Bureau of Labor Statistics

Issues in Labor Statistics: 

Current Trends in Construction 

Employment

Bureau of Labor Statistics

October 5, 2007
Issues in Labor Statistics: Current Trends in Construction Employment 

From 2004 to 2006, construction was among the leading contributors to job growth, with 

employment expanding at over triple the rate of total nonfarm payrolls as measured by the 

Current Employment Statistics (CES) or “establishment” survey. Fueled by a boom in housing, 

the industry had added over a million jobs since its most recent trough in 2003. In 2006, the 

housing boom ended as homes sales stalled and the number of unsold homes rose. 

Construction employment peaked in September 2006 and then fell by 112,000 over the year. 

Residential construction has borne the brunt of the slowdown, shedding 192,000 jobs since 

March 2006. 

Construction employment, 

January 2003- September 2007,

6,400

6,600

6,800

7,000

7,200

7,400

7,600

7,800

8,000

'03 '04 '05 '06 '07

Seasonally adjusted, in thousands

Mar '03- Sep '06 = 1,069,000

Sep '06- Sep '07 = -112,000

Job losses in construction appear subdued in comparison to the sharp declines in some of the 

other housing indicators. Homebuilding has continued to weaken, with starts, permits, and 

construction spending all falling.1

 In August 2007, the number of single family units under 

construction was 22.4 percent below the previous year’s level, and residential construction 

spending was down 16.0 percent over the year. Throughout the recent turmoil in housing, the 

downturn in construction spending has been confined to the residential segment, which 

accounts for just under half of total construction spending. Expenditures on nonresidential 

building and public-sector construction have continued to expand throughout the downturn, with 

annualized spending increasing by 14.7 percent, as of August 2007.2

 Overall, construction 

spending has only declined 1.7 percent over the year ending in August. 

CES employment has broadly mirrored construction spending, if with less pronounced 

movements. The residential construction components have seen the largest job losses, 

192,000 since March 2006, with modest job growth across the nonresidential components 

tempering total construction job losses. 

The shallow declines have led to speculation that perhaps CES has not accurately captured 

construction employment. In fact, since the most recent benchmark in March 2006, construction 

employment in the CES series has closely mirrored the QCEW universe employment counts.3
Preliminary benchmark figures for March 2007, released on October 5, 2007, indicate a 

downward benchmark revision of 8,000 or 0.1 percent for construction. It is possible that some 

firms classified as primarily engaging in residential construction have taken on more 

nonresidential construction projects, as activity in the two markets has diverged.4

Construction Indicators

-1.7

1,186,254

Aug. 2006

1,166,667

Aug. 2007

Construction 

Spending

(Thousands of 

Dollars)

-22.4

889

August 2006

690

August 2007

Housing Units 

Under 

Construction

(Thousands)

-1.4

7,725

Sep. 2006

7,613

Sep. 2007

Construction 

Employment

(Thousands)

Over-the-year 

percent change Indicator Current period value Year ago value

Additional BLS statistics provide a basis for comparison of recent trends in construction. The 

Current Population Survey (CPS), a survey of households, produces monthly construction 

employment estimates. 5 Since January 2006, CPS private-sector construction employment has 

broadly emulated the CES construction series, with staffing at construction firms remaining 

steady over the year. Similarly, the unemployment rate among construction workers has 

remained essentially unchanged during this period—5.3 percent in August 2007 compared to 

5.9 percent in August 2006. Together these measures are in line with the relative flatness 

reported in CES construction employment. 

It is unclear as to what extent construction employment is being impacted by the industry’s large 

number of immigrants, some of whom are assumed to be undocumented. In 2006, 28 percent 

of all workers employed in construction and extraction occupations were foreign born.6

 It is 

likely that many of these workers are included in the payroll survey. However, the exact number 

is undetermined as CES does not collect demographic information. BLS requests the number 

of persons employed by a given establishment, regardless of nationality or legal status. While 

BLS surveys are confidential and used only for statistical purposes, firms may be reluctant to 

report payroll data on undocumented workers to a government agency. Thus hiring and layoffs 

in construction may be larger than reported in the payroll survey due to exclusion of such 

workers. 

Another dynamic affecting construction employment is the large number of temporary workers in 

the industry. Temporary workers allow firms to scale production up or down to meet demand, 

without incurring the costs associated with hiring or laying off permanent workers. When 
choosing contract workers, construction firms have three options: hire temporary workers 

directly, subcontract from a third party, or subcontract with self-employed individuals. Under 

CES methodology, directly hired temporary workers are indistinguishable from permanent 

employees. Workers from a third-party employment agency would be classified according to 

the industry in which the contract agency operates. A temporary help firm specializing in 

construction would be included in construction, while a diversified temporary help firm would be 

counted in the employment services industry. As of May 2006, 178,100 workers in the 

employment services industry were employed in construction and extraction occupations.7

 Selfemployed individuals fall outside the scope of the CES payroll survey; however, they are 

captured in the household survey. 

According to data from the household survey, approximately one in six individuals working in 

construction is self-employed. That is over twice the average across all nonagricultural 

industries. Much like temporary contract workers, self-employment is considered to be more 

sensitive to economic fluctuations. CPS data indicate that self-employed construction workers 

have been impacted, albeit modestly, by the slowdown in housing. In the first half of 2007, selfemployment in construction was down 0.5 percent from the prior year. 

Through the March 2007 benchmark reference period, CES construction employment has 

trended in line with the universe employment counts derived from UI records. Over the past 

year ending in September 2007, CES has recorded a construction employment decline of over 

110,000. While the drop has been modest when compared to other housing indicators, 

nonresidential construction activity and spending remained relatively strong throughout the 

recent housing downturn. In addition, construction-related job losses are possibly occurring 

among groups that are not included in the CES construction payroll series, such as the selfemployed, workers in the temporary help industry, and undocumented employees. 

Construction industries,

September 2007 over-the-year change and prior 3-year 

average, in thousands or percent change, seasonally adjusted

59

20

26

128

81

Over-the-year 

change, prior 

3-year avg.

(Sep 03-

Sep 06)

-48 -4.6 6.5 Residential 

building

3 0.4 2.6 Nonresidential 

building 

3 0.3 2.9 Heavy and civil 

engineering

-107 -4.5 6.1 Residential 

specialty trade 

36 1.4 3.4 Nonresidential 

specialty trade

Over-theyear percent 

change, 

prior 3-year

Over-theyear 

change

percent 

change

Over-theyear change
For additional information, contact Christopher Goodman, an economist in the Division of 

Current Employment Statistics, Office of Employment and Unemployment Statistics. E-mail: 

goodman.christopher@bls.gov. Telephone: 202-691-6555. Information in this summary will be 

made available to sensory impaired individuals upon request. Voice phone: (202) 691-5200. 

Federal Relay Service: 1-800-877-8339. This report is in the public domain and may be 

reproduced without permission. 

 

1

 Data on housing starts, building permits, and construction spending are available from the U.S. Census Bureau at 

www.census.gov/cgi-bin/briefroom/BriefRm. 2

 Expenditures were calculated from the U.S. Census Bureau’s total construction spending minus residential privatesector construction spending. 

3

 In order to ensure the survey’s reliability, CES employment data are benchmarked annually to the Quarterly 

Census of Employment and Wages (QCEW) data, a complete universe count of employment derived from UI tax 

records that nearly all employers are required to file. Establishments not covered by UI are counted in the CES 

survey, resulting in a small employment gap between the two series. See the methods section of the Benchmark 

article for more information on this topic; on the Internet at www.bls.gov/web/cesbmart.htm. 4

 QCEW updates NAICS Codes for every worksite on a 3-year cycle; see www.bls.gov/qcew. 5

 For more information on CPS data see www.bls.gov/cps. 6

 Data on foreign-born workers are available from the CPS at www.bls.gov/news.release/pdf/forbrn.pdf. 7

 For more information on Occupational Employment Statistics see www.bls.gov/oes. 

Notes