In the years following the start of the COVID-19 pandemic, self-employment in the construction industry has moved in the opposite direction of its typical pattern. While construction self-employment typically rises during economic downturns and falls during expansions, self-employment rates rose during the post-pandemic housing boom. According to NAHB analysis of the 2021 American Community Survey (ACS), 23% of workers employed in construction were self-employed, an increase from pre-pandemic times and a rate much higher than the economy-wide average of 10% of the labor force.
It is likely that rising self-employment in construction reflects divergent trends within the industry – a faster V-shape recovery for home building and a slower delayed improvement for commercial construction that is less dependent on self-employed. It is also possible that some construction employees laid off during the Covid-19 recession of early 2020 were pushed into self-employment. 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.
The Quarterly Census of Employment and Wages (QCEW), that relies on the unemployment insurance accounting system in each state, provides data on employment and establishment counts throughout the pandemic. Even though self-employed are not covered by the QCEW, the survey reveals a shift in construction employment towards smaller size establishments.
As of January 2022, construction establishments with fewer than 50 employees were able to recover all jobs lost early in the pandemic and currently have larger payrolls than in January 2020 before the pandemic wreaked havoc on labor markets. At the same time, construction establishments with 500 or more employees have not reached their pre-pandemic employment levels, with payroll employment being 10% lower for establishments with 500-999 employees and 19% lower for the largest companies with 1,000 or more workers.
