Construction Builds On Self-Employment

More than one in four construction workers are self-employed, and the numbers have trended up since the recession.

The construction industry has always been known for employing a high share of self-employed workers. Builders and remodelers commonly maintain small payrolls and rely on subcontractors for a large share of the heavy lifting.

Now a new study is adding credibility to common knowledge. According to the 2010 American Community Survey (ACS), more than 26 percent of workers in construction are self-employed, making it the second-highest self-employing industry in the nation. Only agriculture has a higher share, close to 34 percent. The national average for all industries is 10 percent.

Tellingly, self-employment rates in the construction industry started to rise during the housing downturn, increasing from 24 percent in 2006 to 26 percent nationally in 2010. Builders and remodelers without a steady workflow likely eliminated payroll positions to manage costs, and forced staff to strike out on their own among the ranks of the self-employed.

During the same period the national self-employment rate fell from 11 to 10 percent, and self-employment in agriculture declined from 41 to 34 percent. Moreover, states hit hardest by the housing downturn – Florida, California, Nevada, and Arizona – registered some of the highest jumps in 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, self-employed construction workers increased by over four percent in Nevada, and nearly four percent in California.

The 2010 ACS data also places the highest percentages of self-employed construction workers in New England. Maine, Vermont and New Hampshire register fall above 40 percent – 43.1 percent, 41.1 percent, 40.3 percent, respectively – well above the national average. Connecticut and Rhode Island follow with 38.5 and 36.9 percent, with the next highest in Montana, at 34.9 percent.

The National Association of Home Builders (NAHB) estimates that 8.7 million people worked in construction in 2010, nearly 3.4 million of them in residential construction, accounting for 2.4 percent of the US employed civilian labor force. Contrarily, when NAHB measured residential construction employment in 2005, the industry employed 4.8 million workers and accounted for 3.5 percent of the employed U.S. labor force.