U. S. Bureau of Labor Statistics

The Housing Bubble and the Resulting Impact on Employment

Kathryn Byun

byun_k@bls.gov

2

Commonly Cited Data from Current Employment Statistics (CES)

1) Construction Industry Employment:

• Includes work by the construction industry to satisfy demand other than for structures

• Does not include employment necessary to satisfy intermediate demand (secondary employment)

3

Commonly Cited Data from the Office of Occupational Statistics (OOS)

2) Employment in Construction Related Occupations:

• Includes employment in the occupation that satisfies demand other than for building structures

• Overlook occupations outside of construction

Y

X

UseTable

DirectRequirements

Total Requirements

Industry

Commodity

MakeTable

MarketShares

Total Requirements

OOSEP Methodology

Total Requirements Table * Final Demand = Industry Output

5

OOSEP Methodology cont.

• Ind. Ouput / Ind. Empl. Empl. Multiplier

• TRT * Emp. Multiplier = Employment Requirements Table

• ERT * FD vector = Industry Employment

• Industry Employment Vector * Staffing Pattern Matrix = Occupational Employment

Final Demand

7

Final Demand for Construction(chained 2000 dollars, millions)

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1950

1957

1964

1971

1978

1985

1992

1999

2006

Nonresidential

Residential

Nonres. Trend

Res. Trend

8

Annual Growth Rate

Annual Growth Rates

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2000

2005

Nonresidential

Residential

9

Divergence from 1950-95 Trend(chained 2000 dollars, millions)

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

1929

1937

1945

1953

1961

1969

1977

1985

1993

2001

NRES. Less Trend

RES. Less Trend

10

Residential Detail

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

1958

1963

1968

1973

1978

1983

1988

1993

1997

2002

2007

Brokers' commissionson sale of structures

Improvements

Multifamily structures

Single-family structures

11

Nonresidential Detail

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

1929

1936

1943

1950

1957

1964

1971

1978

1985

1992

1998

2005

Commercial andhealth care

Manufacturing

Power andcommunication

Mining exploration,shafts, and wells

Other structures

12

Nonresidential Breakout of Commercial and Health Care

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000Office

Health Care

MultimerchandiseShopping

Food and BeverageEstablishments

Warehouses

Other Commercial

13

Forecasted data for 2016

0

100000

200000

300000

400000

500000

600000

700000

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Nonresidential

Residential

14

Average Annual Growth Rates (Final Demand)

 Historical

1995-2005Projected

2006-2016*Implied

2007-2016

Total 3.2% 3.5%  

Non-Residential 0.2% 1.3% 0.3%

Residential 5.6% 1.5% 4.1%

Employment

16

OOSEP Methodology

• Final Demand + Intermediates = Industry Output

• Ind. Ouput & Ind. Empl. Employment Requirements Table

• ERT * FD vector = Industry Employment

17

Disclaimer

The estimates presented from this point on reflect my research alone and are not the

official view of OOSEP or the BLS

18

Employment due to Construction Spending

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

1993

1996

1999

2002

2005

2008

2011

2014

Nonresidential

Residential

19

Employment in the Residential Construction Industry (CES data) vs. Employment due to Demand for Residential Construction (My data)

(Wage and Salary Employment, Thousands)

0

1000

2000

3000

4000

5000

6000

7000

1993

1995

1997

1999

2001

2003

2005

2007

My Estimate

CES

CES+Specialty

20

Annual Growth Rates

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

1994

1996

1998

2000

2002

2004

2006

CES

My Estimate

CES+Specialty\

21

Employment during the Housing Bubble versus Trend

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

Residential

RES Trend

Difference

22

Could res. trend be shifting up?

• More people owning multiple homes

• More home owners / Less renters

• Replacing a higher percentage of existing structures

• Faster population growth (illegal immigration)

• More single persons buying homes (higher divorce rate)

23

Nonresidential Construction Related Employment versus Trend

-2,000,000

-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

1993

1995

1997

1999

2001

2003

2005

Nonresidential

NRES Trend

Difference

24

Could Nonres. trend be shifting down?

• Less need for structures with e-business

• Telecommuting

• Move from manufacturing to services?

• Other reasons?

25

2007 Employment(Assuming 2006 ERT holds)

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

1993

1995

1997

1999

2001

2003

2005

2007

NRES

RES

RES Trend

NRES Trend

26

Industry Employment

27

Industries with Construction Related Employment in 2006 (by major sector)

Construction

Financial Activities

Retail

Other

Professional and Business

Services

Manufacturing

Construction

Professional andBusiness Services

Manufacturing

Financial Activities

Retail

Other

28

Residential: industries with biggest gains in employment

 Residential Res. as % of Total

 95-05 06-16 1995 2005 2006 2016

Construction1,943,233 154,570 38.8% 50.8% 48.9% 48.7%

Real estate127,258 50,538 7.6% 12.9% 11.1% 11.5%

Architectural, engineering, and related services

103,943 34,450 11.9% 16.3% 14.6% 13.6%

Employment services82,070 1,159 4.4% 5.3% 4.5% 3.9%

Services to buildings and dwellings

59,090 16,507 4.1% 5.7% 4.9% 4.4%

29

Residential: industries with biggest gains in employment cont.

  Residential Res. as % of Total

  95-05 06-16 1995 2005 2006 2016

Wholesale trade 35,587 -21,019 2.1% 2.6% 2.1% 1.6%

Cement and concrete product manufacturing

30,911 -441 23.4% 31.8% 29.6% 27.6%

Monetary authorities, credit intermediation, and related activities

30,330 -3,472 2.4% 3.0% 2.5% 2.2%

Architectural and structural metals manufacturing

29,755 -8,756 18.9% 24.7% 22.5% 19.4%

Truck transportation 29,429 9,706 4.1% 5.4% 4.5% 4.0%

30

Residential: industries with biggest losses in employment

 Residential Res. as % of Total

 95-05

06-161995 2005 2006 2016

Retail trade -173,691 12,547 3.1% 1.8% 1.5% 1.5%

Other wood product manufacturing

-35,557 -6,961 33.6% 24.0% 21.1% 19.9%

Household and institutional furniture and kitchen cabinet manufacturing

-5,122 -5,865 5.5% 4.7% 3.9% 2.7%

Commercial and service industry machinery manufacturing

-4,539 -573 3.9% 1.0% 1.0% 0.5%

Crop production -4,384 -1,889 1.2% 1.1% 0.9% 0.8%

31

Residential: industries with biggest losses in employment cont.

  Residential Res. as % of Total

  95-05 06-16 1995 2005 2006 2016

Logging -3,998 -3,366 13.2% 14.9% 12.1% 10.7%

Other electrical equipment and component manufacturing

-3,560 -5,209 7.0% 6.6% 6.1% 2.6%

Clay product and refractory manufacturing

-2,756 -1,895 11.3% 10.4% 8.9% 6.6%

Semiconductor and other electronic component manufacturing

-2,543 -1,431 1.3% 1.0% 0.7% 0.5%

Communications equipment manufacturing

-2,540 -401 1.6% 0.9% 0.7% 0.4%

32

Nonresidential: industries with biggest gains in employment

  NonResidential Nonres. as % of Total

  95-05 06-16 1995 2005 2006 2016

Support activities for mining

63,800 -15,910 88.2% 88.6% 88.8% 88.4%

Amusement, gambling, and recreation industries

3,002 294 0.1% 0.3% 0.3% 0.3%

Management, scientific, and technical consulting services

2,406 10,313 2.4% 1.7% 1.7% 1.5%

Architectural, engineering, and related services

1,696 16,050 8.9% 6.9% 7.0% 6.5%

33

Nonresidential: industries with biggest losses in employment

  NonResidential Nonres. as % of Total

  95-05 06-16 1995 2005 2006 2016

Retail trade -189,316 7,107 2.0% 0.7% 0.6% 0.6%

Construction -93,959 79,242 29.4% 21.4% 23.0% 23.0%

Wholesale trade -20,274 -11,471 1.6% 1.2% 1.1% 0.8%

Plastics product manufacturing

-11,611 -1,893 4.1% 2.7% 2.6% 2.3%

Architectural and structural metals manufacturing

-9,487 -4,462 14.6% 11.0% 11.3% 9.8%

34

Nonresidential: industries with biggest losses in employment cont.

  NonResidential Nonres. as % of Total

  95-05 06-16 1995 2005 2006 2016

Household and institutional furniture and kitchen cabinet manufacturing

-9,335 -2,703 3.9% 1.9% 1.8% 1.2%

Management of companies and enterprises

-8,162 -8,413 2.7% 2.1% 2.3% 1.6%

Other wood product manufacturing

-7,161 -4,881 9.0% 7.2% 7.3% 6.1%

Telecommunications -7,083 -183 2.0% 1.2% 1.2% 1.1%

Other fabricated metal product manufacturing

-6,610 -3,205 5.3% 3.5% 3.5% 2.7%

Occupational Employment

(Indsutry Employment Vector * Staffing Pattern Matrix)

36

Occupational Breakout in 2006(by major sector)

Management, business, and financial occupations

Professional and related occupations

Service occupations

Sales and related occupations

Office and administrative support occupations

Farming, fishing, and forestry occupations

Construction and extraction occupations

Installation, maintenance, and repair occupations

Production occupations

Transportation and material moving occupations

37

Top 5 occupations

  NRES RES Sum as % Total

  2006 2016 2006 2016 2006 2016

Carpenters 217,832 236,030 466,321 504,660 46.8% 45.9%

Construction laborers 207,437 225,088 435,019 472,275 52.1% 51.0%

First-line supervisors/managers of construction trades and extraction workers 128,869 137,675 251,917 271,776 49.3% 48.6%

Electricians 117,508 126,535 246,118 264,958 51.6% 51.7%

Plumbers, pipefitters, and steamfitters 87,733 97,510 184,772 205,273 54.3% 54.5%

38

Occupations 6-10

  NRES RES Sum as % Total

  2006 2016 2006 2016 2006 2016

Office clerks, general 73,542 75,999 157,710 168,167 7.2% 6.8%

Truck drivers, heavy and tractor trailer 83,452 83,169 153,255 154,591 12.7% 11.6%

Operating engineers and other construction equipment operators 68,501 73,433 137,035 147,812 48.5% 48.1%

Bookkeeping, accounting, and auditing clerks 66,193 67,726 136,736 142,832 9.6% 8.9%

Painters, construction and maintenance 59,983 63,594 128,680 136,569 40.8% 38.7%

39

Occupations 11-15

  NRES RES Sum as % Total

  2006 2016 2006 2016 2006 2016

Construction managers 55,082 60,252 116,899 128,245 35.3% 33.4%

Farmers and ranchers 52,243 37,237 114,666 83,275 15.8% 12.4%

Laborers and freight, stock, and material movers, hand 54,032 48,389 107,360 97,624 6.7% 5.9%

Secretaries, except legal, medical, and executive 50,942 47,943 106,203 102,458 8.1% 7.7%

General and operations managers 54,552 50,872 102,529 98,131 9.1% 8.5%

40

Occupations 16-20

  NRES RES Sum as % Total

  2006 2016 2006 2016 2006 2016

Cement masons and concrete finishers 48,114 53,397 102,261 113,203 67.9% 67.5%

Heating, air conditioning, and refrigeration mechanics and installers 42,372 46,837 90,508 99,882 45.5% 46.2%

Retail salespersons 38,231 40,720 88,288 93,885 2.8% 2.7%

Janitors and cleaners, except maids and housekeeping cleaners 31,944 32,199 86,456 90,750 5.0% 4.5%

First-line supervisors/managers of retail sales workers 35,789 30,495 79,626 68,920 6.9% 5.7%