And the Work Goes On

Construction has been classified as essential during the outbreak of coronavirus and it will be even more essential to the economic rebirth of the country after the COVID-19 pandemic is brought under control. But construction requires projects and many jobs that were planned and even contracted before the crisis have been placed on hold or, unfortunately, cancelled outright. This has led to companies retrenching and laying of workers, often as a temporary expedient but sometimes permanently. Only 35% of firms report they plan to add staff this year while 24% plan to decrease their headcount in 2021; 41% expect to make no changes in staff size.
This has resulted in a rollercoaster ride for workers and companies alike. Construction employment increased by 51,000 jobs in December, with gains for nonresidential as well as residential contractors, according to an analysis by the AGC (Associated General Contractors of America). The AGC survey found contractors expect the volume of work is likely to decline for nearly all nonresidential project types, and most firms have experienced project cancellations or postponements.
Residential construction has weathered the pandemic much better than nonresidential segments. While both parts of the industry had huge job losses from the pre-pandemic peak in February to April, residential building and specialty trade contractors have now recouped the employment losses they incurred. In contrast, nonresidential construction employment—comprising nonresidential building, specialty trades, and heavy and civil engineering construction—was lower by 241,000 in December than in February 2020.
In fact, unemployment in construction nearly doubled in 2020 with the rate in December at 9.6% compared to 5.0% in December 2019. A total of 930,000 former construction workers were unemployed, up from 489,000 a year earlier, the highest for December since 2013.
The association’s 2021 Construction Hiring and Business Outlook Survey found that 78% of contractors reported a project had been canceled or postponed, while only 25% reported winning new or additional work. Firms report that many of their already-scheduled projects have either been delayed or canceled. Fifty-nine percent of firms report they had projects scheduled to start in 2020 that have been postponed until 2021 while 44% report they had projects canceled in 2020 that have not been rescheduled. Eighteen percent of firms report that projects scheduled to start between January and June 2021 have been delayed; 8% report projects scheduled to start in that time frame have been canceled.
Contractors are most pessimistic about the market for retail construction, lodging, and private office construction. Other construction categories of concern include higher education construction, public buildings, and K-12 school construction. Among the market segments with a positive outlook, two – warehouse construction and the construction of clinics, testing facilities and medical labs – track closely with the few segments of the economy to benefit from the impacts of the coronavirus.
Association officials urged the new Congress and incoming Biden administration to enact measures to boost investments in all manner of public infrastructure. They added that Washington needs to backfill depleted state and local construction budgets so those new federal infrastructure investments can be more effective in boosting demand and construction employment.