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Productivity
Bureau of Labor Statistics > Productivity > Publications > Productivity Highlights

Construction Labor Productivity

On September 21, 2021, the Bureau of Labor Statistics (BLS) updated measures of productivity for four construction industries through 2020. 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 2020, 5.9 percent of all U.S. nonfarm payroll employment[1] and 4.3 percent of GDP[2] were attributable to this sector. BLS publishes labor productivity measures for four construction industries, which comprise about 12.3 percent of the entire sector's employment:

  • Single-family residential construction – NAICS 236115x (1987-2020)
  • Multiple-family residential construction – NAICS 236116x (1987-2020)
  • Industrial building construction – NAICS 236210 (2006-2020)
  • Highway, street, and bridge construction – NAICS 237310 (2002-2020)

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Bar chart of labor productivity, output, and hours worked, for selected construction industries, average annual growth rate

 

Chart 1 data. Labor Productivity for Selected Construction Industries (2007-2020)

 

The chart above highlights the four construction industries published by BLS and their respective changes in labor productivity, output, and hours worked since 2007. This year is an appropriate starting point for the comparison for a few reasons. Because of source data limitations, the reference periods of the industries begin at different points. Also, 2007 includes the peak of a business cycle. The recession from December 2007 to June 2009 had both immediate and lasting impacts on the construction industries.

Productivity grew fastest in industrial building construction (NAICS 236210) as output increased while hours worked declined. The four industries are described in further detail below.

Single-Family Residential Construction (NAICS 236115x)

New housing for-sale builders (NAICS 236117) includes both single- and multiple-family homes. On the basis of bridge tables published in the 2002 Census of Construction, 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).

Line chart of labor prodcutivity, output, and hours for NAICS 236115 since 1987

 

Chart 2 data. Labor productivity for NAICS 236115X (1987-2020)

 

The chart above illustrates the trends in output, hours worked, and labor productivity for single-family residential construction (NAICS 236115x). Labor productivity rose during the 2000-2005 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 labor productivity in the period. These years correspond with the collapse of the housing market. Labor productivity grew from 2009 to 2013 but steadily weakened through 2019.

Preliminary data show that a rise in output and a drop in hours worked resulted in a jump in productivity in 2020. (Source data are subject to revision.)

Multiple-Family Residential Construction (NAICS 236116x)

Similar to single-family residential construction, BLS combines all of 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).

Line graph of labor productivity, output, and hours, for NAICS 236116, since 1987

 

Chart 3 data. Labor productivity for NAICS 236116X (1987-2020)

 

The chart above shows that multiple-family housing construction (NAICS 236116x) experienced large gains in labor productivity from 1993 to 2007, as output increased far faster than hours worked. The industry then experienced a sharp decrease in output and a moderate drop in hours worked, leading to decreasing labor productivity until 2010. From 2010 to 2016, output rebounded substantially, leading to significant labor productivity growth. However, productivity dipped from 2017 to 2020 due to growth in hours worked outpacing growth in output.

The first release of 2020 data suggests that despite an increase in output in 2020, hours worked also rose. On balance, the change in productivity was modestly negative.

Industrial Building Construction (NAICS 236210)

The chart below of data trends for the industrial building construction industry (NAICS 236210) shows that from 2006 to 2018, the productivity trend was mostly consistent with output. Both indexes rose until 2009, then fell sharply as a result of the 2007-2009 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 2006-2018 period. In 2019, the rising output and falling hours worked series moved in opposite directions, which led to the first gain in productivity since 2015.

The year 2020 saw steep drops in both output and hours worked. Because the fall in hours worked was deeper, productivity increased slightly.


 

Line graph of labor productivity, output, and hours, for NAICS 236210, since 2006

 

Chart 4 data. Labor productivity for NAICS 236210 (2006-2020)

Highway, Street, and Bridge Construction (NAICS 237310)

The chart below shows that, similar to the industrial buildings industry, productivity in the highway, street, and bridge construction industry (NAICS 237310) increased during the 2007-2009 recession. Output rose as hours worked declined during this period. Then, until 2018, productivity fell most years as output saw no net growth while hours worked did. Since 2018, there has been little change to output, hours worked, or productivity.


 

Line graph of labor productivity, output, and hours, for NAICS 236310, since 2002

 

Chart 5 data. Labor productivity for NAICS 237310 (2002-2020)

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

Overview of BLS Productivity Statistics

 

Notes