Construction—Formerly “Essential Workers”—Is Taking a Hit

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Robison Wells

It seems incredible to think that we’ve been writing for years about a shortage of skilled labor in construction, with companies desperate to find and secure new employees. But now, in just a few months, we’ve seen a remarkable number of construction companies furlough or lay off workers.

According to a survey last week by the Associated General Contractors of America, twenty-seven percent of construction firms had to cut staff due to the coronavirus.

The problems are tied to a slowdown in projects overall, the survey respondents reported. 30% of firms said that they had to shut down government projects. 53% said their projects had been delayed by the owners, who are also feeling the pinch, and 7% said the owners have canceled their projects entirely.

In a week when the United States saw a record 6.6 million employees file for unemployment, the construction industry has suffered the following losses in nonresidential construction: building (-10,700 jobs), heavy and civil engineering (-10,200 jobs), and specialty trades (-3,700 jobs). And while those numbers may be scary, economists are predicting they’re only the tip of the iceberg. Associated Builders and Contractors (ABC) chief economist Anirban Basu said that while the March jobs report is “horrific”, unemployment in coming months will be even worse.

“Generally, nonresidential construction is one of the last segments of the economy to enter recession as contractors continue to work down their collective backlog,” which stood at nearly nine months in ABC’s Construction Backlog Indicator, he said.

“The need for social distancing renders that statistic less pertinent, meaning that nonresidential construction is susceptible to large-scale job losses immediately,” he noted.

While the recently passed economic stimulus package helps support the U.S. economy, Basu added, recovery won’t occur until the coronavirus health crisis is over. He predicted the impending downturn will be vicious, but may have a silver lining: “It could finally induce policymakers to fashion and implement a long-awaited infrastructure stimulus package.”

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