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New Year Could Bring More Cuts in Construction Employment

Jan 1, 2009 12:00 PM

According to reports in the national news, President Obama warns that if Congress does not take “dramatic action” on his economic stimulus package sooner rather than later, a “bad situation could become dramatically worse” for the general economy. In a recent survey released by the Associated General Contractors of America (AGC), Arlington, Va., that message was echoed by members of the construction industry.

Fearing that things may get worse before they get better, an estimated two-thirds of the nation's non-residential construction companies are planning to cut their payrolls, say the latest employment and business forecast figures from AGC. All told, those layoffs are expected to result in a 30% decline in the number of people working on construction projects.

“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,” says Stephen Sandherr, the association's CEO.

The forecast results, which are based on a representative survey conducted by the construction association late in 2008, found no relief in sight for construction companies that already have been among the hardest hit by the economic slowdown. Many construction companies experienced significant slowdowns beginning late last year, resulting in a 10% decline in the number of construction workers since 2006, notes Sandherr.

According to the forecast figures, the association's member companies have seen or are planning for declining activity in every type of construction market (see Table). A total of 92% of building contractors are expecting or experiencing declining activity. More than 83% of utility contractors are bracing for declines, while 77% of water resource contractors are expecting a decline in business.

The forecast did find, however, that planned investments in infrastructure projects as part of the stimulus package are likely to dramatically improve the employment and business outlook for the year. For example, 85% of non-residential construction companies said they would cancel layoffs or add new employees if states embarked on stimulus-funded infrastructure projects. According to the forecast, construction companies would increase their payrolls by 25% if the stimulus included new infrastructure investments. Construction companies also predict they would invest an average of $500,000 this year in new equipment if they received new work as part of the stimulus package.

“With a stimulus, construction companies can get more people to work and more money into the economy in a way that will immediately boost our economy,” Sandherr says. “Without a stimulus, construction companies will cut jobs, slash spending, and continue to be among the hardest hit sectors within our economy.”

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© 2012 Penton Business Media, Inc.

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