By Roland Murphy for Arizona Builder’s Exchange
From the time President Donald Trump first proposed his $1.5T infrastructure package before the 2016 election, it has been swarmed by more “ifs” than answers.
The most recent “if” is also one of the biggest: If it’s ever enacted, it could create 2.6 million construction jobs.
A May 24 announcement by Associated Builders and Contractors, citing data from the U.S. Census Bureau and the Bureau of Labor Statistics, and using a model developed by Markstein Advisors, estimates every $1B in additional construction spending will generate at least 6,300 new construction jobs.
In announcing its findings, ABC said, “Starting with the annual construction spending data for 2017 ($1.23T), the estimate assumes 4 percent growth (to $1.28T) for 2018, 4 percent on top of that (to $1.33T) for 2019, 3 percent growth above the 2019 construction spending level (to $1.37T) for 2020 and 3 percent growth above 2020 construction spending (to $1.42T) for 2021.
A story on the announcement in Construction Dive notes the president’s infrastructure program is, “at best, a proposal right now.” It is unlikely there will be any movement to create an agreement between the administration and Congress until after the midterm elections in November, and quite likely not until after the first of the year.
Plaguing the program’s potential for approval, much less execution, is its fundamental structure. Trump wants to use $200B in federal funds to seed private sector investment to make up the difference. Details on the nature of these public-private-partnerships, including how businesses would recoup their investments and earn a profit, have been vague. Add to that an innate hesitance on the part of congressional Republicans to expand program spending, particularly in an election year with many seats in potential jeopardy, and it’s not surprising little to no movement has taken place.
The Elephant in the Room
Were the bill fully funded and implemented tomorrow, another massive “if” remains: If the work is created, who is going to perform it?
Between 2006 and 2011, the construction industry lost 2.3 million jobs, according to Tradesmen International. Many of those people took work in other industries, and many of them haven’t come back.
A 2017 survey by the Bureau of Labor Statistics estimated more than 200,000 unfilled construction jobs nationwide.
In Arizona, construction employment peaked at 240,000 in 2006 and bottomed out at 110,900 in 2011. In 2016 the total had only bounced back to 134,500. (AZBEX, Sept. 15, 2017)
Contractors and related craft service providers are buried with work following the economic rebound, and everything from project estimating to delivery of final product has been experiencing timeline delays and cost increases as a result. Despite the high demand, construction wages have not seen any significant growth in most markets. Despite the heavy volume of available work, a recent survey listed the Phoenix-Mesa-Scottsdale area – the state’s biggest market by far – as number 11 on the list of 25 worst-paying metros.
If passed and implemented, the 2.6 million jobs created by the infrastructure program would more than completely offset the total lost job count from the crash. There are currently slightly more than 7.1 million construction workers in the country across all sectors, according to the Bureau of Labor Statistics. As noted above, there are 200,000 open jobs.
According to Construction Dive, in the first year of implementation, the infrastructure program would need 300,000 additional workers.
While it sounds like a great idea at first to add 2.6 million jobs, finding the 2.6 million people to staff them could be the even greater challenge.
As we reported a couple weeks ago, construction and skilled trades as an industry has done a terrible job since the 1980s developing and replacing its workforce. It’s been a matter of too little evangelizing, too little investment and too much risk aversion. (AZBEX, May 22)
We’ve dug ourselves into a deep hole. Ironically, fixing all the nation’s potholes could dig us into an even deeper one.