The EleBlog Report #5 — 9/30/2006 By Joe Salimando

SPECIAL EDITION: Data On Electrical Contractors

First, there are four main sources of information on electrical contractors in the United States:

1. God. Having sent us Benjamin Franklin, Nicola Tesla, and so many others, one assumes he (or she?) is fond of electricity and electrical contractors. On the other hand, he’s not telling us what he knows about the year-to-year change in the electrical construction business. It’s a shame; this is our best shot at accuracy!
2. Private data. When I served as publisher of Electrical Contractor, I looked into Dun & Bradstreet numbers. I looked into the lists assembled our of local phone books by various vendors. I wasn’t happy with what I found. This stuff was marginally useful for purposes of boosting the magazine’s circulation; it was NOT of use in doing statistical reports & analyses.
3. Electrical Contractor magazine itself is a useful data resource. In 1990, I took over a publication committed to research and developing data on the market; my predecessor as Publisher, Larry Osius, educated me on what and why and who and how. I left in 1998. My successor in that job, John McKenzie, died. The guy who has it now, John Maisel, has maintained, extended, and built on the magazine’s tradition of developing market information. E.C. has a lot more info than it shares online; it doles out that data to friends, including NECA (which owns the magazine) and various suppliers to contractors that advertise in the magazine’s pages.
   
   Note: As of this writing, E.C. hasn’t yet posted a PDF of its 2006 Electrical Contractor Profile report. Download the 2004 report’s 10-page PDF by clicking here. A version of the 2006 Profile report, without the tables — just the text narrative — is in HTML here.
    
   
4. There are various sources in the labor relations arena that develop market data. NECA’s Labor Relations department and the IBEW, for example, have sets of assumptions about the number of construction electricians in the U.S., how much work they do, and what the IBEW-NECA market share might be. There are even more data along these lines developed by something called the Construction Labor Research Council. I’m sorry to say that none of this is public.
5. The United States government does not copyright its info; at least, not the numbers and information about the construction industry! That’s from where all of the data in this special report come.

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   How Many Electricians?

   Every two years, the Bureau of Labor Statistics projects total employment 10 years into the future for every significant occupation in the U.S. They did it again in 2006, providing data on actual 2004 employment and their best guess on where things would be in 2014.

   Let’s take this step by step. Here’s the first table I harvested from the BLS pool of employment projection data: The Electricians occupation. Call it Table One.

   Industry	2004 employment		Projected 2014 employment		Change, 2004-2014
   	Number	Percent distribution	Number	Percent distribution	Number	Percent
   Total employment, all workers	656,227	100.00	733,697	100.00	77,470	11.8

   Now, what ARE these numbers — 656,227 and 733,697? They are the total number of professional electricians of ANY sort in the U.S. — working for anyone, electrical contractor or your local DOT — or the Procter & Gamble plant in the next county.

   What is that 77,470 number? That’s merely the INCREASE in the number of positions in the 10-year period. Embedded here is the assumption that some percentage of the 656,227 of 2004 won’t be doing electrical work in 2014 — some will retire; some may die; others will leave the field. So the country probably needs to produce a lot more than 77,470 electricians between 2004 and 2014 (if the BLS projections are correct) to stay with needs and requirements.

   
   To answer that next question, there’s this next table (same BLS source) — I’ve highlighted (red-on-white) the GROWTH/REPLACEMENT projections. This is Table Two.

   Occupation	Total employment (000’s)		2004-2014 change in total employment		2004 self- employed Percent	2004-2014 average annual job openings (000’s)
   	2004	2014	Number (000’s)	Percent		Due to growth and total replacement needs	Due to growth and net replacement needs
   Electricians	656	734	77	11.8	9.5	68	21

   The most important number on this table is at the far right, the 21,000/year. If the BLS is right, there will be 21,000 average job openings per year for professional electricians between 2004 and 2014 for (a) growth (to fill those 77,470 positions that will be created over the decade); and (b) for "net replacement needs."

   Just to the left of that number, there is "total replacement needs" — which is a much higher annual figure, 68,000. What’s the diff between "net" and "total" replacement needs?

   Total = all replacement needs. That includes electricians who have retired, died, left the field, or merely changed jobs (moved from ABC Electric to XYZ Electric).

   Net = the replacement needs limited only to those who have retired, died, and left the field. This eliminates the job changers.

   What does this tell us? Several interesting things, actually:

   1 — There will be, on average, 47,000 professional electricians changing jobs in each of the next 10 years.

   2 — The electrical industry (including ALL those who employ electricians — contractors AND others) — will need to create 210,000 new professional electricians (via education and training) in the years 2004-2014.

   3 — In 2014, when there are 733,697 professional electricians working in the U.S., roughly 210,000 of them (or more than 28%) will be "newly minted" -- turned out as journeymen, or the equivalent, in the 2004-2014 period.

   Find the Bureau of Labor Statistics employment projection home page here.

If you’ve read the section above carefully, you know the numbers on the first two tables apply to ALL electricians. What about those working for electrical contractors? Those figures are on the BLS Web site as well.

Table 3. Here are the figures for all electricians (same as those in Tables 1 + 2) — with the number working for Electrical Contractors as well, on the bottom line.

1. Industry	2004 employment		Projected 2014 employment		Change, 2004-2014
   	Number	Percent distribution	Number	Percent distribution	Number	Percent
   Total employment, all workers	656,227	100.00	733,697	100.00	77,470	11.8
   Electrical contractors	398,914	60.78	455,181	62.03	56,267	14.1

   Find the BLS employment projection "occupation" data access page here — and the industry search access page here.

   What does the table above, #3, tell us? Too much, really, so let’s go one step at a time.

   A. The % of electricians employed by electrical contractors will increase in the 10-year period to 2014 — from 60.78% in 2004 to 62.03% in 2014 — the BLS projects.

   B. As a result, the number of new jobs for professional electricians will increase by 14.1% in electrical contracting, while it jumps by only 11.8% in the overall economy.

   C. If you do a little subtracting, you get this:

   • Electrician jobs outside of electrical contracting in 2004: 257,313

   • Electrician jobs outside of electrical contracting in 2014: 278,516

   • Increase in electrician jobs outside of electrical contracting, 2004-2014: + 8.24%

   D. In looking at item C directly above, keep in mind the these figures DO NOT include replacement needs for those leaving the field, retiring, and dying.

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Other Employees of Electrical Contractors

Electrical contractors employ a lot of other people besides electricians, of course.  Table 4, below, provides total employment for electrical contracting as an industry — in 2004 and the projection for 2014 from the BLS:

Info of use here:

a. In 2004, there were 456,386 non-electrician employees of contractors.

b. In 2014, if BLS is right, there will be 499,930 such employees.

c. The growth rate, 2004-14, for these "overhead" or "other" employees is 9.54% over the 10-year period.

d. The 99,811 jobs to be added by 2014 include 56,267 electricians and 43,544 "other" folks.

e. Table 4’s numbers do not include replacements for executives, estimators, project managers, purchasing agents, material handlers, and others due to retirement, those leaving the field (voluntarily or due to termination), and death.

How Many Electrical Contracting Establishments?

The U.S. Census Bureau conducts a twice-a-decade "economic census" in years ending with 2 and 7. Therefore, the most recent data — I thought — were for 2002. However, I discovered a place on where the Bureau provided estimates for NAICS 23821 — electrical contractors. Here is that page, reproduced (call it Table 5). Note that these data are for electrical contracting companies in 2003 that had employees (more about this in a minute).

Here’s a link to the page.

Note that 64.1% of the employees worked at the 10.7% of the firms that had 20+ employees. On the high end, 12.9% of the employees worked at the 0.2% of the companies with 500 employees or more.

What’s the difference between a Firm and an Establishment? A firm that has 10 branches will, in theory, be counted as "one" in the Firm column and "10" in the Establishments column.

EC Establishments—Change From 2002

I’m not sure the numbers are comparable — due to differences in methodology — but here are the data from 2002:

    # of Electrical contracting establishments: 62,862.

    Paid employees: 763,949

    Value of business done: $82,662,284,000.

If all of the data ARE comparable, the number of establishments went UP and the number of employees DOWN between 2002 and 2003. That’s not impossible, but it is hard to believe.

Separately, the Census Bureau compiled a limited amount of data on the # of electrical contractors in its County Business Patterns for 2004. These are:

    # of Electrical contracting establishments: 72,817

    Employees: 744,050

    Estimated annual payroll: $30,916,533,000 (compare with the total above in Table 5).

NonEmployer Electrical Contractors

Years ago, a marketing guy working for Square D (he worked for an agency) asked me to get him a number of all of the "little guys" -- the "mom-and-pop" companies that bought electrical stuff. Unfortunately, this was before the advent of the Internet. I didn’t know where to find the information.

Now, I do. The Census Bureau tallies "NonEmployer" firms — companies that are: (a) subject to federal income tax, and (b) have no employees. Here are the number of electrical contracting firms in this category, and their sales, for the three years 2002-04. NOTE: If the Census people have been consistent in their methodology, there is NO overlap between the data above for contracting establishments/firms and these entities:

Overall Picture — 2002, 2003 & 2004

Above, we’ve got variant snapshots of the electrical contracting industry in 2002, 2003, and 2004 — using government data. I’ve put this into paragraph form (not a table) because the data don’t really “fit” into a table. Despite that, there’s a story here.

2002: 62,862 electrical contracting establishments with employees; 102,219 establishments without employees. The 62K contractors with employees had $82.66 billion in sales in ’02; the 102K mom-and-pops had $3.83 billion in sales. Together, that equals more than $86 billion in sales in 2002.

2003: 68,211 EC establishments with employees, 106,802 establishments without employees. The # of establishment increased 8.5% for the contracting companies with employees, 4.5% for those without employees.

2004: The government says there were 72,817 EC establishments in 2004, up 6.75% in one year. There were 113,161  establishments with zero employees in ’04, up 5.95% over 2003. The number of employees in 2004, 744,050, was up 2.6% from 2002. The annual pay for those employees, almost $31 billion in 2004, was up almost 3.3%.

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Electrical Contractors — Ratios With Overall Construction & More

Other than the data contained in the table, there’s more here to think about:

1. In 2001, employees of electrical contractors accounted for 14.09% of all employees in construction (this includes all employees, not just electricians). In 2004, that figure had declined to 12.22%. The reason: What immediately comes to mind — to explain that figure, and the decline in EC employees contrasted with the increase in total construction employees from '01 to '04 — is the higher share of residential in the overall construction mix.
2. “Production workers” is the Bureau of Labor Statistics way of identifying people working in positions to produce something. In the construction industry, I assume (perhaps correctly, who knows?) that it refers to Job Site Employees. Note that the decline in EC production workers in '01 to '04 is bigger (percentage-wise) than the total for all employees.
3. For overhead workers — arrived at by subtracting Production Workers (column 4) from All EC Workers (column 3) — the decline from ’01 to ’04 was from 202,300 to 196,600. That’s a dip of only 2.82%, compared to 13.63% for the folks on the job site.
4. For 2004, we have the BLS estimate of the number of professional electricians working for electrical contractors for the year — 398,914. That leaves the “Production Worker” job functions of 256,986 people unexplained. My assumption is that these people are helpers, apprentices, spear-carriers, and others on the job site. Another assumption, for what it’s worth, is that most of those 256,986 people are non-union.
5. Take the 2004 data, and you arrive at the fact that 46.8% of the employees of electrical contracting firms, on average, were professional electricians. I don’t think I ever “knew” that before!
6. The final two rows across (called out with white backgrounds) compared employment from July 2001 to July 2006 demonstrate that the advantage other trades showed over electrical construction in the changes from the 2001 peak. From July 2001 to July 2006, construction employment was up 9%, EC employment down 8.4%. That’s a sharp contrast.