Free Falling: Productivity of U.S. Construction Industry Half of 1960s Level

While productivity improves in almost every sector of the U.S. economy, it's dropping quickly in the construction industry.

1 minute read

August 23, 2017, 9:00 AM PDT

By James Brasuell @CasualBrasuell


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Metropolitan Transportation Authority of the State of New York / Wikimedia Commons

"Superficially, the construction industry would seem healthy enough," according to an article in The Economist. "Yet more than 90% of the world’s infrastructure projects are either late or over-budget, says Bent Flyvbjerg of Saïd Business School at Oxford University."

"Construction holds the dubious honour of having the lowest productivity gains of any industry," adds the article, citing data from McKinsey. The United States provides a particularly bad example of the problem. Here, productivity "has plunged by half since the late 1960s."

The article digs into the list of potential causes for the woes of the industry, discarding one of the usual suspects as the culprit (i.e., "Prices for building materials are not to blame). Instead, the article suggests two structural trends are to blame: the work is less capital intensive and the industry has yet to consolidate.

Thursday, August 17, 2017 in The Economist

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