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    1. News & Analysis

    Quick Facts about the Construction Industry

    Dec. 28, 2007
    Ken Simonson, chief economist of The Associated General Contractors of America last week commented on how the construction industry has played a powerful role in sustaining economic growth, in addition to producing structures that add to productivity and quality of life.

    Ken Simonson, chief economist of The Associated General Contractors of America last week commented on how the construction industry has played a powerful role in sustaining economic growth, in addition to producing structures that add to productivity and quality of life.

    • Construction is a significant source of jobs. The industry provides jobs for 7.6 million employees—more than 5 percent of the total nonfarm workforce. In contrast to the steep drop in homebuilding, nonresidential construction employment grew at least 0.9 percent from November 2006 to November 2007. This estimate is probably understated, since many “residential” construction employees are now doing nonresidential work, even though their employers are still counted as residential contractors.
    • Construction jobs are good-paying jobs. In November 2007, seasonally adjusted hourly earnings in construction averaged $21.27 per hour, 21-percent higher than the average for all private industry nonsupervisory workers.
    • Construction makes a disproportionately large contribution to GDP. For the past eight quarters, investment in private nonresidential structures has grown faster than gross domestic product (GDP). Construction spending totaled $1.16 trillion in October 2007; nonresidential was $647 billion (56 percent).
    • Small business is big in construction. In 2005, 91 percent of construction establishments had fewer than 20 employees. Only 1 percent had 100 or more.
    • Construction is a high-turnover industry in terms of entering and exiting firms. Census data prepared for the Office of Advocacy of the U.S. Small Business Administration shows that 99,000 of 630,000 construction firms with employees in 2004 (16 percent) opened since 2003, while 77,000 firms closed.
    • The 2007 Construction Industry Annual Financial Survey, conducted by the Construction Financial Management Assn. (http://www.cfma.org), included responses from 756 companies. The net margin before income taxes in the latest fiscal year averaged 2.7 percent. The median return on assets was 8.8 percent.