The coronavirus crisis has had a negative effect on construction firms across the country but those working in a handful of states, especially those with government-mandated jobsite shutdowns, have been especially hard hit.
A look at government employment statistics and jobsite construction activity pinpoints the states that have been most impacted.
While the most recent Bureau of Labor Statistics’ data shows deep construction job losses across the country since the start of the coronavirus pandemic, states including Michigan, Pennsylvania and Vermont experienced all-time lows. All but one state — South Dakota — had a decline in construction employment.
The magnitude of the increase in job losses is stunning,” said AGC Chief Economist Ken Simonson, noting that the April numbers follow a devastating March in which the industry lost 975,000 jobs, 13% of the workforce.
Nearly all of the 10 most impacted states were those that had severe statewide government shutdown orders, or in the case of Massachusetts, a shutdown order in Boston and other cities. New York state experienced the largest reduction of construction jobs from March to April, losing nearly 41% for a total of 166,200. California, a state with no statewide shutdown but many local restrictions including in the Bay Area, nearly made the top 10 list, reporting a 15.1% decline from last year’s construction employment numbers.
The states that lost the most construction employment compared to a year ago are:
Government-induced slowdowns weren’t the only factor leading to decreased employment. Owner cancellations are also forcing many firms to furlough or terminate employees, Simonson said, noting that the association’s latest survey found that owners are canceling jobs for a variety of reasons, including safety concerns, reduced demand and loss of financing.
In fact, since the pandemic began in the U.S., an increasing number of contractors have reported that projects they expected to start in June or later have been cancelled:
“Contractors are staying busy so far as they finish up current projects but going forward there’s not enough work to justify keeping people on,” he said.
Project cancellations have forced 30% of firms to furlough or terminate employees, but an equal share has added workers, including some firms that laid off employees earlier, according to Simonson.
“The Paycheck Protection Program, which provides no-cost loans for firms to cover payroll expenses for a short time, appears to have achieved the goal of helping contractors retain or add workers for now,” he added.
Construction activity declines
Software provider OxBlue found that construction restrictions have also had a major impact on the level of activity recorded by its artificial intelligence-driven tool that uses live field data to measure progress on U.S. commercial projects. The states with government shutdowns experienced the most decline in activity by far, according to OxBlue CEO Chandler McCormack.
“Overall, the areas most impacted are those that have the highest construction volumes and where the most stringent orders limiting construction were put in place,” he said. This combination of factors exists in New York, Pennsylvania, Washington, Michigan and Massachusetts. “All five states saw a dramatic decrease in construction activity, which correlates to the timing of when each state issued its orders to combat COVID-19.”
Some of the hardest-hit states are slowly rebounding, he said.
New York and Massachusetts construction activity levels remain low while Pennsylvania and Washington have seen a general upward trend but still remain far below normal levels,” he said. “Michigan, which allowed both commercial and residential construction to reopen on May 7, has seen a dramatic change in construction activity levels to near pre-pandemic levels.”
What’s next?
The crushing levels of construction job losses could continue for several more months, Simonson told Construction Dive, and states with relatively small construction job losses so far can’t count on remaining unaffected. PPP loans intended to cover eight weeks of payroll will soon run out, greatly affecting construction firms across the country, which received more loans than any other industry.
“Unless Congress extends the program and loosens the eligibility of what you can use the money for we’ve only just delayed the job losses that are going to be coming,” he said.
In addition, robust unemployment benefits are keeping some workers on the sidelines, he said. About 12% of firms in the AGC survey said recalled workers preferred to stay home and keep collecting benefits.
“Under the CARES Act, workers’ $600 of additional unemployment benefits expires on July 31 so we are still quite a ways off on that,” he said. “And the new House bill adds another six months to that.”
Source: constructiondive
