Long weekend reading: deconstructing productivity


by Kevin Schofield

The “long read” this weekend is a items edited by Noah Smith, which studies construction worker productivity and how it is measured.

It is popular belief that productivity in construction has been falling slowly for decades, in sharp contrast to other intensive industries such as agriculture and manufacturing. This graphic from the economist sums up the picture well:

Graph showing gross value added at constant prices per hour worked in the United States. Data from McKinsey Global Institute, graph provided by The Economist.

Smith points out that there are two problems with conventional wisdom. First, it sums up all constructions; Once broken down, there are some significant differences in productivity for different designs. For example, productivity in industrial construction has increased while productivity in transport construction has decreased.

Chart with the index of labor productivity in road and industrial construction, including hours of subcontractors, from 2002 to 2016 with a dark blue line for industrial construction and a dark red line for the construction of highways, roads and bridges.
Road and Industrial Construction Labor Productivity Index graph, including hours of subcontracting, from 2002 to 2016. Data from US Bureau of Labor Statistics.

Similarly, multi-family housing construction has become much more productive than single-family housing, suggesting that some types of buildings are more suited to innovation and technological improvements that increase worker productivity.

Graphic to show the index of labor productivity in single and multi-family new buildings including the hours of subcontractors from 1987 to 2016, whereby the dark blue line stands for single-family new buildings and the red line for new multi-family buildings.
New construction labor productivity chart, including subcontracting hours, from 1987 to 2016. Data from US Bureau of Labor Statistics.

Smith argues that overall construction productivity has declined for so long because the mix of construction projects in the US has shifted over time towards more single-family homes and transportation projects, some of the least productive building forms. But Smith also poses a second problem: he doubts the way we measure productivity in construction, more precisely the accuracy of the underlying data. He rightly points out that worker productivity doesn’t suddenly increase over the course of a few years and then regress just as quickly, so the jagged edges in the graphs above are strong arguments that the underlying data is unreliable.

Smith’s article is a good reminder that it is usually a good idea to be skeptical about conventional wisdom – and that not all dates are created equal.

What happened to construction productivity??

Kevin Schofield is a freelance writer and founder of Inside Seattle City Council, a website that provides independent news and analysis from Seattle City Council and City Hall. He also co-hosts the Seattle News, Views and Brews podcast with Brian Callanan and appears from time to time on Converge Media and KUOW’s Week in Review.

📸 The selected image is attributed JJ (under Creative Commons, CC BY-NC-ND 2.0 License).

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