2. Payroll Establishments and Employees in Construction
The Economic Census, one of the main sources of information on the structure and performance of the U.S. economy, is conducted every five years by the U.S. Census Bureau and covers nearly all businesses and industries in the private, non-farm U.S. economy. The most recent Economic Census, conducted in 2012, reported 598,065 construction establishments (see Glossary) with payroll, an 18% decrease from 729,345 establishments in 2007 in the aftermath of the Great Recession.1 Establishments without paid employees (nonemployer, see Glossary) are excluded from the Economic Census, and are reported separately in the annual Nonemployer Statistics series (see page 3).
According to the Economic Census definition, an establishment (with payroll) is a single physical location at which business is conducted and/or services are provided. Therefore, a company or corporation (see Glossary) may consist of multiple establishments or offices. An establishment usually has a permanent address and may be responsible for multiple projects at one time.
Based on this definition, the majority of construction establishments are small; about 81% of payroll establishments had fewer than 10 employees in 2012 (chart 2a). Large establishments, those with 500 or more employees, accounted for 0.1% of the total number of construction establishments with payroll, yet employed over 9% of the industry’s paid employees (see Glossary) .
The number of payroll establishments in the construction industry fluctuated with the business cycle, generally increasing until 2007, and then decreased significantly in each major construction sector (chart 2b). While the overall economy was climbing out of the recession by 2012, economic recovery was delayed in construction. The number of establishments in the Specialty Trade Contractors sector was 400,950 in 2012, about 16% less than the 2007 peak of 477,950. During this period, establishments in both Construction of Buildings and Heavy and Civil Engineering Construction also decreased by 22% and 17%, respectively.
Across business cycles, construction employment tends to be more volatile than the number of construction establishments. During the Great Recession, while the overall number of construction establishments fell by 18% between 2007 and 2012, the number of construction paid employees fell by 23% from 7.32 million to 5.67 million in the same time period. Following the trends in overall construction employment, employment in the Specialty Trade Contractors sector fell from 4.73 million to 3.62 million, a decrease of more than 23%. Employment in the Construction of Buildings sector fell by 29.6%, while the Heavy and Civil Engineering Construction sector decreased by 7.9%. These changes reflect the significant impact of the housing market in the construction industry2 and the stabilizing role of government construction expenditures on non-housing projects during the Great Recession (chart 2c).
In addition to economic cycles, construction employment is affected by seasons. The census averages quarterly counts of employees. In 2012, payroll employment in construction was at its lowest level of 5.4 million in March and rose to 5.9 million in September.3
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Corporation – From the Internal Revenue Service: a business that is legally separate from its owners (who may be people or other corporations) and workforce and thus, among other things, forms contracts and is assessed income taxes.
Establishment – From the Economic Census: a single physical location, where business is conducted and services or industrial operations are performed. An establishment is classified to an industry when its primary activity meets the definition for that industry. In construction, the individual sites, projects, fields, lines, or systems of such dispersed activities are not considered to be establishments. The establishment in construction is represented by a relatively permanent main or branch office that is either 1) directly responsible for supervising such activities, or 2) the base from which personnel operate to carry out these activities. Establishments are either with or without payroll (see nonemployer).
Paid employees– From the Economic Census: consists of full- and part-time employees, including salaried officers and executives of corporations, who are on payroll in the pay period including March 12. Included are employees on paid sick leave, holidays, and vacations; not included are proprietors and partners of unincorporated businesses.
Nonemployer – From the U.S. Census Bureau: a business with no payroll or paid employees, with annual business receipts of $1,000 or more ($1 or more in the construction industry), and subject to federal income taxes. Most nonemployers are self-employed individuals operating very small unincorporated businesses. Nonemployers can be partnerships, sole proprietorships, or corporations without employees..
1. U.S. Census Bureau. 2012 and 2007 Economic Census. http://www.census.gov/programs-surveys/economic-census.html (Accessed March 2016).
2. Scopelliti DM. 2014. Housing: Before, During, and After the Great Recession. U.S. Bureau of Labor Statistics. Spotlight on Statistics. http://www.bls.gov/spotlight/2014/housing/pdf/housing.pdf (Accessed November 2016).
3. The average number of non-leased construction employees is the sum of establishment averages of non-leased construction workers who were on the payroll during the pay periods including the 12th of March, June, September, and December. http://www.census.gov/programs-surveys/economic-census.html (Accessed March 2016).
All charts – Data cover the private sector only.
Chart 2a – Totals may not add to 100% (or the exact sum) due to rounding.
Charts 2b and 2c – In 2012, payroll establishments totaled 598,065, with 5.7 million employees.
Chart 2a – U.S. Census Bureau. 2012 Economic Census. Construction Summary Series (EC1223SG01). http://www.census.gov/data/tables/2012/econ/census/construction.html (Accessed April 2016).
Charts 2b and 2c – U.S. Census Bureau. 2012 and previous years Economic Census, Industry Series, Construction. www.census.gov/econ/construction.html (Accessed April 2016).