Leo Sveikauskas: Federal Economist Leads Design of a More Reliable Construction Productivity Measure
Leo Sveikauskas, research economist in the U.S. Bureau of Labor Statistics’ Division of Productivity Research and Program Development, had been thinking about issues in measuring construction productivity after a discussion with peers in that unit of BLS, part of the U.S. Labor Dept.
The PhD economist and 48-year BLS veteran says his fellow researchers “mentioned that they had many requests for measures of productivity growth in construction, and that this topic was an extremely high priority for them.” He adds that the revelation of extreme interest in such tools from his colleagues and from the public pushed him to spend the next three months “thinking only about this topic and considering, designing and evaluating alternative ways of preparing such measures.”
Following many years of reports detailing stagnant or declining construction productivity, BLS in early 2018 published “Measuring Productivity Growth in Construction,” an analysis that used Sveikauskas’ more reliable data and indicated that, in fact, productivity had risen in several areas. The study applies updated “output price deflators” across the industry to measure the change in what contractors charge for items, ranging from the number of bathrooms in single-family homes to the cost of maintenance and repairs for highways.
Using this method, Sveikauskas and other BLS researchers focused on single-family and multifamily building, industrial work and highway construction over a period of several years. Of the four sectors, three showed growth, with only the highway segment remaining stagnant. Sveikauskas says finding a proper deflator has been a problem for some time, noting that “it’s so difficult” to separate quality increases from price increases. Measures of total prices and output of construction historically have been not as reliable, he says, adding that the sectors used in this study have the industry’s most dependable deflators.
Department statistician Samuel Rowe, research assistant lead on the productivity study in his former role as a BLS economist, praises Sveikauskas’ leadership. “Working under Leo was one of the best experiences I had at BLS,” he says. “If it wasn’t for him, none of this would have gotten done.” Sveikauskas brought innovative ideas to measure and compare productivity growth within the construction industry and against other sectors, along with external instruments for assessing regulation in construction, Rowe says. “His vast research experience and knowledge is what really carried this project to fruition.”
After many years of bad construction productivity news, Sveikauskas’ analysis has created some industry optimism. “The meticulous work of Leo and his team at [BLS] disprove the prevailing belief that construction has had zero—or even negative—productivity gains,” says Ken Simonson, Associated General Contractors chief economist.