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Table 22.—Publicly financed nonfarm family dwelling units under active management in Federal Public Housing Authority programs, by month, January 1946-February 1947

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Source: Federal Public Housing Authority, Statistics Division.

the defense amendment to the United States. Housing Act, units built by Defense Homes Corporation, and units in privately owned properties converted by HOLC (Home Conversion Program). The United States Housing Act program includes all housing developed by PWA directly or through loans to limited dividend corporations, and housing constructed under the United States Housing Act of 1937 and its defense housing amendment (Public Law 671). The Veterans' Reuse Program includes all projects both Federal and nonfederal, made available under title V of the Lanham Act. The Homes Conversion Program includes all structures leased by the Federal Government and converted into dwelling units by the HOLC. This program was transferred from the HOLC to the FPHA on

July 1, 1944. The DHC program includes all housing developed by that Corporation. The Subsistence Homestead and Greenbelt Towns Program includes the projects developed by the Resettlement Administration and its successor, the FSA, for nonfarm families of low or moderate income. Units sold to individuals and homestead associations on which FPHA holds the securities are still included in the total as an FPHA responsibility.

Note that this series includes stop-gap family accommodations in both the Public War Housing Program and the Veterans' Reuse Program. "Stop-gap" is a term commonly used to refer to trailers and portable-shelter units.

Data for periods prior to January 1946 are not included.

Chapter IV

Materials, Labor and Building Costs

The cost of the various items (materials, labor, land, utilities, and overhead) which go into the final cost of a dwelling, and the behavior of these costs in relation to the rise and fall of residential construction volume, have been a matter of concern to both industry and Government for many years. It is the interplay of these component costs that determines the final cost of the unit. Examination of these costs and their trends can be approached in several ways, and in fact must be so approached if the subject is to be properly understood.

It may be said at the outset that while several distinct bodies of data are available for such an examination, none of them is entirely adequate for the study of this complex subject. While important contributions have been and are being made by several agencies to the statistical literature on costs, none appears to have had the continuing resources needed to furnish data adequate in all respects.

Generally speaking, questions concerning the trend of building costs most commonly refer to the total cost of the dwelling unit. How much does it cost to build a particular kind of house, and how much does this vary from place to place? How does today's cost of a particular house in a particular place compare with the cost of a year, or 10 years ago?

Not infrequently however, the interest lies, not so much in the cost of a particular kind of house, as in the average amount being spent per unit. Is the average amount per unit higher than it was and if so, does this reflect a general rise in costs, a general rise in housing standards, or increasing builder attention to expensive units? Both points of view are reflected in the statistics covered below.

The reader should keep in mind the fact that cost data have been compiled by various agencies for different purposes and with differing degrees of interest in certain aspects of the problem. Be

Table 23.-Wholesale price indexes for specified building materials, by year, 1913–46

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cause of this, important differences will be found in the meaning of certain terms employed.

It is important, for example, to distinguish between "housing costs" and "construction costs." The term "housing costs," is often loosely used to refer to the cost of building. It is more properly applied however, to the composite costs of home ownership including initial building, land purchase, development costs, and all subsequent costs in the way of interest and insurance charges, taxes, expenses for maintenance and repair and allowance for depreciation. "Construction costs" or "building costs" include only the capital costs incurred in building the dwelling unit, such as costs for material, on-site labor, interest charges on money borrowed to finance operations during construction and other items of builders' overhead and profit. It is clear that subsequent operating charges for financing, taxes and upkeep would not be included in construction costs.1

The problem of terminology is also apparent in connection with the BLS data on the dollar volume of residential construction presented in chapter II. The "permit valuation series," the "total construction costs series" and the "value-put-in-place series" do not include the cost of land. These series include allowances for overhead costs and builders' profit.

Cost of Materials and Labor

Before taking up the statistical material bearing directly upon the measurement of building costs, it is helpful to look at the statistics relating to the cost of construction materials and labor, the two elements which comprise the bulk of building costs. No exhaustive treatment of the data can be made here; the items treated have been selected as useful background material which the reader can supplement, by inquiry at the sources indicated.

Data are presented on the trend of wholesale prices for specified building materials, and on the trend of earnings, hours of work and wage rates in the construction industry. It should be noted, of course, that while the items reported are all ingredients that go into the dwelling unit the individual price movements of which have an effect on building costs, they are of varying importance because of the wide variations in the amounts of each item that can be used to produce the dwelling unit. It should also be noted that wide local variations may occur in prices paid by building

A study entitled "Housing Costs" published by the National Housing Agency in 1944, brings out this distinction very clearly. Further reference to this study is made later in this chapter, but the reader is referred to it here as useful background material on the point discussed.

contractors for materials delivered at sites in an area served by a single wholesaler because of quantity purchase differentials, transportation costs and other factors. An index of wholesale prices is therefore of limited usefulness except as a general indicator. Similarly union wage rates may differ substantially from prevailing rates actually paid, and figures on hourly or weekly earnings may be distorted because of overtime or bonus payments. Also, the union wage may not have been the prevailing wage in home building, prior to 1941 particularly.

The Bureau of Labor Statistics indexes of primary market wholesale prices of building materials are presented, by years, from 1913 to date in table 23. Monthly data for 1945 and 1946 are presented in table 24.2 The index numbers are weighted and are based on average 1926 prices= 100.

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The following groups of materials are represented by subgroup indexes, which are combined to make the general average for all building materials: brick and tile, cement, lumber, paint and paint materials, plumbing and heating, structural steel, and other building materials, including roofing, glass, millwork, coarse aggregates, etc.

In making these indexes, price changes for the different materials are combined in accordance with the relative importance of the materials in the market. The weight factors which have been used since 1934 are based on average quantities marketed as indicated by the Census of Manufactures for 1929 and 1931 and other authoritative sources. Prior to 1934, changes were made in the weights as census data became available. The subgroup "plumbing and heating" was not computed separately prior to 1926. The lumber index was revised by the Bureau of Labor Statistics, beginning in January 1935, to include a larger sample of lumber prices. Also, an improved method of weighting was used. Price data for the enlarged sample were not available to compute revised indexes for the period prior to January 1935, but a continuous series was constructed by introducing the revised price series for January 1935 at the same level as the former series. This index includes most nonconstruction lumber and is not too sensitive to changes in consumption of lumber used in residential building.

Most of the price quotations are reported directly to BLS by producers and dealers in building materials of all kinds, on a voluntary and confidential basis. At the manufacturer and wholesale distributor level about 850 different quotations are assembled periodically. These represent the principal building materials in many markets throughout the country. A limited number of quotations are obtained from trade organizations and authoritative trade periodicals.

Wholesale price data, in the main, represent prices prevailing in the "first commercial transaction." They are prices quoted in primary markets at principal production centers or distribution points. The prices used in the calculations are for typical sales and are net prices (that is, list or selling prices after the deduction of regular trade and cash discounts). It should be noted that the index figure for the period of Government controls may be considerably understated. Black market prices, and increases resulting from the entrance of new distributing outlets would not be reflected in the data.

Average Hourly Earnings in the Construction Industry

Table 25 presents data on the hourly wages of both common and skilled labor in the construction industry. These data are compiled by the Engineering News-Record as of the first of each month on the basis of monthly reports received from correspondents in 20 cities. Both the skilled and common labor rates are dollar-and-cent wages actually paid in the 20 cities. Union wages actually paid are used, except where nonunion jobs predominate. In some instances where both union and nonunion rates exist, the rates have been averaged. The skilled rates represent the averages for workers in the three principal trades in heavy construction, i.e., carpenters, bricklayers, and structural-iron workers.

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Average Hourly and Average Weekly Earnings in Private Building Construction

The data in table 26 indicate the trend of average weekly and hourly earnings in private building construction.

These data are collected by BLS from selected contractors engaged in private building construction operations. The sample contains about 11,000 firms of different sizes engaged in various types of building trades. The computations of hours and earnings are from monthly returns which cover the pay period ending nearest the 15th of the month. Pay is for actual hours worked at the site. Skilled, semiskilled, and unskilled workers, as well as working foremen and gang bosses who work at the site erecting, altering, or repairing privately financed buildings (residential, commercial, industrial, etc.) are included. Excluded are (1) owner-builders, supervisors, executives, office employees, and all workers engaged in "shop"

work, quarrying, or cutting marble and stone, manufacturing, selling, or delivering building materials; (2) workers on Federal construction projects; (3) workers on construction projects other than buildings, such as highways, docks, subways, etc. The average weekly earnings include those of part-time as well as full-time workers. Gross wages earned by the workers are reported, and include over-time premiums. No deductions are made for employee contributions to social security benefits, group insurance, taxes, etc.

Monthly data on earnings, both for the private construction industry as a whole and for selected building trades, are available in the BLS Construction Bulletin, published monthly, in the monthly release, Hours and Earnings, and in the Monthly Labor Review.

4 Data are published on earnings in general building and in the various special building trades (plumbing and heating; painting and decorating; electrical; masonry; carpentry and wood floors; roofing and sheet metal; excavating; and all other types of special building trades).

Table 26.-Average hourly and average weekly earnings in private building construction, by year, 1934–46; by month, January 1940-December 1946

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