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Imperfect bill a 'cushion,' not a cure for construction unemployment

Date Posted: February 27 2009

From the perspective of the building trades, a perfect federal stimulus package would have lavished hundreds of billions of dollars on infrastructure upgrades, road and bridge projects, school and public building improvement work, and green energy investments.

But the $787 billion American Recovery & Reinvestment Act is far from the construction industry’s ideal. It’s loaded with hundreds of billions in federal dollars intended to stimulate the economy and help Americans in other ways.

Still, the stimulus provides for $135 billion in U.S. construction and infrastructure investment, which will create nearly two million jobs over the next two years, according to the Associated General Contractors (AGC) of America.

The analysis, conducted by the association’s chief economist, Ken Simonson, concluded that the infrastructure and construction funding would create or save 650,000 construction jobs and 300,000 positions in related fields such as equipment and material supply. An additional 970,000 jobs in the broader economy are also expected to be created or supported by the investments.

“Whether or not you wear a hard hat for a living, these construction investments will make a difference for the better,” said Simonson. “Beyond the immediate benefits, the new infrastructure projects will make businesses more efficient, commuting more reliable and our economy more prosperous for years to come.”

President Obama signed the legislation Feb. 17, which was adopted completely along party lines in the House (all Democrats for, all Republicans against). Only three Republicans joined Democratic senators in passing the bill.

“We are remaking the American landscape with the largest new investment in our nation’s infrastructure since Eisenhower built an Interstate Highway System in the 1950s.” Obama said. “Because of this investment…men and women will go to work rebuilding our crumbling roads and bridges, repairing our faulty dams and levees, bringing critical broadband connections to businesses and homes in nearly every community in America, upgrading mass transit, building high-speed rail lines that will improve travel and commerce throughout our nation.”

An analysis of the construction portion of the stimulus package by Richard Kroman of the Engineering News Record said that “with most of the stimulus directed toward infrastructure, the news isn’t uniformly good” for all the trades.

“Highway and bridge construction should grow modestly, but nonresidential building construction will begin to turn toward cyclical lows,” he wrote. “The stimulus package will cushion, not save, the buildings sector. What is certain in a time of uncertainty, economists say, is that the industry will be much more public-works-oriented than at any time in recent history.”

Late in the legislative process, President Obama shepherded into the bill $8 billion in high speed rail money, as a start toward modernizing the nation’s train corridors. And, one of the three Republican senators who voted for the package wanted, and got, about $20 billion in school construction stripped from the final bill. However, local school districts can spend money they do receive on school construction.

“Probably the biggest disappointment,” said the Engineering News Record, “was that the final package has no specified funding for school construction.”

Said American Council of Engineering Companies President Dave Raymond: “The final package is not perfect, but it will invest well over $100 billion in infrastructure improvements at a time when this investment is desperately needed.”

The anti-union Associated Builders and Contractors praised some portions of the stimulus bill, but predictably had no use for the fact that workers would receive prevailing wages on all projects funded by the stimulus package. “Including Davis-Bacon Act provisions in the bill not only increases wasteful spending but will not offer any additional benefits to the economy,” said Jerry Gorski, 2009 ABC national chairman. That’s debatable – especially for workers holding union cards: union Hardhats on average earn about a third more than their nonunion counterparts and those higher earnings are certain to add benefits to the economy.

AFL-CIO Building Trades Department President Mark Ayers called the legislation the “first critical step in revitalizing our economy and offering renewed hope for millions of struggling American working families and their communities.”

We reported in the past about Michigan and other states lining up “shovel ready” projects, so that the stimulus money can bring about employment as quickly as possible. Indeed, for infrastructure money, the goal in the stimulus is to use at least 50 percent of that money in the first four months after the bill’s signing. Overall, however, the ENR said only $34.8 billion, or 11 percent of the stimulus money, will be spent by Sept. 30. Then the pace picks up in 2010.

“There’s no doubt the stimulus will have a positive impact for construction businesses and their workers across the country,” said Stephen Sandherr, chief executive officer of the AGC. “When you get beyond the politics and the policy, the fact remains these investments will put people to work, save businesses, and help rebuild aging infrastructure.”