Dive Brief:
- The construction industry lost 975,000 jobs in April, according to the most recent report from the U.S. Bureau of Labor Statistics, as contractors experienced less demand for their services amid the pandemic. This drop represents approximately 13% of the country’s construction workforce, said Associated General Contractors of America.
- The overall U.S. unemployment rate increased by 10.3% to 14.7%, the biggest month-to-month increase since the government began keeping track of employment figures in 1948. The construction industry unemployment rate was 16.6% in April, up from 6.9% in March and 4.7% from April 2019. Ken Simonson, AGC’s chief economist, said the March-to-April 2020 drop in jobs is the industry’s largest ever.
- The dismal April numbers are proof, the AGC said, that the federal government should introduce new measures to help the construction industry recover. This includes infrastructure funding, as well as safe harbor provisions and more clarity from the Treasury Department regarding the rules for eligibility and forgiveness of Paycheck Protection Program loans.
Dive Insight:
The AGC has been petitioning Treasury to provide more detailed guidance for the PPP program, which is being administered by the Small Business Administration through traditional lenders. The loans are meant to help business owners continue to pay employees rather than lay them off and cover payroll and other specific expenses for eight weeks after receiving the loan proceeds.
However, the guidance that the federal government has issued thus far regarding which firms are eligible for loans and exactly how that money can be used has been vague, according to the AGC, and has led some companies, including those in the construction industry, to either return or consider returning the money they received through the PPP to avoid potential punitive action.
In fact, according to the AGC’s latest survey of more than 800 members, 2% returned their PPP loans and 18% are considering returning their loans.
“Without new federal help, it is hard to see a scenario where the construction industry will be able to recover any time soon,” Simonson said.
The AGC survey conducted May 4 to 7 also reveals that contractors feel pinched by the coronavirus. Of members surveyed:
- 67% reported having at least one project canceled or delayed, forcing some to reduce staffing.
- 30% reported that their projects have been stopped by government mandate. This figure was at 35% two weeks ago, according to AGC.
- 37% responded that owners have voluntarily halted work because of the pandemic.
- 31% said owners have canceled projects because of the likelihood they will experience decreased demand.
- 21% said some of their privately funded projects have been canceled due to a loss of funding.
The AGC teamed up with project management software provider Procore to generate more precise numbers about where and when U.S. construction activity has been impacted since the shutdowns and stay-at-home orders began in March. Procore pulled the data from transactions logged by its U.S. customers.
Some takeaways from Procore’s calculations from the week of March 1 to the week of April 26 include:
- Construction worker hours declined by 13%.
- The smallest contractors had the biggest decline in worker hours.
- The Northeast saw the sharpest decline in worker hours, while the Southeast saw the smallest reduction.
- The decline in worker hours for noninfrastructure and infrastructure projects have been about the same.
Source: constructiondive
