March 31, 2020
According to a new survey by the Associated General Contractors of America (AGC), COVID-19 is taking a swift and severe toll on the construction industry, prompting association officials to call for additional measures to help workers and firms recover.
Thirty-nine percent of contractors report project owners have halted or cancelled current construction projects amid deteriorating economic conditions, according to the survey. Association officials warned these cancellations mean massive job losses are likely soon unless congress passes targeted recovery measures to boost infrastructure funding, compensate firms for lost or delayed federally funded work, and provide needed pension relief. The project cancellations are particularly severe in light of new data showing 42 states added construction jobs through February.
“The abrupt plunge in economic activity is taking a swift and severe toll on construction,” said Ken Simonson, the association’s chief economist, noting only 18 percent of respondents has been ordered to halt work by elected officials. “The sudden drop in demand stands in sharp contrast to the strong employment levels this industry was experiencing just a few weeks ago.”
In the association’s latest online survey, conducted between March 23 and 26, 45 percent of the 1640 respondents reported experiencing project delays or disruptions. Shortages of material, parts and equipment, including vital personal protective equipment (PPE) for workers such as respirators, were reported by 23 percent of respondents. Eighteen percent reported shortages of craftworkers, while 16 percent said projects were delayed by shortages of government workers needed for inspections, permits, and other actions. Thirteen percent said delay or disruption had occurred because a potentially infected person had visited a jobsite.
The survey also found 35 percent of firms said suppliers had notified them or their subcontractors that some deliveries would be delayed or cancelled, Simonson added. He noted only 22 percent reported similar supply chain challenges last week. That survey was conducted between March 17 and 19. However, eight percent of firms did report they have added new work expanding health care and other facilities needed to respond to the growing health crisis.
In contrast to the rapidly deteriorating current market conditions, the association also released new construction employment data showing most states, 42, added construction jobs between February 2019 and February 2020. Industry employment declined over the year in eight states and the District of Columbia. From January to February, 37 states and D.C. added construction jobs, while 11 states shed jobs and two states had no change.
Association officials said new investments in infrastructure, relief from losses incurred on delayed or canceled federally funded projects, and protections for multi-employer pensions will help the industry recover from the economic impacts of the pandemic.
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