One-person Firms in Residential Construction: Many but Small

In 2014, there were 1.7 million one-person firms in specialty trade contracting (carpenters, electricians, plumbers, etc.), 582,000 in residential building construction (e.g., home builders and remodelers), and 11,000 in land subdivision (developers of residential lots). These numbers come from the latest U.S. Census Bureau’s Nonemployer Statistics,  which define a nonemployer as a business with no-paid employees, which means essentially that the business consists only of the owner.  Because these one-person firms count as neither employers nor employees in the official government accounts, they can be easy to overlook, even though they are so numerous.  Residential building construction, land subdivision, and specialty trade contractors are the three categories that encompass activities related to home building.  Unfortunately, the Census Bureau doesn’t distinguish residential from non-residential specialty trade contractors.

These one-person firms tend to be relatively small, especially the trade contractors. In 2014, the average receipts among one-person firms were $51,000 for specialty trade contractors, $74,000 for residential building construction, and $158,000 for land subdivision. The average receipts of these three industries hit the lowest level during the Great Recession, but then climbed back almost the same level in 2014 as in 2007.

Slide1

The number of one-person trade contracting firms tended to be somewhat less volatile than the number of paid employees in the industry between 2007 and 2014. The number of specialty trade one-person businesses declined by 9% during the Great Recession, and 3% from 2009 to 2011, but then increased modestly by 2%, and totaled 1.7 million in 2014. In comparison, employment in specialty trade companies decreased 21% from 2007 to 2009 and 9% from 2009 to 2011, but rose rapidly by 12% from 2011 to 2014, based on Current Employment Statistics .

In residential building construction, one-person firms also experienced smaller declines from 2007 to 2011, and then recovered more slowly than employment in the same period. The only industry related to residential construction where the numbers have continued to decline is land subdivision, which lost 6,000 one-person firms (down by 34%) and 525,000 employees (down by 56%) from 2007 to 2014.

Slide2

The relative stability of one-person firms could result from workers laid off during the downturn going off on their own to form one-person contracting businesses, then returning to work for someone else during the recovery period.

 



Tags: , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *