States Hope for Rebound in Construction
By Pamela M. Prah, Staff Writer
The corner of 8th and Main streets in downtown Boise, Idaho, was jokingly called “the hole” because it had been vacant since a 1987 fire there. No more. Construction began last summer on a new $60-million building that’s now the headquarters of Zions Bank. And a new $70-million convention center called Jack’s Urban Meeting Place is also on track to open in downtown Boise next year.
These large-scale projects are helping Idaho’s construction industry recover from its lowest numbers since 1995. "There is quite a bit of activity in the metro right now, " says Lisa Bloomquist of the Boise Valley Economic Partnership.
Job losses in California, Nevada, Arizona and Florida may draw more attention, but other states, including Idaho, also suffered significant construction job losses in the aftermath of the recession (see list).
In fact, for a time before the recession, Idaho had the highest year-over-year increase in construction employment of any state. Construction drove Idaho's economic expansion from 2004 through 2007, with many people relocating from California to Idaho or building vacation homes there. The number of construction jobs in Idaho is still 44 percent below its peak in 2006, and a forecast from the state last year anticipated that “a large-scale recovery” will not start immediately, with growth expected at 2.8 percent this year, to climb to 4.5 percent in 2015.
Nationwide, the recession hit construction harder than most other sectors. During the first half of the 2007-2009 economic downturn, a little more than half of the job losses occurred in construction and manufacturing, according to an analysis from the U.S. Bureau of Labor Statistics. The losses in construction were the steepest since World War II, the bureau found.
Now there is a turnaround, driven in part by the recent improvement in the housing sector — crucial since housing makes up more than 50 percent of all employment in construction. “It takes more workers per million dollars to put up houses than to put down sewer pipes or highways,” says Ken Simonson, chief economist at the Associated General Contractors of America.
|States with Most Losses in Construction|
|Source: Associated General Contractors analysis of U.S. Bureau of Labor Statistics data|
Slow, Steady Growth
Arizona is experiencing one of the sharpest rebounds even though the number of workers employed in construction is still 51 percent below its peak in 2006. The state added 50,000 jobs last year, almost all of them in the Phoenix Metro area. And the fundamental reason is population growth, says Lee McPheters, director of the Economic Outlook Center at Arizona State University’s W. P. Carey School of Business. “Bottom line here is slow, steady growth, well below long run averages, but continuing to improve.”
California accounted for the largest number of construction jobs, despite losing nearly 400,000 from the 2006 peak. But Nevada saw the deepest decline by percentage, at 66 percent. The state’s reliance on gambling and tourism and a boom in construction of casinos and hotels before the recession are main reasons why.
Florida likewise still has a 50 percent drop in construction employment compared to its peak year in 2006. The state experienced a huge boom in retirement and vacation homes, and many parts of the state remain overbuilt in the residential sector.
Hurricane Sandy Has Impact
Nationally, the construction industry gained 30,000 jobs in December, the latest government figures show. That is the fastest pace of construction employment growth since February 2011, says Anirban Basu, the chief economist at the Associated Builders and Contractors.
A big part of that increase could be related to the recent rebuilding in New York, New Jersey and other areas affected by Hurricane Sandy. The number of construction jobs could increase even more if Congress approves more relief aid for Sandy recovery. States hit by the storm are hoping the $9.7 billion that President Obama recently approved is a down payment toward the $60 billion they say they need.
The continued budget uncertainty in Washington also could affect the construction sector. “Ongoing bickering in Washington, D.C., is likely to keep many projects on hold for the next two months or more, implying that more vigorous construction recovery will remain elusive in early 2013,” Basu said in a statement.