It All Starts with Rooftops

Image from LondonHouse Chicago

Image from LondonHouse Chicago


by Phillip B. Burum, Executive Vice President, Diversified Pacific,

President, Building Industry Association (BIA) Baldy View Chapter

What comes first, housing, jobs or a thriving economy? The question is akin to that of the chicken and the egg. Any economist or civic leader of an economically viable city or town, however, will tell you that rooftops (new housing) bring retail and retail brings jobs. The combination of rooftops and successful retail generate the need for, and income for, local services. New home building is the key to attracting and sustaining the population that provides the spending and labor pools to keep cities strong and viable.

     No one will suggest that the jobs brought by new retail will be enough to sustain a healthy local economy or housing market but, the local job base of a sprawling region will typically start with construction and retail. If managed correctly, and adequate services are provided for the growing population, the initial job base will evolve into higher paying blue collar jobs in manufacturing, distribution, and white collar municipal jobs and those in education as well as health and human services. It is not possible to attract the higher end white collar jobs that have made the City of Irvine such a powerful economic engine for Orange County without first laying the proper infrastructure with retail services and rooftops.

     The United States Bureau of Labor Statistics (BLS) reported in March, 2018, that nationwide residential construction employment is now 2.79 million. That number includes approximately 782,000 individuals that work directly for a homebuilder and another two million that work for, or as, residential specialty trade contractors. The six-month moving average of job gains for residential construction is 15,617 a month. Over the last 12 months, home builders and remodelers have added 114,200 jobs on a net basis. The industry continues to grow, which is a positive leading indicator for a sustained growing economy.

     According to the 2015 study Residential Construction – Employment Across States and Congressional Districts by Natalia Siniavskaia, Ph.D., for the National Association of Home Builders (NAHB), the construction industry accounted for nearly 2.5 percent of the U.S. employed civilian labor force. More than half a million of those employed were California residents, accounting for three percent of our state’s employed labor force.

     The construction job itself, is just the beginning of growing a region’s economy. When economists and planners consider the impacts of job creation, they also consider something called job multipliers. ‘Job multipliers’ are estimates used to forecast how many additional jobs a single job will support. This means that when a new position is created, it will support the creation of a number of additional jobs in connected occupations. Construction jobs, for example, will support additional jobs for insurance agents, mortgage bankers, and grocery clerks just to name a few. Historically, construction jobs offer some of the most attractive job multipliers and it is generally estimated that a single construction job will support conservatively between seven and nine additional jobs.

     Only about half of the jobs created by building homes are actually in construction which includes construction workers, electricians, plumbers, carpenters and all of the other workers who contribute to preparing the land and building the home. The other half of the jobs created by housing are in housing-related industries that produce building materials and provide services to both home builders and homebuyers. From the architects and engineers that prepare the plans for the construction and development to the furniture and appliance industries that make the products to fill the home, residential construction is an economic force in and of itself.

     Construction of the new home is only the beginning of how housing helps grow an economy. When a home is built, it will be occupied by people who will generate additional jobs and revenue streams. According to NAHB, building an average single-family home will generate about 2.97 full—time jobs and $110,957 in taxes per house. Building an average rental apartment home (a single unit, not a complex) will generate an average of 1.13 full-time jobs and $42,383 in taxes.

     Job creation is just one of the reasons the nation sets aside three months every year to celebrate every aspect of those benefits and why this month is dedicated to National Homeownership Month. For more information on homeownership, visit on the web.