Data from the Bureau of Labor Statistics shows that, in many areas, the construction industry has been one of the hardest hit by national recession. This is, at least in part, due to the fact that the real estate market has been in a state of crisis for some time now.
With fewer people able to afford buying new homes and foreclosure rates up, the market has become saturated with properties. This has severely decreased the need for new projects, which has had an adverse affect on construction jobs.
One hope for the federally appointed stimulus funds was that they would increase hiring in the construction industry. So far this has not been the case. According to a recent press release put out by the Associated General Contractors of America, the stimulus plan has yet to have any real significant influence on the industry’s job market.
One of the reasons that stimulus funds have not created a large number of jobs in the construction industry is the fact that this money has yet to make its way outside of the transportation sector, according to the AGCA.
“While the construction portion of the stimulus is having an impact, it is far from delivering its full promise and potential,” Stephen E. Sandherr, AGCA chief executive officer said in the release. “With construction unemployment at almost double the national rate, it is disappointing to see so many stimulus programs getting off to such a slow start.”
According to Sandherr, there has been roughly $135 billion spent on construction projects in the five months since the start of the federal stimulus program. Despite this, he says that there has not been a notable change in the hiring and purchasing patterns of companies doing stimulus-funded work and those that aren’t handling such projects.
To illustrate this, Sandherr pointed to the fact that 36 percent of construction companies that have stimulus-funded work reported that they expected to hire more workers. This figure is almost the same as those who aren’t in the process of working on projects with this funding.
In addition to this, Sandherr noted that 36 percent of construction companies handling stimulus related projects are planning to purchase new equipment and supplies. This figure is somewhat lower than the 43 percent of companies not working on these projects that reported plans to buy such materials and equipment during the same time frame.
According to Sandherr, some of the areas of the construction industry that have lost jobs and need the most help are not related to transportation. At this time, he believes that while the money is not creating new jobs, it is helping companies to save already existing positions. To support this, he said that 60 percent of construction firms working on stimulus related projects have reported that they have been able to save jobs or retain workers as a result of the federal money.
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What about creating cash for contractors, where, the government pays people to bulldoze their existing homes so they can be built again?