AI’s Role in Reshaping Employment: From Theory to Home Building Sector Impacts

2025-06-09T10:19:33-05:00

The rapid rise of artificial intelligence (AI), particularly machine learning and generative AI (GenAI), is reshaping industries, creating new economic opportunities, and raising critical questions about its long-term impact on jobs and economic growth.  A recent study by Ping Wang and Tsz-Nga Wong, titled “Artificial Intelligence and Technological Unemployment” (NBER Working Paper No. 33867, May 2025), provides valuable insights into how AI is reshaping labor markets. Their research highlights both the opportunities and challenges AI adoption brings to the workforce as it becomes increasingly integrated into the economy. The paper conceptualizes AI as a “learning-by-using” technology, meaning that AI improves its capabilities by learning from the very workers it may eventually replace. In the short term, this dynamic can significantly boost labor productivity. However, over time, if wages and job roles are not adjusted to reflect the growing capabilities of AI, the technology may transition from a supportive tool to a direct substitute for human labor. The paper outlines three possible long-term scenarios: Some-AI Steady State: AI improves productivity threefold but cuts nearly a quarter of jobs. Half of the job losses occur within the first five years, driven by the rapid replacement of workers by an AI system. Unbounded-AI Equilibrium: AI adoption unfolds smoothly, enhancing productivity without displacing workers. Employment rises modestly as AI becomes a complement to human labor rather than a substitute. No AI Equilibrium: AI fails to take off, and the labor market remains largely unchanged from its traditional form. AI presents a dual-edged sword. While it holds the potential to drive sustained growth and create new kinds of work, it also poses significant risks of job displacement. Early stages of AI adoption see the most significant job losses, while those who keep their jobs often see wage increases due to higher productivity. The authors emphasize that the long-term impact of AI remains uncertain. Outcomes will depend on several variables, including AI’s learning speed, error rates, and the relative cost of replacing workers with machines. This unpredictability makes it difficult to forecast whether AI will be a net job creator or destroyer over time. Additionally, the study points out that traditional labor market policies are insufficient to address the complex challenges posed by AI. Instead, smart, targeted policies are needed, like balancing the bargaining power between workers and firms, and offering subsidies to jobs at risk of AI disruption. These steps could mitigate negative outcomes and improve overall welfare significantly over the next 20 years, and help make AI a powerful ally in our work rather than a threat. The Impact of AI on the Home Building Industry: Opportunities and Challenges In the home building industry, on the supply side, AI is beginning to make its mark with both significant opportunities and complex challenges. From automating repetitive tasks to enhancing project efficiency, AI is transforming how homes are designed and built. Technologies, such as AI-powered design tools, robotic bricklayers, and automated construction equipment, are streamlining construction processes. These innovations reduce the need for manual labor in certain areas, leading to lower costs and shorter project timelines and helping address ongoing labor shortages. Moreover, AI is creating new opportunities within the home building sector. Demand is rising for workers skilled in AI system management, data analysis, and digital design, signaling a shift toward more technologically integrated and highly skilled roles. However, the adoption of AI comes with disruption. Without opportunities for reskilling, many workers whose roles may become automated may face displacement. The shortage of highly skilled workers could drive up labor costs and lead to project delays, putting pressure on housing affordability. To ensure a smooth transformation, targeted policy support is essential. Public and private investment in workforce retraining and upskilling programs will be key to helping displaced workers adapt to new roles, like ones that involve supervising AI systems or solving complex problems machines can’t yet handle. On the demand side of the housing market, the impact of AI could potentially be farther-reaching. AI will bring short-term disruption to labor markets, eliminating office jobs in metro areas. Such transitions in labor markets will alter housing demand, until the economy produces new jobs in an AI-adopting economy. And in theory, by making workers more productive, AI will raise long-term wage growth. These income gains will be a positive outcome for remodeling, housing demand, and vacation home demand in long run. For the time being, these impacts are speculative. Over time, they will be worth watching on both the supply and demand sides of the housing market. Note: Schmelzer, Ron. “Building The Future: How AI Is Revolutionizing Construction.” https://www.forbes.com/sites/ronschmelzer/2024/10/18/building-the-future-how-ai-is-revolutionizing-construction/ “The Rise of Artificial Intelligence in Construction.” Construction Today, September 2024. Demirci, Ozge, Jonas Hannane, and Xinrong Zhu. “Research: How Gen AI Is Already Impacting the Labor Market.” Harvard Business Review, November 11, 2024. “Artificial Intelligence Impact on Labor Markets.” International Economic Development Council (IEDC) and Economic Development Research Partners (EDRP), Literature Review. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

AI’s Role in Reshaping Employment: From Theory to Home Building Sector Impacts2025-06-09T10:19:33-05:00

HBGI Q1 2025: Multifamily Growth in Smaller Markets

2025-06-03T14:20:31-05:00

Single-family construction growth slowed substantially across all markets in the first quarter of 2025, according to the Home Building Geography Index (HBGI).  Multifamily construction growth remained negative in the largest markets but reported significant expansion in lower population density areas. The HBGI tracks single-family and multifamily permits across seven population density delineated geographies in the United States.   Single-Family Among the HBGI geographies, the highest growth in the first quarter of 2025 was registered in small metro core counties, which increased 3.2% year-over-year on a four-quarter moving average basis (4QMA). The market with the largest decline in growth between the fourth quarter and first quarter was large metro core counties, which saw its four-quarter moving average growth rate fall from 9.4% to 1.3% (-8.1 pp). Two geographies, large metro outlying areas and non metro/micro counties, reported declines in the first quarter, down 0.2% and 0.4% respectively. In terms of market share, single-family construction took place primarily in small metro core county areas, representing 29.2% of single-family construction. The smallest single-family construction market remained non metro/micro county areas, with a 4.2% market share. Single-family construction market share have been stable since the first quarter of 2024, with the largest gain being 0.4 percentage points in small metro core counties over the year.   Multifamily Multifamily construction expanded 33.2% in large metro outlying areas in the first quarter, the highest growth (4QMA) since the second quarter of 2022 when this geography grew 71.8%. Growth was present in three other geographies, with micro counties up 29.3%, small metro outlying counties up 18.5%, and non metro/micro counties up 3.7%. Because of the notable increase in multifamily construction occurring in smaller markets, market shares have shifted over the past two years. Large metro core counties, where a plurality of construction takes place, saw a 4.8 percentage point drop in market share between Q1 of 2024 and 2025. The largest construction gains have been in low population density areas, with the combined market share for small metro outlying counites, micro counties and non metro/micro counties growing 2.2 percentage points from 7.8% to 10.0% between Q1 2024 and 2025. The first quarter of 2025 HBGI data along with an interactive HBGI map can be found at http://nahb.org/hbgi. Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

HBGI Q1 2025: Multifamily Growth in Smaller Markets2025-06-03T14:20:31-05:00

Home Building Employment across States and Congressional Districts in 2023

2025-03-18T08:15:59-05:00

As the number of housing units under construction peaked in 2023, the industry set another record employing close to 11.4 million people, including self-employed workers. NAHB estimates that out of this total, 4.7 million people worked in residential construction, accounting for 2.9% of the U.S. employed civilian labor force. Home building in the Mountain Division, as well as in Vermont and Florida, stand out as generating a significantly higher share of local jobs, with residential construction generating more than 5% of all jobs in Idaho and Montana. NAHB’s analysis also identifies congressional districts where home building accounts for particularly high employment levels and share of local jobs. Not surprisingly, the most populous state—California—also has the most residential construction workers. Over 640,000 California residents worked in home building in 2023, accounting for 3.4% of the state employed labor force. Fast-growing Florida comes in second with 468,000 residential construction workers. The state stands out for registering one of the fastest growing populations since the start of the pandemic, which undoubtedly boosted housing and construction workforce demand. Florida’s large stock of vacation and seasonal housing further boosts demand for residential construction workers. As a result, in Florida, residential construction workers account for a relatively high 4.4% of the employed labor. Even though this share is well above the national average (2.9%), it is significantly lower than in 2006, when Florida registered the highest share among all 50 states and the District of Columbia, at 6.5%. Similar to Florida, fast-growing states with a high prevalence of seasonal, vacation homes top the list of states with the highest share of residential construction workers in 2023. Three states in the Mountain Division - Idaho, Montana, and Utah - take the top spots on the list with 5.5%, 5.1% and 4.9% of the employed labor force working in home building. Vermont is next on the list with a share of 4.6%.   As of 2023, the average congressional district has about 10,800 residents working in residential construction, but that number is often significantly higher. In Idaho’s 1st Congressional District, over 30,000 residents are in home building and Utah’s 2nd Congressional District has over 25,000 residents working in home building.  Eight other congressional districts have over 20,000 residents working in residential construction – Florida’s 26th, Utah’s 4th, Idaho’s 2nd, Florida’s 17th, Arizona’s 3rd, Utah’s 1st, Florida’s 28th, and California’s 29th.  By design, Congressional districts are drawn to represent roughly the same number of people. So generally, large numbers of residential construction (RC) workers translate into high shares of RC workers in their district employed labor forces.  Idaho’s 1st tops this list as well, registering the highest share of residential construction workers in the employed labor force, 6.4%. Florida’s 17th is a close second with 6.3% of the district labor force employed in home building. Next on the list are two Mountain division districts – Montana’s 1st and Utah’s 2nd – with shares of 5.8%, followed by two Florida’s districts – 19th (5.7%) and 26th (5.6%). California’s 29th (5.4%) and 39th (5.3%) also register shares far exceeding the national average of 2.9%.    At the other end of the spectrum there are several districts that contain parts of large urban areas: the District of Columbia, the 12th of New York, located in New York City, Pennsylvania’s 3rd that includes areas of the city of Philadelphia, Georgia’s 5th that includes most of Atlanta, and among others, Illinois’s 7th and 9th, covering parts of Chicago. Most residents in these urban districts tend to work in professional, scientific, and technical services. The District of Columbia stands out for having the lowest number of RC workers, with just 1,400 residing in the district. At the same time, it has a disproportionally large share of public administration workers. The 12th District of New York and the 7th District of Illinois are home to a very large group of finance and insurance workers. Meanwhile, in Pennsylvania’s 2nd, more than a third of residents work in health care and educational services.  The NAHB residential construction employment estimates include self-employed workers. Counting self-employed is particularly important in the home building industry since they traditionally make up a larger share of the labor force than in the U.S. total workforce.   The new NAHB home building employment estimates only include workers directly employed by the industry and do not count jobs created in related industries– such as design and architecture, furniture making, building materials, landscaping, etc.  As a result, the estimates underestimate the overall impact of home building on local employment.  Discover more from Eye On Housing Subscribe to get the latest posts sent to your email.

Home Building Employment across States and Congressional Districts in 20232025-03-18T08:15:59-05:00

About My Work

Phasellus non ante ac dui sagittis volutpat. Curabitur a quam nisl. Nam est elit, congue et quam id, laoreet consequat erat. Aenean porta placerat efficitur. Vestibulum et dictum massa, ac finibus turpis.

Recent Works

Recent Posts