Don't miss the HBA Home & Outdoor Living Show, April 12 - 14, 2024 Wilson Logistics Arena  |  Ozark Empire Fairgrounds  |  Springfield, MO
Don't miss the HBA Home &
Outdoor Living Show
April 12 - 14, 2024
Wilson Logistics Arena
Ozark Empire Fairgrounds
Springfield, MO

(In)stability in Special Trade Employment

NAHB tabulations of employment data from the Bureau of Labor Statistics (BLS) show that nearly 1.4 million specialty trade (or subcontractor) employees left the industry from 2006 to 2011. In spite of the significant drop in the number of specialty trade employees observed in the BLS data on companies, annual statistics for specialty trade nonemployer firms (one-person firms) have been much less volatile during the same period.

Specialty trades are essential to the residential and non-residential construction industry. Specialty trades include masons, plumbers, painters, electricians and other subcontractor professions. The purpose of this post is to highlight the difference in volatility between employees of subcontracting companies and one-person firms and also the importance of considering both employees and one-person firms in specialty trades. A total picture of the labor shortage in residential construction requires a look at the one-person specialty trade firm.

A one-person firm has no paid employees and is subject to individual federal income taxes rather than corporate. In 2012, average receipts for specialty trade one-person firms were just over $47,000. The relatively small size suggests one-person firms do not have significant fixed costs and hence these firms are likely more flexible in downturn.

The chart below shows the number of special trade employees and specialty trade one-person firms from 2002 to 2012; the latest year available for one-person firms. The decline in one-person firms is less severe than employment within multi-employee firms.

Chart1

The peak for multi-employee firm employment was in 2006 with just over 4.9 million workers. The number of specialty trade employees currently stands at just over 3.5 million. The peak for one-person firms was in 2007 with just over 1.9 million workers. The number of one-person firms currently stands at just under 1.7 million.

Year-over-year changes in annual figures highlight the difference in volatility between company employees and one-person firms. The second chart shows the annual change in workers between company employees and one-person firms. For example, companies’ lost almost 750,000 employees while one-person firms decreased by just over 67,000 in 2009.

Chart2

Year-over-year percent change shows similar lower volatility in one-person firms versus company employment. Employment in multi-employee firms decreased 12.2% from 2007 to 2008 and 19.4% from 2008 to 2009 while one-person declined by 5.4% from 2007 to 2008 and 3.7% from 2008 to 2009.

Chart3

The housing market relies heavily on specialty trades or subcontrators. Employment statistics for multi-employee firms do not provide a complete picture of the labor resources available to home builders. One-person firms are flexible enough to fill in for when demand fluctuates and small enough to be able to survive when cycles reduce demand.

 

By – HBA Eye on Housing