The Building Tradesman Newspaper

Friday, January 28, 2011


By The Building Tradesman

Better building year ahead, AGC says

U.S. construction employment is expected to “turn positive” this year in terms of job growth, said Ken Simonson, chief economist of the Associated General Contractors.

Simonson projected that construction employment would rise by 600,000 jobs in 2011 – but he cautioned about 1.5 million workers would still be idled. About 2.1 million construction workers have lost their jobs since August 2009. He was among a panel of economists polled by the Bureau of National Affairs regarding the outlook for U.S. employment in 2011.

The U.S. construction industry’s jobless rate continued to lead all employment categories with a 20.7 percent jobless rate on Jan. 7, down 2.0 points from the beginning of the 2010.

As of Jan. 7, the overall U.S. jobless rate was 9.4 percent, down from 9.7 percent at the beginning of 2010. The Construction Labor Report said the panel expects an average 9-10 percent unemployment rate for the entire U.S. economy, with a possible dip to 8.5 percent by the end of the year, which is termed job growth at a “moderate” pace.

In Michigan, from the start of October to the end of November (the most recent figures available) construction employment eked out a 1.5 percent gain, which represents 1,500 workers added to the payrolls. We were ranked No. 34 (October) and No. 33 (November ) among the states in construction employment change, by percentage.

Contract hikes more like bumps

Construction-industry collective bargaining negotiations completed in 2010 resulted in an average first-year increase in wages and fringe benefits of only $0.80 or 1.7 percent, the lowest percent increase in 25 years, according to the Construction Labor Research Council’s (CLRC’s) annual report on settlements, as reported by the Associated General Contractors.  The last time the average dropped below 2 percent was in 1985.

This reflects a continuation of a trend that began in 2009, when the average first-year increase of $1.23 or 2.8 percent was the lowest since 1996.  Also like 2009 settlements, almost half of the average total package increase ($0.38) negotiated in 2010 was designated for higher contributions to multi-employer pension funds.

A quarter of negotiations settled in 2010 resulted in a wage-and-fringe freeze or reduction for the first year of the agreement. Freezes and reductions were least likely in the Middle Atlantic Region, which covers Delaware, Maryland, New Jersey, New York, Pennsylvania and the District of Columbia.

Close to 60 percent of settlements reported to CLRC were for only a one-year duration.  This is also a continuation of a trend started in 2009 and is typical in tough economic times.  Prior to 2009, the negotiation of three-year contracts was most common.  Where multi-year agreements were executed in 2010, the average second-year increase negotiated was $1.16 or 2.1 percent, and the average third-year increase negotiated was $1.39 or 2.7 percent.  This compares to $1.55 or 3.2 percent for the second year, and $1.63 or 3.4 percent for the third year, in 2009.

Multi-year settlements were most common in the East North Central Region in 2010, which covers Illinois, Indiana, Michigan, Minnesota, Ohio, West Virginia, and Wisconsin. (From the Associated General Contractors).