Close to 23%—or over 2.5 million individuals—of people working in the construction industry are self-employed, according to the most recent 2022 American Community Survey (ACS). The share has ticked down following the pandemic but still remains at a rate above levels seen in 2019, according to analysis by the NAHB.
Since the pandemic, construction self-employment rates have remained significantly higher than the economy-wide average of 10% of the employed labor force.
Stacking construction self-employment rates against NAHB’s measure of labor shortage – the share of builders reporting shortages averaged over the nine trades (carpenter-rough, carpenter-finished, electricians, excavators, framing crews, roofers, plumbers, bricklayers/masons, and painters) – reveals that self-employment becomes less prevalent when construction labor shortages worsen. Thus, persistent labor shortages of the last decade is another contributing factor and helps explain why self-employment rates have been trending lower.
It is possible that some construction employees laid off during the COVID-19 recession of early 2020 became self-employed. Similarly, and consistent with economy-wide “Great Resignation” trends, some workers might have chosen self-employment because it offers more independence and flexibility in hours, pay, type and location of work. Given the widespread labor shortages in construction, securing a steady workflow was less of a concern for construction self-employed in post-pandemic times.
Examining cross-state variation provides additional insights into construction self-employment rates. Montana and Nevada constitute two opposites, with Montana registering the highest (36%) and Nevada showing lowest (11%) self-employment rates in construction. The substantial differences likely reflect a predominance of home building in Montana and a higher prevalence of commercial construction in Nevada.
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