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Recession has ‘devastating impact’ on construction industry

Date Posted: July 17 2009

An economic bellwether and one of the hardest-hit industries during this recession, the construction industry is a very sick patient that isn’t getting better,

A federal jobs report issued July 2 found that U.S. construction unemployment dropped another 79,000 jobs in the month of June. Over the previous 12 months, 992,000 U.S. construction workers lost their jobs. While overall unemployment is 9.7 percent, the construction industry is experiencing 17.4 percent unemployment.

The jobs numbers, said Stephen Sandherr, chief executive officer of the Associated General Contractors of America (AGC). “highlight the devastating impact current economic conditions are having on the construction industry. While there is little doubt that the stimulus has helped slow the decline, the fact remains the construction industry has many long, slow and difficult months ahead as the one trillion dollar construction market continues to suffer from declining state and local revenue, little demand for commercial or retail facilities and shrinking orders for new factories and facilities."

Five months into passage of the $787 billion federal stimulus package aimed at creating more jobs and providing a wider safety net for the jobless and the disadvantaged, the unemployment rate has actually increased, and many economists expect it will climb over 10 percent by the end of the year. The construction industry is expected to be a major beneficiary of the stimulus money, but with bidding requirements and governmental regulations slowing the job-letting process, patience among unemployed workers is growing thin.

The AGC is one group calling for lawmakers to take steps to not only get the stimulus money moving, but to also start greasing the credit markets to get cash flowing for other jobs.

"The Administration and Congress must see today's figures as a reminder to stimulate new commercial lending and hasten non-transportation stimulus construction projects that have by and large yet to begin,” Sandherr said. “And they must not delay action on a host of other infrastructure work, including the surface transportation, aviation and water infrastructure legislation.

“If the stimulus is followed with inaction and political gridlock, many thousands more construction workers will soon be out of work."

 Last week there were calls, mainly from Democratic lawmakers, to create a second stimulus package more focused on job creation. Construction union leaders earlier this year pushed for this stimulus package to have greater spending on infrastructure projects – a ‘la the New Deal work created by President Roosevelt in the 1930s – to improve the nation’s roads, bridges, drinking water systems and other aging fixtures in our society. 

Instead, a lot of the money went for social safety net spending. The current stimulus, said Laborers International Union President Terrence O’Sullivan, “fails to fully take advantage of the opportunity to put America back to work building the essential and long neglected basics of our country, which would leave behind real assets for future generations.”