The number
of people working in construction is approaching a 14-year low now that the
industry lost 21,000 jobs in September, while construction unemployment is at a
September high of 17.2 percent, according to an analysis of federal employment
figures recently released by the Associated General Contractors of America. The
construction industry continues to suffer from declining investments in
construction and broad uncertainty about the future of many federal
infrastructure programs and tax rates, association officials note.
“It has
taken less than four years to erase a decade’s worth of job gains as the
industry suffers from declining private, state and local construction demand,” says
Ken Simonson, the association’s chief economist.
Simonson
notes that the 5.6 million people working in construction today is barely
higher than the 5.59 million people who were working in construction in August
1996. He adds that construction employment continued to lag behind other
sectors of the economy. For example, while total private employment rose by
593,000 during the past 12 months, the construction industry lost 210,000 jobs.
Meanwhile, the industry’s unemployment rate is nearly double the unadjusted
national rate of 9.2 percent.
Most of
September’s construction job losses came from the nonresidential sector as
demand for commercial facilities and infrastructure projects remains weak,
Simonson notes. Residential construction lost 2,500 jobs last month, while
nonresidential construction lost 18,100 jobs. Nonresidential specialty trade
contractors were the hardest hit, having lost 19,500 jobs in September, the
economist adds.
Association
officials note that construction spending figures released late last month show
private, state and local construction spending continues to decline. And while
federal spending has increased, most of those investments have come from
temporary programs like the stimulus and military base realignment programs.
While these
temporary federal programs have helped the industry, many contractors are
reluctant to expand payrolls while long-term federal programs that fund
highway, transit, water system and aviation-related construction remain in
limbo, association officials say. They add that most contractors don’t even
know what their tax rates will be for next year.
“Construction
firms aren’t going to start hiring again until they can predict how busy
they’ll be,” says Stephen Sandherr, the association’s chief executive officer.
“Frankly, it is hard for contractors to make any business decisions when they
don’t know how much they’ll make or how much they’ll owe.”