According to the 2016 ACS, over 23% of construction workers are self-employed, while an economy-wide average does not reach 10% of the employed labor force. Eye on Housing's Natalia Siniavskaia says this reflects a common practice of builders and remodelers to maintain relatively small payrolls and rely on subcontractors for a large share of the construction work.
The industry saw a similar trend during the downturn, when construction self-employment increased from 24% in 2006 to more than 26% in 2010.
Siniavskaia explains:
It is likely that builders and remodelers who were no longer able to maintain a steady work flow may have tried to manage costs by eliminating payroll positions and joining the ranks of the self-employed. It is also possible that some construction employees laid off during the downturn were able to stay in the industry by striking out on their own. The share of self-employed workers in construction peaked in 2010, exceeding 26%.
The opposite hiring trends emerged once the housing industry started its slow climb out of the cyclical trough. The construction industry has been adding payroll jobs since 2011, while the number of self-employed construction workers continued dwindling until 2015. Consequently, the self-employment rates reversed their course in 2011 and fell close to 23% in recent years.
The ACS data show that from 2011 to 2016 construction gained close to 1.2 million (20%) private payroll jobs but the pool of self-employed workers grew by about 100,000 (5%). This helps explain why builders have reported more extreme labor and subcontractor shortages than commonly cited numbers based only on payroll employment suggest.
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