Special Studies March 3, 2020
By Natalia Siniavskaia, Ph.D.
NAHB Economics and Housing Policy Group
Report available to the public as a courtesy of HousingEconomics.com
As the housing industry skilled labor shortage continues, access to workers remains on the list of the top impediments to returning home building to the historically normal levels of production. The most recent 2018 American Community Survey (ACS) shows that immigrant workers remain a vital and flexible source of labor to the construction industry.
Despite the slowing of immigration inflow to the U.S., the share of foreign-born workers in the US construction labor force has been rising since the housing recovery began. Immigrant workers now account for close to one in four workers, a record high share that was reached for the first time in 2016. The story behind the rising share of immigrants in the construction labor force during the housing recovery is twofold – an unusually slow, delayed and reluctant return of native-born workers and a much faster and robust comeback of immigrant workers. Close to 1.7 million native-born workers left the construction labor force during the housing downturn, and the vast majority on a net basis, over 1 million, had not returned to the industry as of 2018. In sharp contrast, the number of immigrant workers in construction has now returned to the 2006 level.
The share of immigrants is even higher in construction trades, reaching 30%. Concentration of immigrants is particularly high in some of the trades needed to build a home, like carpenters, painters, drywall/ceiling tile installers, brick masons, and construction laborers – trades that require less formal education but consistently register some of the highest labor shortages in the NAHB/Wells Fargo Housing Market Index (HMI) surveys and NAHB Remodeling Market Index (RMI).
In some states, reliance on foreign-born labor is even more pronounced. Immigrants comprise close to 40% of the construction workforce in California and Texas. In Florida, New Jersey and New York, close to 37% of the construction labor force is foreign-born and in Nevada, one out of three construction industry workers come from abroad.
Data and Methodology
The construction immigrant labor research in this article is based on the American Community Survey (ACS) data. The ACS replaced the decennial Census long form and provides the same detailed data, including information about the country of origin, age, year of entry, industry and employment status of immigrants – but on an annual basis. The ACS, however, does not gather information on the legal visa status of immigrants and only differentiates between naturalized citizens and not citizens of the United States. The NAHB estimates in this article include all workers of foreign-born origin regardless of their citizenship status or date of entry into the United States.
The ACS surveys households rather than businesses and, consequently, covers self-employed workers. Counting self-employed is particularly important in the construction industry where such workers traditionally make up a larger share of the labor force.
The ACS does not report employment data separately for residential and nonresidential construction, but different types of construction can require similar skills and, therefore, often draw workers from the same labor pool. As a result, workers’ movement between the residential and nonresidential is flexible for many trades.
As an annual survey, the ACS allows for tracking over time changes in the construction labor force. To analyze historical trends, NAHB Economics uses the 2004–2018 ACS Public Use Microdata Samples (PUMS). To analyze the composition of the construction labor force, this research relies on the most recent 2018 ACS.
Rising Immigrant Share
The 2004-2018 ACS data show that the aging US workforce grew more dependent on foreign-born labor, with its share rising from less than 15% in 2004 to 17% in 2018. The reliance of the construction industry on foreign-born workers is greater. Immigrants now account for almost a quarter of the construction work force. That share was rising rapidly during the housing boom years, when labor shortages were widespread and severe across construction trades. It increased from less than 20% in 2004 to almost 23% in 2007 (see Figure 1).
Even during the housing downturn the share of immigrants in construction remained relatively high, fluctuating around 22%. In 2013, as the home building industry started its slow recovery, immigrants started to return to the construction industry and the share of immigrants in the construction labor force started to rise again. By 2016, the share exceeded 24%, the highest level recorded by the ACS.
The share of immigrants in construction stabilized at these record high levels with no further increases in 2017 and 2018. The number of immigrants in construction now approaches 2.7 million, just 60,000 workers short of the peak immigrant employment level reached in 2007.
Even though the flow of new immigrants into the construction work force picked up since the housing recovery got underway, it is now significantlysmall in level terms compared to the housing boom years. Just over 44,000 new immigrants entered the construction industry in 2017. This is a substantial drop even compared to the previous year, when over 67,000 new immigrants joined in. In comparison, over 130,000 new immigrants were joining the construction labor force annually in 2004 and 2005 (see Figure 2).
The 2017 noticeable drop in the number of new immigrants in construction may seem puzzling given favorable economic conditions. Over the last 15 years, the time span these data are available, the annual flow of new immigrant workers into construction remained highly correlated with measures of new home construction, especially new single-family starts. The number of new immigrants in construction rose rapidly when housing starts were rising and declined precipitously when the housing industry was contracting (see Figure 2). The response of immigration has been quite rapid, occurring in the same year as a change in the single-family construction activity. The surprising drop of 2017 in the number of new immigrants in construction most likely reflects a change in the US immigration policy that took place during the first year under the new administration.
The post-recession return of native-born workers into the construction labor force has been much slower (see Figure 3). Close to 1.7 million native-born workers left the construction labor force during the housing downturn, and the vast majority (over 1 million) had not returned to the industry as of 2018. 2015 became the first year since 2006 to register a rising number of native-born workers in the construction labor force, while the number of immigrants started to rise two years prior. As of 2018, the number of native-born workers remained 11% below the cyclical high reached in 2006, while the number of immigrants now returned to the 2006 level.
As Figure 3 highlights, the rising share of immigrants in construction cannot be explained by an unusually high number of immigrants joining the industry. Rather, a slow, delayed and reluctant post-recession return of native-born workers underlies the shift towards the higher reliance on immigrants in the construction work force.
Where Construction Workers Originate
Figure 4 illustrates where immigrant construction workers originate. Half of them come from Mexico. An additional 35% come from other countries in the Americas. Even though the share of Mexican workers declined slightly since 2004, the increase in the share of immigrants from the rest of Americas more than offset the declining share of Mexico-born immigrants. Together, they account for 85% of the immigrant construction labor force. Europeans and Asian immigrants evenly split the remaining 14% of foreign-born construction workforce.
Characteristics of Immigrant Workers in the Construction Labor Force
The ACS data show that the construction industry relies heavily on labor that requires less formal education. As shown in Table 1, one in five construction workers do not have a high school diploma and an additional third of the construction labor force did not study beyond high school.
Immigrants who work in the construction industry are more likely to be drawn into lower skill trades. Almost half of them (45%) do not have a high school diploma and additional 28% did not study beyond high school. By comparison, less than 12% of native-born workers in the construction industry did not graduate from high school and more than half of them went to college.
As a result, immigrants represent more than half of the lowest skill (no high school diploma required) construction labor force, while their overall share in the construction labor force is 24%. As the US workforce becomes more credentialed from an education perspective, it will become increasingly harder to attract native-born workers with higher educational attainment into construction work.
The 2018 ACS data also show that the construction industry attracts younger immigrants, with half of them age 41 and younger, while the median age of the native population in the construction labor force is 42. The median age of immigrants participating in the US labor force outside of construction is 43. Immigrants who arrived in the US during the last decade and joined the construction labor force are even younger with half of them under the age of 33 while the median age of newly arrived immigrants in the labor force outside of construction is 34.
Immigrants in Construction Trades
According to the government’s system for classifying occupations, the construction industry employs workers in over 360 occupations. Out of these, only 33 are construction trades, but they account for almost two thirds of the construction labor force. The other one-third of workers are in finance, sales, administration and other off-site activities.
Immigrants account for 30% of all workers in construction trades. Their presence is particularly large among construction occupations needed to build a home, such as carpenters, laborers, painters, roofers, brick masons, drywall/ceiling tile installers, etc. The two most prevalent construction occupations, laborers and carpenters, account for about 30% of the construction labor force. More than a third of all construction laborers (36%) and 33% of carpenters are of foreign-born origin (see Table 2).
Table 2 shows that immigrants are concentrated in trades that do not require years of education. Immigrants account for half of drywall/ceiling tile installers, a trade where 45% of workers do not have a high school diploma. Over 47% of all plasterers/stucco masons and painters are immigrants. Workers with no high school diploma make up 46% and 36% of these trades, respectively.
The construction occupations with low presence of foreign-born labor, such as construction and building inspectors, boilermakers, elevator installers, electricians, first-line supervisors – tend to recruit better educated workers. Only 2% of elevator installers/repairers, less than 5% of construction and building inspectors, and 8% of electricians did not graduate from high school.
In addition to drywall/ceiling installers, plasterers/stucco masons and painters, the construction occupations with the highest presence of immigrants are roofers, carpet/floor/tile installers and brickmasons. The share of immigrants in these trades is 40% and higher. Between 32 and 42% of workers in these occupations do not have high school diploma.
Table 3 presents the top 15 most common non-construction trades in the building industry. The majority of them are management, office and sales occupations. These trades seem to recruit workers with more advanced education and higher skills as share of workers with no high school diploma in these trades is minimal (with the exception of drivers, heavy vehicle and mobile equipment workers and welding/soldering/brazing workers). The immigrant presence in these trades is less pronounced. While the overall share of immigrants in the construction labor force exceeds 24%, their share among construction and miscellaneous managers – the top two most common non-construction trades in the industry - is 13% and 17%, respectively. Only 11% of chief executives in construction are foreign-born. The immigrant share is as low as 10% among sales representatives and secretaries, 8% among book keepers and accountants, and 6% among general managers.
The Census data, therefore, highlight that immigrants in the construction labor force are concentrated in trades that do not require years of education or advanced skills. It turns out these trades also tend to have more vacancies and labor shortages. According to NAHB’s monthly HMI surveys, construction trades with the most consistent labor shortages are framing crews, carpenters and bricklayers.
About 30% of surveyed builders were reporting some shortages of labor in these trades in June 2012. At this stage of the recovery, the shortages were not nearly as widespread as in the midst of the housing boom. Nine months later, in March 2013, reported labor shortages got worse across all trades, but particularly among framing crews and carpenters. By June of 2014, 63% of builders reported shortages of labor for rough carpentry employed directly by their firms. The most recent (July 2019) survey showed even more acute shortages, with over 80% of builders reporting shortages of carpenters and framing crews directly employed by their firms.
Immigrant Construction Workers across States
Traditionally, construction immigrants are concentrated in a few populous states, with more than half of all immigrant construction workers (56%) residing in California, Texas, Florida, and New York. These are not only the most populous states in the U.S. (together accounting for nearly a third of the country’s population), they are also particularly reliant on foreign-born construction labor, as more than a third of the construction industry workforce in these states comes from abroad.
California and Texas take the lead on the state list with close to 40% of the construction labor force coming from abroad (Figure 6). The foreign-born share is similarly high in Florida, New Jersey, and New York, between 36 and 37%. In Nevada, one of out three workers in construction is foreign-born.
However, the reliance on foreign-born labor is also evident outside of these traditional immigrant magnets. This is evident in states like Maryland, Arizona, and Virginia, where immigrants, as of 2018, account for between 28 and 30% of the construction labor force.
While most states draw the majority of immigrant foreign-born workers from the Americas, Hawaii relies more heavily on Asian immigrants. European immigrants are a significant source of construction labor in North East and Illinois (see Table 4).
The last three columns of Table 4 highlights the uneven losses in the construction labor force that took place across states since 2007. The construction workforce (including both native and foreign-born workers) in Arizona is now 29% smaller than in 2007. The state experienced particularly large losses of immigrant workers, their numbers are down 43% since 2007. Montana and West Virginia that barely have any immigrants in construction lost a quarter of their workforce. Their persistent losses are entirely due to native-born workers not returning to construction.
While most states were unable to restore their construction work force to the 2007 levels, ten states registered labor gains enough to surpass it. All ten states, except for Washington, stand out for being the only states where the number of native-born workers in construction now exceeds the 2007 levels.
The building industry of North and South Dakota continued to absorb new workers, largely native-born, throughout the local oil boom. Neighboring Wyoming, Nebraska, and Kansas also expanded their construction labor force. Texas, where housing is booming, now has a construction workforce that is 16% larger compared to 2007, with both native-born and immigrant workers now exceeding their pre-recession totals. The remaining four states that managed to surpass the 2007 construction workforce levels are DC, Oklahoma, Hawaii and Washington.
Note, that managers, heating, ventilation, air conditioning, and refrigeration (NVACR) mechanics and installers are not included in the construction group.
For more information about this item, please contact Natalia Siniavskaia at 800-368-5242 x8441 or via email at email@example.com.