Representation in Greater Philadelphia’s Construction Industry

In preparation for the Economy League’s inaugural PAGE Real Estate and Construction Summit on August 9, 2023, we explore workforce and business representation in Greater Philadelphia’s construction industry using recent estimates from the U.S. Census Bureau. Workforce representation is a powerful proxy indicator of social equality in a regional economy. In more equal economies, racial, ethnic, gender, disability status, veteran status, and other forms of minority representation among employees and business owners is similar to an area’s overall population breakdown. For example, if an area’s population is 10% Latino and an industry’s business ownership is also roughly 10% Latino, this would indicate that the area likely has equal opportunity for its minority Latino population to be represented in that industry. If, however, an area’s population is 50% female but an industry in the area shows only 20% female employment or business ownership, this would indicate that various social, economic, political, or financial barriers are preventing equal opportunities for women to find employment or start a business in that industry. If equitable development is truly a region’s economic goal, it benefits to identify the structural barriers preventing underrepresented groups from becoming employed, building a business, or competing in certain industries. These barriers are varied and can be complex. They could result from a lack of educational or professional training opportunities for fields of employment, hiring prejudices, or a lack of access to financial capital or assets – to name only a few [1]. The point is not to look to fill quotas based on single categories of identification but to identify why certain groups do not have the equal opportunity to find employment or build a business in a field of their choice. We keep this in mind as we dive deeper into the demographic representation of Greater Philadelphia’s construction industry.

What You Need to Know

• Greater Philadelphia’s construction sector grew at an average annual rate of 1.5% between 2010 and 2023 and employed 121,000 individuals in 2023. This accounts for 1.3% of the region’s total nonfarm employment in 2023.
• Employee representation in Greater Philadelphia’s construction industry largely does not match the region’s racial and ethnic population breakdowns.
• Black residents are heavily under-represented in construction-related jobs in both the city as well as the surrounding metropolitan area’s suburban counties. Their employment proportion in the construction sector is roughly 15% lower than their population proportion in Greater Philadelphia.
• White and Latino/Hispanic populations dominate construction employment in both the City of Philadelphia and its surrounding suburbs.
• White workers, are particularly over-represented in the suburban construction industry by 16.7%, compared to 11.9% in the city.
• Latino/Hispanic workers, on the other hand, experience a higher level of over-representation in the city’s construction industry at 9.0%, compared with the surrounding suburbs at 4.4%.
• Racial and ethnic representation among business owners follows the same pattern as employment in the construction industry in Greater Philadelphia.
• Black business owners in the construction industry have an under-representation of roughly 9% both in the city as well as the surrounding suburbs, which highlights a historically limited access to resources, capital, and professional development opportunities for Black entrepreneurs.
• White employers in the construction industry are over-represented by roughly 10-13% in both the city and the suburban counties.
• Latino/Hispanic business owners in the construction industry are under-represented by 3.5% in metropolitan area’s suburban counties despite over-representation by 4.8% in the city.

Representation in Construction Employment

Figure 1 details employment levels for Greater Philadelphia’s construction industry from 2010 to 2023. With an annual average growth rate of 1.5%, the region’s construction industry has grown from roughly 100,000 employees in 2010 to 121,000 in 2023. As of 2023, it accounts for 1.3% of the region’s total nonfarm employment. Despite its modest size, the regional construction industry provides unique employment and business opportunities. From foundational-level laborer positions to apprentices, specialized tradespersons, and site managers, the construction sector offers a diverse range of employment opportunities for a wide selection of foundational- to specialized-skilled workers. With enough experience, financial backing, and customer demand, construction workers can also transition from a worker to a self-employed or small business owner. Therefore, the construction industry is one of the few sectors that offers unique career and business opportunities for a variety of experience and skill levels that often do not require traditional forms of academic credentialing, like four-year college degrees.

FIGURE 1 

Source: U.S. Bureau of Labor Statistics' Current Employment Statistics

Employee representation in Greater Philadelphia’s construction industry largely does not match the region’s racial and ethnic population breakdowns. Figure 2 highlights the average level of racial and ethnic representation in employment in the region’s construction industry from 2010 to 2021, by showing the difference between employment and resident population proportions. All negative bars (or those below the zero-line) indicate under-representation for a racial or ethnic group while positive bars above the zero-line show that a group is over-represented in regional construction employment. Figure 2 also compares the level of representation in the construction industry in the City of Philadelphia (blue bars) with the surrounding ten suburban counties of Southeastern Pennsylvania, Southwest New Jersey, Northern Delaware, and Cecil County, Maryland (red bars).

FIGURE 2 

Source: U.S. Census Bureau's American Community Survey

Our analysis shows that Black residents are heavily under-represented in construction-related jobs in both the city as well as the surrounding metropolitan area’s suburban counties. At roughly 15% underrepresentation, the City of Philadelphia’s Black population currently faces significant barriers to employment in the city’s construction industry – which largely seems dominated by White and Latino/Hispanic workers. While facing smaller under-representation in the surrounding suburbs at 8.2%, Black residents of Greater Philadelphia also seem to be facing barriers to employment in the construction industry. More than any other major racial or ethnic group, Black residents of Greater Philadelphia do not seem to have access to building new homes or businesses in the neighborhoods and municipalities where they are often the racial majority. Limited access to financial resources and relationships, underfunded public education, and limited professional training opportunities for Black residents have hindered many individuals’ ability to acquire the necessary skills and certifications required for seeking employment in the construction sector [2]. Additionally, the prevalence of informal networks and word-of-mouth referrals within the construction industry can disadvantage Black job seekers, as they may have limited connections or access to these networks [2]. Discrimination and bias during the hiring process further perpetuate the underrepresentation of Black individuals in the construction workforce [2].

As beforementioned, White and Latino/Hispanic populations are over-represented in construction-related employment in both Philadelphia and its surrounding suburbs. This means that there are larger proportions of White and Latino/Hispanic workers employed in the construction industry than there are individuals living in the region. The surrounding suburban counties, in particular, host a higher level of over-representation of White workers at 16.7%, compared to 11.9% in the city. Latino/Hispanic workers, on the other hand, experience a higher level of over-representation in the city at 9.0%, compared with the surrounding suburbs at 4.4%. In fact, Latino/Hispanic workers form 13% of the total construction workforce in Greater Philadelphia, whereas their population accounts for roughly 7% of the region’s residential population. This means that Latino/Hispanic jobseekers face far lower barriers in accessing construction-related jobs compared to Black residents. This over-representation might be explained by higher-levels of immigrant employment opportunities in the construction industry which creates robust networks for accessing employment [4].

Representation among Construction Business Owners

While unequal representation in the workforce can highlight barriers and bottlenecks in employment opportunities for different communities, it also sheds light on minority business development patterns as well. Underrepresentation in the workforce can often translates to underrepresentation in business ownership since it is often easier for a worker with experience to form a business within an industry than an individual without experience or the required skillsets. Similarly, other barriers could prevent business development among minority groups even if those groups can easily find employment within the industry. Lack of financial backing, a history of poverty, or prejudiced contracting practices could all prevent experienced and skilled employees within an industry from forming a business [5]. Since evidence suggests that many minority-owned small businesses hire from within their own neighborhood, family, and community networks[6], examining levels of representation among business owners in an industry can help pinpoint both challenges and opportunities to reducing underrepresentation as well as building more small and diverse businesses.

Figure 3 shows levels of representation among employers in Greater Philadelphia’s construction industry. Using the U.S. Census Bureau’s IPUMS household survey, we measured the region’s construction employers by filtering survey respondents who identified themselves as self-employed in the construction sector between 2010 and 2021. We then calculated the proportion of these self-employed residents by their self-identified race and ethnicity. Figure 3 shows how the level of racial and ethnic representation among construction business owners in the region was similar to construction employment trends depicted in Figure 2.

FIGURE 3

Source: U.S. Census Bureau's American Community Survey and Integrated Public Use Microdata Series

We found that Black employers are heavily under-represented while White business owners are heavily over-represented in Greater Philadelphia’s construction industry. These trends remain consistent across the city as well as the metropolitan area’s suburban counties. Black business owners have an under-representation of roughly 9% both in the city as well as the surrounding suburbs, which highlights a historically limited access to resources, capital, and opportunities for Black entrepreneurs [7]. The prevalence of established and well-connected firms in the construction sector creates a highly competitive environment that makes it challenging for new entrants, particularly minority-owned businesses, to secure contracts and establish strong footholds [8]. Furthermore, licensing and certification requirements—which are necessary to operate legally and secure projects—can be complex and costly, further increasing the barriers for entry [9], [10]. These cumulative factors contribute to the under-representation of Black businesses in the construction sector in Greater Philadelphia.

Similar to employment representation trends, White and Latino/Hispanic employers are significantly over-represented among construction employers. White employers are over-represented by roughly 10-13% in both the city and the suburban counties. Latino/Hispanic business owners, on the other hand, are still over-represented in Philadelphia but are under-represented by 3.5% in metropolitan area’s suburban counties. This under-representation could be the result of higher barriers to business formation in the suburban counties, like limited access to traditional and nontraditional funding sources or a lack of a robust minority business network and programming, when compared to the city [11].

Looking Forward

The Economy League’s upcoming PAGE Summit on August 9th, 2023, will aim to address these issues of representation and equity in the region’s construction landscape. As the event approaches, stay tuned for further research on the business opportunities and funding currently moving through the region’s construction ecosystem.

If you are interested in learning more about the PAGE Summit and how to partner with the Economy League as it works to increase diversity, equity, and inclusion across Greater Philadelphia’s workforce and businesses, please sign up to attend the event and learn more about how you can get involved.

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[2] “Black workers face gaps in representation, participation, and pay” http://ceros.mckinsey.com/bem2021-s1 (accessed Jun. 28, 2023).

[3] “Black workers are concentrated in lower-paying service industries.” http://ceros.mckinsey.com/button-groups-1-1-1 (accessed Jun. 28, 2023).

[4] “Immigrants in Construction: Rising Numbers, Falling Share | Eye On Housing.” https://eyeonhousing.org/2021/03/immigrants-in-construction-rising-numb… (accessed Jun. 28, 2023).

[5] “An analysis of financial institutions in Black-majority communities: Black borrowers and depositors face considerable challenges in accessing banking services,” Brookings. https://www.brookings.edu/articles/an-analysis-of-financial-institution… (accessed Jun. 28, 2023).

[6] https://www.latimes.com/staff/lee-romney, “Minority-Owned Firms Tend to Hire Within Own Ethnic Group,” Los Angeles Times, Sep. 18, 1999. https://www.latimes.com/archives/la-xpm-1999-sep-18-fi-11575-story.html (accessed Jun. 28, 2023).

[7] “Black-owned businesses face unequal path to recovery | McKinsey.” https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth… (accessed Jun. 28, 2023).

[8] “To expand the economy, invest in Black businesses,” Brookings. https://www.brookings.edu/articles/to-expand-the-economy-invest-in-blac… (accessed Jun. 28, 2023).

[9] “Becoming a CCM | Construction Management Association of America.” https://www.cmaanet.org/certification/certified-construction-manager/be… (accessed Jun. 28, 2023).

[10] T. Scalisi, “15 Construction Certifications to Advance Your Career at Any Stage,” Levelset, Nov. 23, 2021. https://www.levelset.com/blog/construction-certifications/ (accessed Jun. 28, 2023).

[11] “Hispanic business owners challenges in the U.S.” https://www.oneparkfinancial.com/blog/challenges-faced-by-latino-busine… (accessed Jun. 28, 2023).