Understanding the Economy

Economic news supplements and videos to accompany 'Economics:The Basics' by Michael Mandel

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Fiscal Stimulus and Construction Workers

Posted by Mike Mandel on March 18, 2009

 
It’s a tough time to be a construction worker. The unemployment rate in the industry, as of February 2009, was a stunning 21%, up from 11% a year ago. Homebuilding has come to a standstill, and there are few new office buildings being started.

But there is one part of construction which is about to get a boost—and that’s highway and bridge construction. The fiscal stimulus bill passed by Congress and signed by President Obama in February had $27.5 billion in funds for fixing and expanding highways and bridges. On March 3 the Transportation Department began doling out these funds to states.

(To see how much highway fiscal stimulus money your state got, take a look here. If you live in or near a large city, this list may tell you how much is going to your area.)

These funds translate into jobs. American Infrastructure is a Pennsylvania-based highway construction contractor, which got the very first contract from the federal stimulus package (to resurface a highway in Maryland). So far they’ve called back about 50 of the 350 people they’ve had to lay off since October, says Mark Compton, who handles public relations for the company. But they have made a bid for work in Pennsylvania—that is, offered a price for doing the construction–and hope to get the contract soon, with projects in Virginia and Delaware to follow. These contracts would allow them to make big dent in layoffs. One employee who was rehired said, “When I was laid off my family survived, now that I’m working, we live.”

That means construction firms that specialize in highway and bridge construction are calling back laid-off workers, and in some cases actually advertising for more. For example, constructor contractors in Iowa have set up a online jobs listing here.

This is good news for workers in the highway and bridge construction business. Not only are jobs being created, but wages are going up for these kinds of jobs. In the “heavy and civil engineering construction industry”—a category which includes highway and bridge construction, hourly wages have risen by 4.9% over the past year.

By comparison, for workers in the residential construction industry, wages have only risen by 2.1% over the past year. The chart below shows how wage growth in these industries has changed over time.


construction-wages_28452_image001

These figures are based on 12-month moving averages.

But suppose you are one of the many unemployed construction workers who used to build homes. The question is: How do you get a well-paid job at one of these new highway and bridge projects—say, operating a $70,000 asphalt paver? There are two problems with moving over from homebuilding to highway construction. First, state governments are being encouraged to get construction moving as quickly as possible, in order to generate jobs. That means construction firms are more likely to hire workers who can get to work right away—who already have experience operating heavy equipment like bulldozers and pavers (which are the machines which spread the asphalt or other road material on the highway). “We have so many experienced workers sitting on the bench,” says Compton of American Infrastructure.

Second, it’s expensive and time-consuming to get experience operating heavy equipment. Either you can get ‘on-the-job’ training, or you can go to a special “heavy equipment” school. For example, West Coast Training in Woodland, Washington, offers an 8 week course—320 hours–in operating heavy equipment such as bulldozes, graders, and backhoes. The total cost of the course is a bit over $7000, but unemployed workers can sometimes get money for retraining from the government.

But the training school has not yet seen an increase in students, says Criss Jaeger of West Coast. They have “high anticipation” that the highway stimulus will boost demand for training, but so far it has not. The bottom line: For now, it looks like the stimulus bill is going to help a limited number of construction workers.

Reported by Judy Scherer

 

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