Construction sector still suffering with high unemployment rate

Construction sector still suffering with high unemployment rate

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Construction image 1 THE construction unemployment rate jumped to 18.8% in November as the sector lost another 5,000 jobs, according to an analysis of federal employment data released by the Associated General Contractors of America.

The data indicates that, while construction employment typically drops as winter approaches, the construction sector has suffered more than any other industry during the economic downturn, association officials said.

“The unemployment report shows construction still has not broken free of the recession that has gripped the industry since 2006,” Ken Simonson, AGC's chief economist, said in a statement. “Other than the stimulus and other temporary federal programs, it has been a pretty bleak four years for the industry.”

Simonson noted that the construction industry has lost 2.1 million jobs since employment in the sector peaked in August 2006. He added that the sector has continued to lose jobs during the past year even as overall private employment has picked up. Since November 2009, the industry has lost 117,000 jobs while the private sector added slightly more than one million jobs. The industry's 18.8% unemployment rate (not seasonally adjusted) remains the highest of any industry and roughly double the overall unemployment rate of 9.8% (seasonally adjusted).

The only construction segment to add jobs in the past year has been heavy and civil engineering construction, which has benefited from federal economic recovery, military base realignment, and Gulf Coast hurricane-prevention projects, Simonson said.

Nonresidential construction fared relatively well in October compared to residential construction, officials said. Nonresidential construction employment added 10,300 jobs in September and October, while residential construction lost 5,800 jobs. Nonresidential specialty construction added 7,300 jobs and heavy and civil engineering added 4,800 jobs. However, nonresidential building construction employment declined by 1,800 jobs between September and October.

AGC officials cautioned that the American Recovery and Reinvestment Act and other temporary federal programs will begin winding down in 2011, most likely before private, state, and/or local demand for construction picks up. They urged Congress and the Obama Administration to act on a series of long-delayed funding bills for water, transportation, and other infrastructure programs.

“We're hoping Congress doesn't cut off federal investments that are almost single-handedly keeping this industry together,” Stephen Sandherr, AGC's Chief Executive Officer, said in a statement. “Even the deficit commission understands that the one thing we can't afford to do as a nation is neglect our infrastructure,” Sandherr added, referring to the National Commission on Fiscal Responsibility and Reform's proposal to raise the gas tax 15 cents per gallon to fund transportation upgrades.

The American Association of State Highway and Transportation Officials praised the commission.

“We are encouraged that the report emphasizes the vital link between transportation and balancing the federal deficit,” said AASHTO Executive Director John Horsley. “This crucial investment in transportation will pay huge dividends in the form of safer highways and transit systems for generations to come, while creating and sustaining hundreds of thousands of good paying jobs today.”

The proposal received 11 votes from the commission's 18 members, a majority but not the three-fourths supermajority (14 votes) required to endorse the plan and submit it to Congress. The 11 votes in favor came from a bipartisan majority of seven Democratic and four Republican appointees.

The commission's proposal states that without new Highway Trust Fund revenue, policymakers will be forced to impose highway and transit program cuts that would reduce payrolls and impede economic growth.

AASHTO also joined with leaders from a diverse coalition of transportation interests in releasing a statement commending commission Chairmen Erskine Bowles and Alan Simpson for recognizing in their recommendations the critical role surface transportation improvements play in the nation's overall fiscal and economic health.

“We strongly support their proposal to phase-in a 15-cent federal motor-fuels-tax increase to ensure the US surface transportation network is strategically upgraded to promote and accommodate future economic growth,” the 21 organizations said in their joint statement. “The infrastructure investment component of the proposal is consistent with the recommendations of two independent, bipartisan commissions established by Congress in the last major transportation bill.”

Both the National Surface Transportation Policy and Revenue Study Commission and the National Surface Transportation Infrastructure Financing Commission recommended increased federal investment in transportation infrastructure and recommended that it be paid for by users in a variety of ways, including an increase in the federal motor-fuel fee. The first commission recommended an increase of 25 to 40 cents per gallon, while the second commission recommended an increase of 10 cents per gallon. Both commissions acknowledged that public/private partnerships to fund transportation projects have limited applications and are not a substitute for core federal investment.

“We support this latest recommendation because it reinforces the long-standing policy of pay-as-you-go financing by system users as the foundation of the federal surface transportation program's success over the past half century,” according to the joint statement by AASHTO and others. “Capital investments, like highway and public transportation improvements, are long-term activities that require the financial stability generated from recurring revenues. This user-pay construct has assured the federal surface transportation programs are fiscally responsible and largely deficit neutral. It is also important to recognize that a small portion of the public transportation program has been historically funded with general funds. These contributions meet critical needs and should be continued.”

Raising the federal gasoline and diesel taxes as recommended by the commission's proposal would allow Congress to move forward with a long-term reauthorization of the surface transportation program that provides the resources and policy reforms necessary to facilitate long-term economic growth, supporters contend.

“We encourage all members of the National Commission on Fiscal Responsibility and Reform to support the co-chairmen's proposal to generate new revenues for the Highway Trust Fund,” the joint statement concludes. End of feature

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