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Construction Industry Continues to Lose Jobs as all States Report Decreases in 2009

Written by Peter L. Mosca on Tuesday, 23 February 2010 6:00 pm
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Mr. Obama take note. As you and your administration make jobs a top priority in 2010, the construction industry needs your help. For the first time since the start of the economic downturn, every state and the District of Columbia reported losing construction jobs over the past twelve months, according to a new analysis of state-by-state employment data released by the Associated General Contractors of America. The research found few signs of a construction industry recovery with only six states reporting construction job increases between November and December 2009.

"There's nowhere for construction workers to turn for relief from job losses and hardship," said Ken Simonson, the association's chief economist. "Sifting through the monthly variations, it is obvious that construction employment is losing ground almost everywhere." Simonson noted that Nevada experienced the largest annual percentage decrease in construction employment (27.7 percent), followed by Wyoming (23.8 percent); Tennessee (20 percent); Montana (19.6 percent); and Arizona (19 percent). He added that California had lost more construction jobs (116,100) than any other state during the past year.

The smallest declines in construction employment between December 2008 and December 2009 were in Louisiana (3.5 percent); D.C. (4 percent); Oklahoma (4 percent); West Virginia (4.2 percent); and North Dakota (4.8 percent), the economist noted. Simonson added that the District of Columbia lost the fewest of construction jobs (500) during that time.

Unusually cold and wintry weather throughout most of the country in December contributed to the downward trend in monthly construction employment, Simonson suggested. He said that compared to November reports showing 24 states added construction jobs during the past month, the December report had only six states adding jobs after normal seasonal adjustments (which does not take into account exceptional mild or harsh weather.) Mississippi had the largest monthly percentage increase in construction employment (1.2 percent) followed by Virginia (1.1 percent); Hawaii (1 percent); Oklahoma (1 percent); South Carolina (0.5 percent); and New Mexico (0.2 percent). Meanwhile, Montana had the largest monthly percentage decrease (10.5 percent), followed by North Dakota (9.6 percent); Wyoming (6.8 percent); Nevada (5.7 percent); and Wisconsin (5.5 percent).

Given that 90 percent of contractors don't expect a recovery in 2010, according to an industry forecast the association released earlier, construction officials urged Congress and the Administration to act now to avoid continued construction job losses.

"The best way to boost employment is to continue making the kind of infrastructure investments everyone agrees our country needs to remain globally competitive," said Stephen E. Sandherr, the association's chief executive officer.

Will we begin to see more construction workers building wind farms, solar heat, bridges and roads, and making the necessary improvements to our daily lives or will we continue to see partisanship and in-fighting stalling what most agree are the necessary changes for our nation's survival. Only time will tell (this reporter still holds out 'hope' in this administration and its overall goal of making American strong again.) Interestingly enough, Onvia, the creator of Recovery.org, a private sector initiative to give businesses transparency into recovery project spending, is forecasting the creation or retention of 1.1 million direct and indirect jobs as a result of stimulus-funded contracting in 2010. The delayed effect of the stimulus is due to the fact that 75% of the funds allocated for recovery projects did not actually leave Washington DC in 2009, according to Onvia analysts.

"The true impact of the stimulus spending was not felt in 2009, but will be in 2010," said Mike Pickett, CEO of Onvia. "In 2009, we saw just 25 percent of recovery funds actually leave Washington and reach the contractors and subcontractors that actually create jobs. Our analysts foresee that the majority of funds will finally reach 'Main Street' in 2010." Onvia's information, which is updated daily from 89,000 government agencies, reveals the following:

  • Percent of Recovery Act dollars in 2009 that reached contractors and subcontractors that create jobs: 25% ($68.75 Billion)

  • Percent of Recovery Act dollars in 2009 that did not leave Washington, but are likely to reach contractors in 2010: 75% ($206.25 Billion)

  • Estimated number of jobs funded by the Recovery Act to date: 509,025

  • Number of Recovery Act jobs forecasted in 2010: 1.1 Million

  • Government spending relative to GDP in 2010: $5.5 trillion, or almost 50% of GDP -- an all time high

"With government spending at $5.5 trillion in 2010, government spending will be nearly half of GDP - an all time high. Areas like infrastructure, energy and information technology will benefit from plenty of government spending, but it will remain a buyers' market due to fierce competition for contracts. Welcome to the 'Next Economy' - one in which government and business operate more closely," said Pickett.

Finally, more good news comes from homeowners themselves who report that they will remodel in 2010. After a year of steady declines in home remodeling, the Spring 2010 www.remodelormove.com U.S. Remodeling Sentiment Report reveals a 13% increase in the number of homeowners who say they will remodel in the next 12 months. This increase follows a 5% increase in last year's Spring 2009 report. The continuing upward swing in remodeling sentiment indicates that 2010 will show a strong increase in remodeling activity.

The Spring 2010 Sentiment Report, a survey of 5,000 homeowners in the U.S. who are considering remodeling, also shows that the recession has had several impacts on U.S. homeowners. These include:

  • The most popular projects in the past - remodeling the kitchen and bathrooms - have decreased in popularity, as adding a bathroom has taken the honors of the most popular project. This makes sense since, for many homeowners, updating an existing room can be put off because it is often seen as a "luxury", while for many the addition of a bathroom is a necessity due to changes in the needs of the family.

  • Interest in do-it-yourself projects, both the actual building as well as acting as their own general contractor, has remained steady throughout the economic downturn.

  • Economizing on the cost of materials is growing in popularity at the same time, as fewer homeowners are reporting they will use expensive materials for their remodel. The percentage of homeowners reporting they will use average costing materials remains the same.

  • The number of homeowners reporting they are "excited" about remodeling has climbed to an all-time high of 54%, which is primarily due to homeowners who aren't excited about remodeling choosing to put their plans on hold to wait until the recession is over. This may be a costly choice for homeowners since the cost to remodel now is as much as 20% lower than in 2006, according to a special cost to remodel study published earlier this year at www.remodelormove.com.
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