Jan/Feb 2009

Construction Industry Prepares for Layoffs

A recent survey on construction employment reveals that an estimated two-thirds of the nation's nonresidential construction companies are planning to cut their payrolls. Layoffs are forecasted to result in a 30% decline in the number of people working on construction projects unless an economic stimulus package is passed by the
U.S. Congress.

The results, based on a survey conducted by the Associated General Contractors of America in late 2008, show no relief in sight for construction companies, which have been among the hardest hit by the economic downturn. Construction companies experienced significant slowdowns beginning late last year, resulting in a 10% decline in the number of construction workers since 2006. "Unless the business climate changes significantly and soon, the construction sector will continue to experience the kind of devastating job losses and crippling declines in business activity that will undermine efforts to end the recession," said Stephen Sandherr, AGC's chief executive officer, in a January 8 news release.

According to the forecasted figures, AGC's member companies have seen or are planning for declining activity in every type of construction market:

• 92% of building contractors and 93% of road builders are expecting or experiencing declining activity.
• More than 83% of utility contractors are bracing for declines.
• 77% of water resource contractors are expecting a decline in business building levees or locks.

Many of the companies are hoping that a proposed stimulus package will improve employment and business outlook. The industry is urging Congress to include infrastructure investments in the stimulus, and AGC would like to see $2.2 billion for federal facilities and school renovations. According to the forecast, construction companies would increase their payrolls by 25% if the stimulus included new infrastructure investments. For example, 85% of nonresidential construction companies would either cancel layoffs or add new employees if states embarked on stimulus-funded infrastructure projects.

AGC is working with a range of building, design, and labor groups to call for new tax incentives to encourage conversion to energy-efficient buildings, construction of renewable energy facilities, remediation of brown fields, and construction of new airport and commercial projects. The groups are proposing the creation of "economic crisis zones" to provide tax exemptions and private activity bonding authority to finance construction projects in communities experiencing two consecutive months of double-digit unemployment.