Steven Smith tells the story of living in a walk-up building in New York City. That is, a building without an elevator seemed like a good idea until he developed health problems that made it difficult for him to climb stairs. For a while, he considered it one of the inevitable problems. But he visited relatives in Romania, talked to friends in Rome, and learned that small apartment buildings in other countries, poorer than the United States, often had more than one elevator. What happened? Smith started the North American Building Center, and what did the report say? “elevator” (Building Center of North America, May 2024). I learned about the report through a short overview essay he wrote. The New York Times (“US Elevators Explain Why Home Prices Are Soaring.” July 8, 2024).
If you don’t want to read a 100+ page international comparison of elevators, here are some key takeaways. Consider the number of elevators per capita, as shown by the bars in this figure (the narrow line represents the total number of elevators in each country):
One might assume that the reason there are fewer elevators in the U.S. is because there are more single-family homes, but that alone doesn’t explain the size of the difference. Smith writes:
Excluding single-family homes, the U.S. has over 32 million apartments, while Spain has less than 13 million, but they have about the same number of elevators. The U.S. has 40 percent fewer elevators per capita than the Netherlands. Thirty percent of the U.S. housing stock is multifamily (19 percent of buildings with 10 or more units), while the Netherlands has only 21 percent of the total multifamily housing stock. New York City has about the same population as Switzerland, and more New Yorkers live in apartment buildings than Swiss residents, but New York has only half as many passenger elevators. No matter how you slice the numbers, the U.S. is behind when it comes to elevators.
Why is that? Well, at the most basic level, elevators are much more expensive in the United States. By Smith’s estimate, it costs about “three times” as much to install an elevator than it does to developers in high-income countries in Europe and Asia. This difference can be broken down into the amount of labor required and the cost of components.
Labor is the main cost of elevator installation and maintenance, and as a basic rule of thumb, it takes about twice as long to install an elevator in a new building in the United States as it does in Europe. The variable length portion of the installation in the United States requires about one week of labor per floor for a full-time two-person crew, with additional time for fixed components that do not vary with height. In Western Europe, elevators are typically installed by the same crew at a rate of at least two stops per week.
Conversely, higher labor costs are determined by other factors. Elevators in small and medium-sized buildings in other high-income countries typically have smaller cabins that can accommodate wheelchair users and others pushing them, but are not large enough to accommodate hospital stretchers.
Smith also emphasizes that it is difficult to develop economies of scale in production because building codes governing elevators vary from state to state and from city to city within a state. In addition, competition among companies in the elevator industry is more difficult because the company best suited to handle a special elevator installed early is the one that originally installed it, and switching to another competitor is expensive.
Also: “The International Elevator Builders Association is one of the strongest construction unions in North America and has resisted trends such as prefabrication and pre-fabrication, which create more jobs and further tighten the labor market.” In contrast, many high-income countries across Europe have government-funded technical training schools that provide a steady supply of elevator construction workers. Smith writes:
Contrary to the stereotypes of organized labor in the United States and Europe, the American elevator sector is heavily unionized, and organized labor exerts far more power over the elevator installation and maintenance process. The International Union of Elevator Builders (IUEC) represents most workers in the sector in the United States and Canada. The union handles recruitment into the industry, has made strong and successful efforts to limit entry into the sector, and has limited the ability of companies to use new technologies and factory production to streamline elevator installation and maintenance in North America. The result is higher compensation, more work for citizens, fewer opportunities for immigrants, and overall lower work efficiency, which in turn increases the bottom line. Ironically, the labor shortage is somewhat of a self-reinforcing mechanism, allowing the IUEC to exert its power at the negotiating table to create more work, particularly through prohibitions on efficiency in the installation process.
Simply put, the Big Four elevator companies (Otis, Schindler, ThyssenKrupp, Kone) have no reason to advocate for major changes in the market, nor do the dominant unions. Instead, they have an incentive to advocate for additional layers of building codes at the state and city levels.
The global trend in elevator regulations has been for countries outside of Europe to adopt European elevator safety codes. North America has so far resisted this trend. There is not much difference between European and North American elevator safety codes (in fact, before much global harmonization took place, more than three-quarters of the rules in national standards were already identical in the 1980s). However, the mere existence of separate codes and standards that are incompatible with manufacturer certification adds to the costs. The cost consequences of these code and standard differences come in two forms: the costs incurred by different certification processes and separate markets for components, and the costs incurred by actual differences in products. In the first category, North America’s divergence from the global European-based codes makes the North American component market much smaller. This small North American elevator component market is very profitable for companies that do manage to enter, but it is difficult for small and medium-sized foreign companies to enter because the costs and headaches of certifying components under unique rules that apply only to the US and Canada, which represent a small share of the global elevator market. … In addition to the differences between North American and global standards, the US also has unusually large differences within its technical regulations compared to other countries. These differences between US states can lead to requirements and complexities that further increase costs.
There is an irony to America’s elevator problem. Thanks to the Americans with Disabilities Act of 1990, the United States has far more ramps, automatic door openers, and accessibility in public buildings than many other countries. Yet for mid-sized apartment buildings, five or six stories high, elevators are common, and concerns about accessibility seem to be ignored in favor of rules set by Big Elevator and its union. After Smith analyzes the elevator market, one wonders if other factors that make America’s housing prices so high might be explained by unseen and unappreciated rules and regulations.
