By Joshua Wolpe, DENVER DAILY NEWS
A construction industry analysis of the federal government’s economic stimulus package released Thursday shows “little influence” on companies’ ability to expand payrolls, according to the Associated General Contractors of America.
The stimulus analysis was based in part of a survey of nearly 1,000 construction firms nationwide conducted by AGC over the past three weeks.
Stephen Sandherr, CEO of the contractors association, said that five months into a federal stimulus program that has approximately $135 billion dedicated for construction projects is showing little difference in hiring and purchasing patterns between companies doing stimulus-funding work and companies that are not.
“Unsustainably high expectations can bring down good policy and great programs,” he said. “The stimulus will keep our industry alive, but it will not turn around a trillion dollar construction industry overnight.”
One of the more interesting results of the survey is the number of firms planning significant purchases of equipment and supplies in the near future.
Forty-three percent of the firms that do not expect to do stimulus work said they plan to purchase new equipment or supplies in the next two years, versus 36 percent of firms that have won stimulus work.
However, far fewer estimate they will spend $500,000 or more – 18 percent, compared to the 42 percent of firms that have already won stimulus-funded work.
The Colorado Department of Transportation, which is overseeing many American Recovery and Reinvestment projects, says that the industry needs to be patient.
“What is difficult right now is that it takes a while to get a project under construction — it’s never going to be an immediate project,” said Stacey Stegman, public relations director for CDOT. “We’re just now starting to see impacts from the bill — we have seen an 89 percent increase from May to June in the number of people working on projects for CDOT.”
Stegman went on to say that perhaps the biggest influence of the stimulus package on construction has been on companies’ abilities to avoid firing employees.
“You have to understand that departments are facing significant cuts. We didn’t hit the cliff like many other industries, and the stimulus bill has allowed contractors not to lay people off. They’ve done some hiring, but more than anything, they’ve been able to maintain their workforce.”
Sandherr agreed with that notion, saying that 60 percent of construction firms nationwide with stimulus-funded work have saved or retained jobs because of the ARRA.
Spend, spend, spend
AGC maintains that the stimulus is working in some areas but expressed disappointment that money is not moving as fast as it should.
One reason the stimulus is having a limited impact on construction hiring and purchasing patterns, Sandherr said, is that outside of the transportation arena, little of the stimulus’ authorized construction dollars have resulted in actual construction work.
He noted that while the Army Corps of Engineers is responsible for $4.6 billion in stimulus construction funds, the agency has only obligated $715 million and paid out $84 million.
While CDOT says that the construction industry has not “hit the cliff,” the national unemployment figures do not paint a rosy picture. Construction unemployment is at 17.4 percent, which is nearly double the national rate of 9.7 percent as of June, according to the U.S. Bureau of Labor Statistics.
“The stimulus is clearly working,” Sandherr said. “It just isn’t working fast enough for many construction workers in many communities.”
Distributed by Colorado Capitol Reporters