The strange and awful path of productivity in the US construction sector

If, all along, you could have rented it out for more money ... why were you planning to rent it out for less money? I get that you wouldn't have to, but it appears that the "market rate rent" was higher than you initially anticipated.

As a corollary, assuming that you had initially planned on the highest rent that the market would bear...it seems that after a year of unexpected delays you'd most likely still choose to finish the project even at a loss. This is because all the loss would have already been sunk cost that you can't change anymore, and at the "original maximum rent the market would bear" you'd still make your IRR/ROI on the marginal future investment of finishing the construction.

So, assuming you couldn't raise the rent, you'd lose money either way, but you'd lose less money by finishing the construction vs. losing more money by abandoning the project entirely.

Of course the pay's shit, you're subject to all kinds of quality-of-work-life destroying whims of politicians at the top, the bureaucracy is as abusive and ineffective as stereotypes about bureaucracies would lead one to expect, and if you have an effective union shielding you from some of that, about half the politicians are constantly trying to weaken or eliminate that, plus trying to mess with your pension which is practically the only attractive thing about those jobs... so, no fucking wonder, really. Recent wage inflation has made all this stuff worse by making unresponsive government pay scales far less attractive than market-driven wages elsewhere, so systems and offices that were teetering before are now falling over.

I couldn't believe this is true, so I actually read the article. Turns out, it's not true. It's multiple orders of magnitude off.

There were 15 inspectors for the city (not county) of LA when this article was written:

"In order to be up to code, each of the 20,974 elevators in the city of Los Angeles needs to be checked once a year.

But there are only 15 inspectors to do it."

Roughly half of the elevators were past due, which means they were inspecting 10k+ elevators per year just in the city of LA, let alone the entire state.

The two are interrelated. There'd be a lot less opportunity for error if building codes were cut in half. For example where I live there is a fair bit oil heating & therefore underground oil tanks. Building code requires that upon switching to something else, like natural gas, the submitted plans must include information about the planned removal or decommissioning of the tank.

This wasn't always a requirement, but now that it is that means someone has to check the plans to make sure that requirement is met. So, bureaucracy and building codes go hand in hand.

Of course in the case of residential oil tanks remaining in the ground, or not being properly decommissioned, there it can cause a variety of problems. Water contamination for example, a major concern for abandoned tanks in any area where residential well water is common. (and for other reasons)

I'm not arguing that bureaucracy as it exists is at all a model of efficiency, but you can't examine or solve that problem without understanding how we got there.

I could see any of these as being a way to describe a deal that “loses money.”

That said, the products being used have improved a lot. Things like PEX tubing for plumbing (instead of copper) and glue on walls for showers (over doing tile work), make some aspects go a lot faster.

Edit: Oh, I forgot to mention vinyl plank flooring... omg, so easy and the results look and function great.

New constructions (for cold zone), need to be air tight and that certainly comes at a cost in time as it is work to apply all the layers, run the conduits and whatnot.

For example, cars today are orders of magnitude more complicated than 50 years ago, but due to more efficient manufacturing technology, the auto industry has far higher productivity per employee than it did 50 years ago.

Yeah pretty much this I suspect. The paper doesn't propose that more regulations and complex code is why it's harder to build things today. And that's not a bad thing - code is a great thing since it sets a standard.

Houses from 100 years ago, a carpenter could just make game time decisions regarding things that are highly scrutinized today like staircase run/rise, doorway height, etc. If you gut an old house it's amazing how simple they are.

The old saying "they don't build them like they used to" applies here. We don't because we can't and when they did they overbuilt them because they were simple and it wasn't documented what the build had to be.

[1] https://fee.org/articles/new-homes-today-have-twice-the-squa...

What do you mean by this?

A great example being fire walls and mandatory self-latching doors between garages and living spaces - definitely a logical thing (cars and their gas are flammable, so let's isolate them from the house).

When you look at the data [0], garage fires are 2% of residential fires because cars don't really catch on fire in garages (fires happen in garages, but usually because of intentionally set fires getting out of control)

So now, in the midst of a housing affordability crisis (or a the end of a great run for real estate, depending on your outlook), we have construction workers using special fire-resistant drywall (that must be cut specially and cannot have holes in it), placing solid steel doors, and generally spending a lot of hours and materials building spaces that people don't even live in, when really, adding smoke detectors in garages solves the problem.

[0] https://www.usfa.fema.gov/downloads/pdf/statistics/v14i12.pd...

*George, instead of just putting up this wall, can you have a ticket and close it for every board you put up?*

This is inarguable. The aftermath of the major earthquakes of the past have had an very noticeable effect on building safety and the effect on damage done has been measurable. I can't imagine there aren't similar trends in other places for their own local natural disasters.

Sure, and entirely misses any difference in quality certification of the widget. However, the point that you are fewer widgets per hour still stands. It is a starting point for further questions. For example, Do you really need all that paperwork for the widgets?

In this case the analysis was conducted on housing square footage built and we are building less per hour. If we accept that we can ask further questions.

I don't see the point you're making. Houses are twice as big, so they require twice the amount of finishing work. If productivity was growing or staying the same, you shouldn't get less productivity as a result of that.

https://research.stlouisfed.org/publications/economic-synops...

Such knowledge can also be transmitted from one subculture to another, with varying degrees of success. In order to bring in new people, one must either bring in a few beginners into a majority competent population, or have one subculture highly motivated to absorb and replicate the success of another.

This is well covered in Migrations And Cultures: A World View by Thomas Sowell.

Over time, these folks become skilled, and generally end up running crews. It's very commonplace to find the more experience undocumented workers being the ones running small subcontract crews under the table with day labor, because they speak fluent Spanish.

I hope you understand, because of the implications.

I am confused by this assertion. If they are undocumented, wouldn't they be excluded in the stats? And if they aren't included in the stats, shouldn't we expect an artificial increase in worker productivity? If there is a 4:1 undocumented to documented ratio, then that 1 documented person will get "credit" for the work of 5 people! Even if 4 of those people are relatively unskilled, that's still a big boost.

My initial thought about this is that productivity declines because workers wait around a lot, and they wait around because of ballooning administrative overhead. This would also be consistent with what we know about state of the medical industry and academia during the same time period.

or, as usually happens, being "documented" have become more and more difficult, so the number of undocumented workers has gone up as a consequence.

also, immigrants are replacing those workers who are not willing to do the job most of the time.

it's not unusual everywhere you go in the west to witness that a large portion of construction workers are immigrants.

Here in Italy it's mostly people from Romania, North Africa and other eastern European Countries.

Virtually no Italian wants to be a mason anymore.

They rather prefer to work for app-based tech companies (Glovo and such).

And don't underestimate bureaucracy.

Most likely explanation is just that we have been burdened with infinite amount regulatory busy work.

> There are several plausible channels for labor measurement difficulties in construction, including a higher than average frequency of employees working irregular hours, contractor labor that may be misclassified by survey respondents, and, especially in more recent decades, labor supplied by undocumented workers.

It then goes on to talk about that in more detail, but I won't copy that in because every time I do, someone goes on with "but what about X?" where X is also in the very next paragraph.

Nothing wrong with coming up with the hypothesis, honestly. But the extraordinary number of responses to your comment that speculate on something that one can immediately find are just so typical of HN comments.

I sometimes see that in software engineering where some engineer will tell me about some library we're using that we have access to source code for: "yeah, I looked at the docs and it's not clear if it does A or B". But...the source code is right there. Why not just use that? At least then if the library is doing it wrong you'll know for sure.

You can see this literally everywhere. Unless you are going to pay 200K+ you will have difficulties hiring reasonably intelligent, motivated, conscientious workers.

The "mistake" in the linked article is assuming all construction work is equal and unchanging over those decades where CLEARLY there have been infinite real estate fads over the decades. There's just no way replacing countertops with granite can generate as much financial productivity as sewer work, and the fraction of the market spend on low-profit countertops is vastly higher now.

> By the late 1960s, most new homes had central air conditioning

So the addition of central HVAC likely isn't a big factor, because most new homes in the US already had it 50 years ago.

That also makes me think that SWE should either break all those red tapes or put up their own. Nowadays they are simply being milked by everyone else who is behind a red tape or a stamp or a certification or something similar.

Having separately elected house, senate, and president is a primary source of gridlock. Each body can reject a legislative change, while none can effectively create change. The only way laws can be passed in this system is under a very rare set of conditions. When those conditions are present (government shutdown imminent, filibuster eliminated, plurality requirements reduced) you see large omnibus bills pushed through as fast as possible, without time to adequately vet the details.

From an engineering perspective, this would be like pushing a few massive commits every few years rather than making regular bug fixes as needed. As such, our laws are buggy and unmaintained. Unfortunately, this leads many to believe that regulations generally are ineffective rather than the poor implementations of such being ineffective.

Poorly written legislation puts more pressure on the judicial system to litigate between the lines. This is an externality that is extremely expensive for every individual and company to have to deal with.

I advocate for a more parliamentary style system where politicians continued careers are based on their effectiveness and continued approval rather than fixed terms. There are plenty of ways to ensure proper checks and balances without stopping government dead in it's tracks.

1. https://en.wikipedia.org/wiki/The_Mom_%26_Pop_Store#:~:text=...

Add to that home building is very boom/bust. The county I live in currently has 1900 homes in progress. A year from now if the market goes down that number could be 100. Trying to scale things that have regulated and licensed inspections is massively difficult. And the answer is not let the builder do whatever because whatever almost always equals screwing the buyer.

See also "Chinese ghost towns": https://en.wikipedia.org/wiki/Under-occupied_developments_in...

For example, it's easy to sit in an air-conditioned office and say "thou shalt not overload the trucks" but when you actually drag your ass to somewhere you can observe the conditions in which the per-load work is being done it becomes clear that much analysis must be done to figure out if more trucks at 80k is in fact safer than fewer trucks at 120k.