent, and second only to an agriculture rate of 34 percent. Because of this broader employment definition, the ACS employment numbers exceed the estimates from the QCEW but count voting constituencies and reflect the political importance of home building more accurately. The drawback of the ACS is its limited industry information, particularly, it does not differentiate between residential and non-residential construction.

 

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 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. The final comprehensive estimates show how many RC workers reside in each state (see Table 1) and congressional district (see Table 2).

 

State Residential Construction Employment

The NAHB estimates show that, nationally, close to 3.4 million people worked in residential construction in 2010, accounting for 2.4 percent of the US employed civilian labor force. Not surprisingly, the most populous state—California—also has the most residential construction workers. Almost 475 thousand California residents work in home building in 2010, accounting for 2.9 percent of the state employed labor force. Both numbers are significantly down from 2005 when NAHB Economics last reported residential construction employment by state. At that time, California was home to more than 747 thousand residential construction workers that accounted for 4.7 percent of the employed labor force.

 

Despite being one of the states most severely affected by the housing downturn, Florida still comes in second with 268 thousand residential construction workers. They account for a relatively high share of the state labor force, 3.4 percent. 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.

 

In 2010, Montana tops the state list with the highest share of RC workers, 3.7 percent of the employed labor force. In addition to Montana and Florida, six other states register shares of RC workers that exceed 3 percent: Idaho (3.6 percent), Vermont (3.4 percent), Maine (3.3 percent), New Hampshire and Colorado (with 3.2 percent each). Interestingly, construction workers in these states are more likely to be self-employed. Notably, Maine, Vermont and New Hampshire have the highest shares of self employed construction workers, 43.1 percent, 41.1 percent, 40.3 percent, respectively. Montana registers the sixth highest rate in the nation, 34.9 percent.

 

It is worth mentioning that, nationally, self-employment rates in the construction industry increased from 25 percent in 2005 to 26.2 percent in 2010. Moreover, states known to have been hit hardest by the housing downturn – Florida, California, Nevada, and Arizona – registered some of the highest jumps in the construction self-employment rates. According to the ACS, the share of self-employed construction workers rose in Arizona from 16 to 21 percent and in Florida from less than 24 to 29 percent. Similarly, the share of self-employed builders increased by more than 4 percent in Nevada and almost 4 percent in California. It has always been common for some builders and remodelers to maintain relatively small payrolls and rely on subcontractors for a large share of the construction work. 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.

 

Residential Construction Workers in Congressional Districts

The ACS data known for the detailed geographic coverage also allow estimating RC employment by Congressional district (see Table 2). In 2010, the average Congressional district had around 7,700 residents working in residential construction, considerably down from the average of more than 11,000 workers in 2005. The map below 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.

 

Residential Construction Employment, 2010

 

Montana’s At-Large Congressional district (Rep. Rehberg, Dennis – R) registers the record number of residential construction workers among all districts - 17,190. The 44th District of California (Rep. Calvert, Ken – R), that includes the city of Riverside, and Texas’s 29th District (Rep. Green, Gene – D) that serves the eastern part of the Greater Houston area, come second and third respectively with more than 14,000 workers each. The top ten list also includes three districts in the state of Florida. The 18th (Rep. Rooney, Tom – R) and the 25th districts (Rep. Rivera, David – R) cover South Florida and each has nearly 14,000 residential construction workers. The 8th district (Rep. Webster, Daniel – R) that includes most of Orlando concludes the top ten list with 13,290 residents working in the home building industry. The remaining districts on the top ten list are California’s 49th (Rep. Issa, Darrell – R), Idaho’s 1st (Rep. Labrador, Raul R. – R), Arizona’s 6th (Rep. Flake, Jeff – R) and Colorado’s 7th (Rep. Perlmutter, Ed – D), each registering between 13,400 and 14,000 RC workers.

 

By design, Congressional districts are drawn to represent roughly the same number of people. However, in 2010, Congressional districts are still based on the 2000 Census population counts and do not capture population changes that have taken place since then. Nevertheless, large numbers of RC workers generally translate into high shares of RC workers in their district employed labor forces. The 29 District of Texas has the highest share of RC workers in its employed labor force, 5.3 percent. California’s 49th District is a distant second with 4.4 percent.

 

At the other end of the spectrum there are several districts that contain parts of large urban areas: the District of Columbia (Rep. Norton, Eleanor Holmes – D), the 14th (Rep. Maloney, Carolyn – D) and 15th districts of New York (Rep. Rangel, Charles B. – D), located in New York City, the 7th district of Illinois (Rep. Davis, Danny K. – D) that covers the Near North Side and 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 1,700. At the same time, it has a disproportionally large share of public administration workers. The 14th and 15th districts of NY, 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 around 7,700 residents working in residential construction but the number can be twice as high or higher, and actually exceeds 17,000 in Montana’s At-Large Congressional District. Most states have at least one district where residential construction employment accounts for at least 2 percent of the state employed labor force.

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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