March 7, 2007

Construction Jobs Expand for Latinos Despite Slump in Housing Market

Fact Sheet

I. Overview

Hispanic workers landed two out of every three new construction jobs in 2006 benefiting from strong employment growth in the industry even as the housing market endured a year-long slump.

The construction industry continues to be a key source of jobs for Hispanics and especially for those who are foreign born. The vast majority of new construction jobs in 2006 were filled by foreign-born Latinos, many of them recently arrived.

The employment trends in construction reflected economy-wide developments that delivered strong growth in employment for both Hispanic and non-Hispanic workers in 2006.

This fact sheet examines recent trends in the employment of Hispanic workers in the U.S. labor market. It focuses on the construction industry which was a vital contributor to the jobs recovery from the 2001 recession but which also experienced a slowdown in 2006.

Housing starts fell steadily in 2006 from 2.1 million in the first quarter to 1.6 million in the fourth quarter. Housing permits and housing units under construction also experienced a decline. The slowdown, however, did not have a negative impact on job prospects for Hispanic workers or, in particular, for foreign-born Hispanics.

The estimates in this fact sheet are derived from data from the Bureau of Labor Statistics and the Census Bureau. Most of the data is from the Census Bureau’s Current Population Survey, a monthly survey of approximately 60,000 households. Monthly data are combined to create larger sample sizes and to conduct the analysis on either an annual or quarterly basis. The analysis is for 2004-2006.

Hispanics in the Labor Market

There was strong growth in the employment of Hispanic workers in 2006. Most of the newly-employed Hispanic workers were foreign-born. The number of recently arrived immigrants who are employed nearly doubled over the past two years. The growth for Latino workers was not an isolated event; it was rooted in strong overall growth in employment in the U.S. labor market.

Hispanic employment

There were 19.6 million Hispanic workers employed in the U.S. labor market in 2006 (Table 1), accounting for 13.6% of the total employment of 144.7 million workers. The share of Hispanics in total employment has increased steadily in the past three decades. Most recently, it was 12.8% in 2004 and 13.1% in 2005.

Foreign-born workers account for a majority of the Latino workforce and a significant share are recently arrived. In this analysis, recently-arrived workers are defined as those who arrived no earlier than 2000.

In 2006, the employment of foreign-born Latinos reached 11 million and their share of total employment was 7.6%. Recently-arrived Hispanics accounted for 2.8 million of those workers in 2006, or 2% of total employment in the economy. That compares with 1.6 million recently-arrived Latinos who were employed in 2004, representing 1.2% of total employment.

Changes in the employment of Hispanic workers

As shown in Table 1, Hispanic employment in 2006 was almost 1 million more than the total in 2005. At the same time, total employment in the economy was up 2.7 million. Even though Hispanics account for only 13.6% of total employment, they accounted for 36.7% of the increase in employment in the past year.

The share of Hispanic workers in overall employment growth mirrors demographic change in the U.S. Approximately 40% of the total increase in the working-age population (16 and older) in 2006 was Hispanic (Appendix B, Table B1). Moreover, almost three-fourths of the increase in the Hispanic working-age population was due to an increase in the number of foreign-born persons (Table B2).

Consistent with these demographic changes, most of the recent increase in Hispanic employment was attributable to foreign-born workers. Their employment increased by 825,000 between 2005 and 2006, accounting for 30.3% of the growth in total employment (Table 1).

The growth in the hiring of foreign-born Latinos is driven by recent arrivals. The employment of recently-arrived foreign-born Hispanics increased 649,000 between 2005 and 2006. That one group of workers was responsible for 23.9% of the total increase in employment in the U.S. labor market last year. Estimates by the Pew Hispanic Center suggest that, in recent years, about two-thirds of the increase in the employment of recently-arrived Latinos has been due to unauthorized migration.

Hispanics in the Construction Industry

Hispanic workers, especially those who are recently-arrived, are a vital part of the construction industry. Despite the slowdown in the housing market, there are no indications that the role of foreign-born Hispanic workers in this industry might diminish in the near future.

Employment in the construction industry grew by 559,000 workers in 2006. Hispanic workers, mostly foreign born, were responsible for nearly two-thirds of the increase in industry employment.

This section first presents evidence on employment in the construction industry in 2006 and then considers changes between 2005 and 2006. The focus is on employment trends for Hispanic workers, particularly the foreign born.

Employment in construction

The construction industry employed 2.9 million Hispanic workers in 2006 (Table 2). Hispanics accounted for 25% of the total employment of 11.8 million in the construction sector.

Most Hispanic workers in the construction industry are foreign born. Of the 2.9 million Hispanics employed in the construction industry in 2006, 2.2 million were foreign born, representing 19.1% of industry employment. Among the foreign-born Latinos in construction, 847,000 were recently arrived. They represented 7.2% of industry employment in 2006.

Changes in construction employment

Hispanic workers played a large role in the growth in employment in the construction sector. As shown in Table 2, total employment in the industry grew by 559,000 in 2006. Of that total increase, 372,000 were Latino workers. Hispanics, who account for 25% of industry employment, accounted for 66.5% of the increase in employment in the past year.

Foreign-born Latinos account for the largest share, by far, of new Latino workers in the construction industry. About 60% of the increase in industry employment, or 335,000, went to foreign-born Hispanics. Most of these foreign-born Hispanic workers in construction were recent arrivals. The number of recent arrivals employed in construction rose by 255,000 and that represented 45.6% of the total increase in construction employment.

No employment slowdown in 2006

It is notable that the growth in construction employment in 2006 more than kept pace with the increases in 2005. For all workers, construction employment increased 443,000, or 4.1%, in 2005 and 559,000, or 5%, in 2006 (Table 2). For Latino workers, employment in the industry increased 277,000 (12.1%) in 2005 and 372,000 (14.5%) in 2006. Latinos, who accounted for 62.4% of the growth in industry employment in 2005, accounted for 66.5% of the growth in 2006.

Among foreign-born Latinos, employment in construction increased by 335,000, or 17.5%, in 2006. That was similar to the situation in 2005, when the employment of foreign-born Latinos increased 262,000, or 15.9%. Overall, there are no signs of a slowdown in construction sector employment in the past year. There are also no indications that the role of Hispanic workers in the industry might be diminishing.

The role of the construction industry in Hispanic employment

The preceding sections highlighted the important role played by Latino workers in overall employment growth in the construction sector. This section shows that the construction industry has been a key source of jobs for Hispanic workers, especially for foreign-born Latinos. Moreover, the recent slowdown in the housing sector has not diminished the importance of the construction industry to the job prospects of Hispanic workers.

Table 3 shows that 15% of Hispanic workers, or 2.9 million out of 19.6 million, were employed in the construction sector in 2006. That is nearly double the proportion (8.1%) of all workers who were employed in the industry in 2006.

The proportion of Hispanic workers in construction is even more striking when compared with the proportions of non-Hispanic whites (7.8%) and non-Hispanic blacks (3.9%). Moreover, 37.2% of the increase in Latino employment between 2005 and 2006 was attributable to the construction industry alone.

The significance of construction to Latino workers in 2006 was greater than in 2005. In the previous year, 2005, 13.8% of all Hispanic employment was in construction and 37.3% of the increase in employment for Latinos was rooted in the industry.

Foreign-born Hispanics were the principal beneficiaries of the continuing growth in construction employment. For these workers, construction accounted for 20.4% of employment in 2006, up from 18.7% in 2005. More notably, this industry contributed 40.6% of the total growth in employment of foreign-born Hispanics between 2005 and 2006.

Nearly one-third (29.9%) of recently arrived foreign-born Hispanics worked in construction in 2006. That share is likely to grow in the near future since 39.3% of jobs acquired by recently arrived foreign-born Hispanics were in construction. These trends suggest that new foreign-born Latino workers continued to find ample opportunities for employment in construction in 2006 despite a housing slowdown.

Construction employment by region

Most construction jobs for Hispanics are in the South and West, which is consistent with the overall distribution of the Hispanic workforce. In 2006, those two regions were home to 2.5 million Latino construction workers, or 86% of the 2.9 million Latino construction workers in total (Table 4).

Not surprisingly, the South and West also contributed the most to the increase in construction jobs for Latinos—293,000 between 2005 and 2006, or 79% of the total increase.

There was a modest redeployment of Latino construction workers across regions over the past two years. Compared with 2004, there were relatively more Hispanic construction workers in the Northeast and the South. For example, the percent of Hispanic construction workers located in the South increased from 45.6% in 2004 to 48.3% in 2006 (Table 4). Over the same time period the percent of Latino construction workers in the West decreased from 39.3% to 37.5% and the percent in the Midwest diminished from 7.5% to 5.8%.

The shift in the distribution of Hispanic construction workers across regions is consistent with regional trends in the housing market. As shown in Figure 1, trends in housing starts have differed across regions in the past three years. The Northeast and the South witnessed stronger growth in 2004 and 2005 in comparison with the Midwest and the West.

Housing activity diminished in all regions starting in 2006, but the level of activity remained strong in the Northeast and South. In particular, housing activity in the Northeast and the South was at about the same level near the end of 2006 as it was at the beginning of 2004. However, housing starts in the Midwest and the West were well below the levels seen in early 2004. Consequently, it is possible that at least some of the movement of Latino workers across regions was caused by variations in the housing market.