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Construction Industry Unemployment At Highest September Rate Ever Recorded as Sector Suffers from Private, State and Local Funding Declines and Unclear Federal Funding Plans

The number of people working in construction is approaching a 14-year low now that the industry lost 21,000 jobs in September, while construction unemployment is at a September high of 17.2 percent, according to an analysis of federal employment figures released today by the Associated General Contractors of America. The construction industry continues to suffer from declining investments in construction and broad uncertainty about the future of many federal infrastructure programs and tax rates, association officials noted.

“It has taken less than four years to erase a decade’s worth of job gains as the industry suffers from declining private, state and local construction demand,” said Ken Simonson, the association’s chief economist. “No other sector of the economy has suffered as much for as long as construction.”

Simonson noted that the 5.6 million people working in construction today is barely higher than the 5.59 million people who were working in construction in August 1996. He added that construction employment continued to lag behind other sectors of the economy. For example, while total private employment rose by 593,000 during the past 12 months, the construction industry lost 210,000 jobs. Meanwhile, the industry’s unemployment rate is nearly double the unadjusted national rate of 9.2 percent.

Most of September’s construction job losses came from the nonresidential sector as demand for commercial facilities and infrastructure projects remains weak, Simonson noted. Residential construction lost 2,500 jobs last month while nonresidential construction lost 18,100 jobs. Nonresidential specialty trade contractors were the hardest hit, having lost 19,500 jobs in September, the economist added.

Association officials noted that construction spending figures released late last month show private, state and local construction spending continues to decline. And while federal spending has increased, most of those investments have come from temporary programs like the stimulus and military base realignment programs.

While these temporary federal programs have helped the industry, many contractors are reluctant to expand payrolls while long-term federal programs that fund highway, transit, water system and aviation related construction remain in limbo, association officials said. They added that most contractors don’t even know what their tax rates will be for next year.

“Construction firms aren’t going to start hiring again until they can predict how busy they’ll be,” said Stephen E. Sandherr, the association’s chief executive officer. “Frankly it is hard for contractors to make any business decisions when they don’t know how much they’ll make or how much they’ll owe.”

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