Subcontractors play an essential role in the home building industry and new data demonstrate just how vital they are. Subcontractors represent nearly 3/4 of all workers in the home building industry, according to data provided by the Bureau of Labor Statistics.
Many outside the industry do not understand how large a part subcontractors have in the construction of a home. Home builders, as well as remodelers, typically subcontract a large portion of their construction work out to trade contractors who can more efficiently deliver individual pieces of the construction process. Specialized subcontractors perform much or even all of the actual labor.
This revelation is included in one of a series of good posts on the Eye on Housing blog this week that show the importance of construction to the economy and jobs as well as the importance of subcontractors to construction.
Residential specialty trade contractors represent 1.584 million of the 2.231 million (71%) of the employees in the industry, with an average of 25 subcontractors employed on a typical single-family detached home. Generally, the larger the builder, the more subcontractors they use. Certain trades are much more commonly subbed out than others.
More than 90 percent of builders always subcontract for security systems, HVAC, technology (structured wiring, home theater, etc), carpeting, electrical wiring, plumbing, masonry work, and fireplaces. Between 80 to 90 percent of builders reported they always subcontracted for drywall, foundations, concrete flatwork, kitchen countertops, roofing, ceramic tiles, wood flooring, and painting.
During the last year, the home building sector added 121,000 jobs nationally and has added 247,000 since employment in the sector hit its lowest level. But the construction industry appears to be suffering a labor shortage, at least in certain markets. There were 143,000 unfilled jobs in the construction industry in December 2013, an increase of 51% from December 2012.
Combined with a declining sector layoff rate (non-seasonally adjusted), charted as a 12-month moving average in the graph above, the uptick in open positions since 2012 suggests more, if modest, construction hiring in the months ahead – if firms can find workers with the right skills.
The jobs available are likely good paying jobs as well. BLS data reveals that approximately 80% of total employees in the home building and remodeling industry work in occupations with median wages higher than the US median annual wage.
Within the largest subsection of the industry (construction and extraction occupations – 64% of industry employment), a majority of the occupations again have median annual wages in excess of the U.S. median. The highest wage for this subsection is for construction supervisors, with an annual median wage of $56,500.
Carpenters, who make up the largest group (47% of the construction occupations and 30% of industry employment), had a median annual wage of $39,940 in 2012. This is 15% higher than the U.S. median annual wage.
As we knew already, subcontractors are a vital piece in a very important industry, employing the bulk of the workers at good wages.