AGC Releases Plan to Boost Demand for Construction

The Associated General Contractors of America (AGC) has released a national plan that it says details measures that could stimulate demand for construction. According to a release, AGC officials said the plan was needed to reverse construction employment declines that have taken place in 317 out of 337 metro areas since January 2007.

“Our goal is to rebuild a devastated construction market that has left millions jobless, littered cities with incomplete projects and sapped much needed revenue, commerce and customers out of our economy,” says Stephen Sandherr, AGC’s CEO. “Considering the scope and impact of construction job losses, the last thing any of us can afford is a repeat of the past four years.”

The plan, called Building a Stronger Future, A New Blueprint for Economic Growth, outlines measures to help boost private sector demand for construction, help tackle a growing infrastructure maintenance backlog and reduce red tape and regulations. Sandherr says the association developed the plan to overcome the years-long construction downturn that has left more than 2.2 million construction workers unemployed and the industry’s unemployment rate at 21.8 percent, more than twice the national average. The AGC release notes that Phoenix has lost more than 91,000 jobs since 2007, the steepest drop from any metropolitan area. The association adds that nationwide, 28 cities lost 50 percent or more of their construction jobs.

Other metro areas losing significant numbers of construction jobs include Las Vegas (-61,900 jobs, -61 percent); Riverside-San Bernardino-Ontario, California (-57,700 jobs, -51 percent); the Atlanta area (-57,700 jobs, -42 percent); and the Los Angeles area (-56,200 jobs, -37 percent).

Only 14 metro areas added construction jobs during the past four years, while employment levels were unchanged in another six. The five metro areas with the largest construction employment gains were all in Texas: Beaumont-Port Arthur (3,400 jobs, 21 percent); Longview (3,100 jobs, 26 percent); Midland (2,100 jobs, 15 percent); El Paso (1,900 jobs, 14 percent); and Odessa (1,800 jobs, 17 percent).

“In too many metro areas, the construction industry is a mere shadow of what it was just four years ago,” says Ken Simonson, AGC’s chief economist, who prepared the new employment analysis. “This new data should make it pretty clear that the sector’s revival is anything but guaranteed.”

Sandherr notes that the recovery plan emphasizes boosting private sector demand, which once accounted for 76 percent of all construction activity, but now accounts for only 60 percent. It calls for approving pending trade agreements to boost demand for manufacturing and shipping facilities, repealing the alternative minimum tax and making permanent the tax cuts that were first put in place in 2001 and 2003.

The plan also identifies new tax credits to encourage retail and restaurant upgrades, improve the efficiency of commercial buildings and help contractors invest in new, more efficient construction equipment. And it urges Congress and the Administration to finally end the double taxation of U.S-based businesses that succeed in international markets.

Sandherr says that the plan includes measures to tackle infrastructure problems that cost American businesses an estimated $100 billion a year due to delays and lost productivity. It calls for significant reforms to federal surface, aviation and waterways programs. And it urges federal officials to refocus on efforts that are clearly in the national interest, streamline the years-long federal review process, and find new ways to leverage private sector dollars.

Sandherr adds that the plan also includes measures to reduce what the AGC calls costly, time consuming and needless regulatory burdens. The plan calls on Congress to pass legislation limiting major new regulations, reform the approval process for new highway and transit projects and oppose well-meaning labor and Buy American mandates that do little to create new jobs and a lot to add costs and delay work.

The plan also highlights the need to repeal a new mandate set to begin next year that requires governments at all levels to withhold three percent of the cost of virtually all major construction projects from contractors. “For an industry where most firms are lucky to make three percent in profit on a project, this new mandate will either put a lot of people out of work or needlessly inflate the cost of public construction,” Sandherr says.