New NAHB research shows that the share of foreign-born workers in the US construction labor force has been rising since the housing recovery got underway. Immigrant workers now account for close to one in four workers, the highest share recorded by the American Community Survey (ACS). The time-series analysis shows that the rising share of immigrants in construction cannot be explained by an unusually high number of immigrants joining the industry. Rather, a slow, delayed and reluctant post-recession return of native-born workers underlies the shift towards the higher reliance on immigrants in the construction work force.
The 2004-2016 ACS data show that the aging US workforce grew more dependent on foreign-born labor with its share rising from less than 15% in 2004 to 17% in 2016. The reliance of the construction industry on foreign-born workers is even greater. Immigrants now account for almost a quarter of the construction work force. Their share was rising rapidly during the housing boom years, when labor shortages were widespread and severe across construction trades. It increased from less than 20% in 2004 to almost 23% in 2007 (see Figure below).
Even during the housing downturn the share of immigrants in construction remained relatively high, fluctuating around 22%. In 2013, as the home building industry started its slow recovery, immigrants started to return to the construction industry and the share of immigrants in the construction labor force started to rise again. By 2016, the share exceeded 24%, the highest level recorded by the ACS.
Even though the share of immigrants in construction is now at its highest since the ACS was fully implemented in 2004, and their number exceeds 2.5 million, this is still almost 200,000 immigrants (5%) fewer than in 2007. The flow of new immigrants into the construction work force is also significantly slower compared to the housing boom years. Less than 60,000 new immigrants entered the construction industry in 2015. In comparison, over 130,000 new immigrants were joining the construction labor force annually in 2004 and 2005.
Therefore, the rising share of immigrants in construction cannot be explained by an unusually high and rising number of immigrants joining the industry. Rather, a slow, delayed and reluctant post-recession return of native-born workers underlies the shift towards the higher reliance on immigrants in the construction work force. Close to 1.7 million native-born workers left the construction labor force during the housing downturn, and the vast majority (1.5 million) had not returned to the industry as of 2016. 2015 became the first year since 2006 to register the rising number of native-born workers in the construction labor force, while the number of immigrants started to rise two years prior. As of 2016, the number of native-born workers remained 16% below the cyclical high reached a decade earlier, while the number of immigrants was 5% lower.
The historical trends analysis is based on the 2004–2016 ACS Public Use Microdata Samples (PUMS). The ACS does not gather information on the legal visa status of immigrants and only differentiates between naturalized citizens and not citizens of the United States. Therefore, our estimates include all workers of foreign-born origin regardless of their citizenship status or date of entry into the United States.
In addition, the ACS does not differentiate between residential and nonresidential construction. As a result, the estimates are for the entire construction labor force. The ACS surveys households rather than businesses and, consequently, covers self-employed workers. Counting self-employed is particularly important in the construction industry where they traditionally make up a larger share of the labor force.