Bureau of Labor Statistics > Productivity > Publications > Productivity Highlights

Construction Labor Productivity

On September 12, 2024, the Bureau of Labor Statistics (BLS) updated measures of productivity for four construction industries through 2023. More information on these measures can be found in an article written by BLS economists in the Monthly Labor Review.

The construction sector, as defined by the North American Industry Classification System (NAICS), makes up a large portion of the U.S. economy. In 2023, 5.1 percent of all U.S. nonfarm payroll employment^[1] and 4.4 percent of GDP^[2] were attributable to this sector. BLS publishes labor productivity measures for four construction industries, which comprise about 11.9 percent of the entire sector's employment:

Single-family residential construction – NAICS 236115x (1987-2023)
Multiple-family residential construction – NAICS 236116x (1987-2023)
Industrial building construction – NAICS 236210 (2006-23)
Highway, street, and bridge construction – NAICS 237310 (2002-23)

Downloadable XLSX tables

Labor productivity and costs measures for selected construction industries

Recent Trends

The following charts highlight the four construction industries published by BLS and their respective changes in labor productivity, output, and hours worked over the periods 2007-19 and 2019-23. The four industries are described in further detail in the subsequent sections.

Chart 1
Chart 2
Chart 3
Chart 4

In the residential construction industries, productivity trended downwards over the 2007-19 period. Since then, productivity has declined in single-family residential construction and increased in multiple-family residential construction over the 2019-23 period. For industrial building construction, productivity rose over both periods with a significant increase from 2019-23. Productivity in highway, street, and bridge construction decreased from 2019-23 after having no change over the 2007-19 period.

Industrial building construction had the largest gain in productivity among the four construction industries since 2019, while highway, street, and bridge construction had the greatest loss in productivity over the same period.

Single-Family Residential Construction (NAICS 236115x)

New housing for-sale builders (NAICS 236117) includes both single- and multiple-family homes. BLS combines the single-family portion of NAICS 236117 (98 percent) with the entire new single-family housing construction industry (NAICS 236115) to form a combination industry: single-family residential construction (NAICS 236115x).

Chart 5 illustrates the trends in output, hours worked, and labor productivity for single-family residential construction.

Productivity rose during the 2000-05 period, primarily driven by a large increase in output. Starting in 2005, output fell through 2009 at a considerably faster rate than hours worked, leading to a sharp decrease in productivity over the interval. These years correspond with the collapse of the housing market. Productivity grew from 2009 to 2013 but then steadily weakened through 2019.

Productivity rose in 2020 and 2021 but declined in 2022 and 2023. The productivity loss in 2022 and 2023 came as output continued to fall after 2021 and hours worked held relatively steady. (Source data are subject to revision.)

Multiple-Family Residential Construction (NAICS 236116x)

Similar to single-family residential construction, BLS combines all new multiple-family housing construction (NAICS 236116) with the multiple-family portion (2 percent) of new housing for-sale builders (NAICS 236117) to form new multiple-family residential construction (NAICS 236116x).

Chart 6 reveals the productivity, output, and hours worked trends from 1987 to 2023.

Multiple-family housing construction (NAICS 236116x) had large gains in labor productivity from 1993 to 2007 as output increased far faster than hours worked. The industry then saw a sharp decrease in output and a moderate drop in hours worked, leading to decreasing productivity until 2010. From 2010 to 2015, output rebounded substantially, driving significant productivity growth. However, productivity plunged from 2016 to 2018 due to growth in hours worked outpacing growth in output. Productivity rose from 2019 through 2021 as output increased faster than hours worked.

In 2022 productivity fell as hours worked increased more than output. Multiple-family residential construction productivity increased in 2023 as output grew faster than hours worked. The U.S. Bureau of Economic Analysis’ National Income and Product Accounts price deflator used in the output calculations for NAICS 236116x is not currently available for 2023. In the interim, the series was extended using the Census Bureau’s price index for multi-family houses under construction, which tracks closely with the standard deflator.

Industrial Building Construction (NAICS 236210)

Chart 7 of data trends for the industrial building construction industry (NAICS 236210) reflects that from 2006 to 2023, the productivity trend was mostly consistent with output.

Both indexes rose until 2009, then fell sharply following the 2007-09 recession, recovered from 2011 to 2015, and then declined again through 2018. The change in hours worked was slow and uneven, but positive over the 2006-18 period. In 2019, a rise in output and a drop in hours worked led to the first gain in productivity since 2015. Productivity increased in 2020 as both output and hours worked dropped.

In 2021, output and hours worked both increased. However, hours worked rose faster than output resulting in the drop in productivity. The following year, output rose faster than hours worked; productivity rose. That trend continued through 2023. Output, once again, grew faster than hours worked.

Highway, Street, and Bridge Construction (NAICS 237310)

Chart 8 indicates that, like industrial building construction, productivity in the highway, street, and bridge construction industry (NAICS 237310) increased during the 2007-09 recession. Output rose as hours worked declined during this period. Then, through 2019, productivity fell most years as output slightly declined while hours worked saw net growth. Productivity increased in 2020 as output increased and hours worked continued to fall.

In 2021 productivity fell again as output decreased at a faster rate than hours worked. Productivity continued to fall in 2022 as output declined and hours worked grew. On account of hours worked growing faster than output, productivity also declined in 2023.

Questions and Answers

What are the challenges in measuring productivity growth in construction?▸
- Productivity is difficult to measure for construction industries because of challenges in measuring both output and hours worked. The main challenge to measuring output is that construction projects differ widely in characteristics and features. For example, a 2,000 square foot single-family residence could differ based on quality of materials used, region of country, and the nature of the underlying terrain. Consequently, it is difficult to develop reliable output price deflators to convert observed revenues into constant dollar measures of output growth. For hours worked, there are two potential measurement limitations. First, the omission of some undocumented immigrants could understate hours worked. Second, subcontractors are not classified in the industry in which they ultimately perform work.
Do these measures of hours worked include labor obtained from subcontractors?▸
- These measures do not include work done by subcontractors. Many builders use specialized subcontractor labor, such as plumbers or carpenters, to supplement or replace their own labor force. The services of subcontractors would normally be included as purchases of materials inputs, much as any other firm purchases necessary inputs from its suppliers. Since the present analysis considers only labor productivity growth, it does not account for materials inputs. The Monthly Labor Review article examines productivity trends if subcontractors are included in official measures. The findings show that estimates of labor productivity growth are typically lower, often by substantial margins, when labor inputs includes hours worked obtained from subcontractors.
Do these measures of hours worked include labor obtained from undocumented laborers?▸
- It is likely that at least some undocumented laborers are included in official measures of employment. However, if these laborers work off the books then they may not be included in measures of labor hours. For purposes of productivity growth, the important factor is not the level of unmeasured undocumented laborers, but rather how that level has changed over time. Previous research has found that not capturing all undocumented laborers has a minimal impact on the measurement of productivity growth.
Do you have productivity measures for the construction sector as a whole?▸
- Yes. The BLS Productivity Program publishes labor and total factor productivity measures for all sectors, including construction. These measures for construction are at the 2-digit NAICS level, while the four newly developed construction industries highlighted here are at the 6-digit NAICS level. Output and input measures for 2-digit and 3-digit nonmanufacturing sectors are often difficult to measure and can produce productivity measures of inconsistent quality. Data users should be cautious when interpreting the data. See the major industries total factor productivity data table.
Do you have productivity measures for other specific construction industries?▸
- Not yet. BLS plans to explore the creation of productivity measures for additional construction industries by utilizing establishment level microdata from the U.S. Census Bureau. The microdata may make it possible to create measures for at least seven additional industries including warehouses, schools, offices, and several contractor industries. The four industries examined here are those for which data are currently available. The availability of deflators also determines the period of time over which productivity can be studied for different industries.

Related resources

Industries at a Glance: Construction NAICS 23

Notes

^[1] Source: BLS Current Employment Statistics Databases

^[2] Source: BEA Gross Domestic Product By Industry. Using the interactive data tool, select Value Added by Industry, then Value added by Industry as a Percentage of Gross Domestic Product.

Last Modified Date: September 12, 2024