“Construction jobs and business have bounced back faster than those in any other Michigan industry,” said ABC President Keith Ledbetter. “Our members are consistently busy and have work booked into and past the rest of 2020. The tale of the tape will be what the bid season looks like in early 2021 for jobs, but many if not all of our general contractor members see positive news regarding new work being available for next year in southeast Michigan.”
According to the Bureau of Labor Statistics, the construction industry had nearly 43% fewer jobs in April of this year than it did 2019. Nearly 100,000 jobs were lost, predominantly due to the coronavirus shutdown. But all that changed when Gov. Gretchen Whitmer authorized the reopening of the construction sector on May 7.
“We are right back to needing additional labor to complete jobs we are working on again,” said Mickey Mortimer Vice President of the Southeast Michigan Construction Academy. “Workforce development continues to be a challenge even without COVID-19 in Michigan. So many of our trained craftsmen are retiring and many of the young men and women graduating from high school are still reluctant to consider the excellent pay and careers that the trades have to offer.”
Economists feel that industries such as construction were able to rebound more quickly because they have work environments that make social distancing and implementing safety precautions more conducive. Also, with the shutdown there was a bottleneck that created a need for quick expansion in order to keep up with demand when job sites reopened.
“Everybody was shut down for months,” said Andrew Maltese, ABC SEMI Chairman and President of DJ Maltese Construction. “What we saw coming out of that was everybody was behind and loaded up to the point where they couldn’t handle everything, so the worked backed up and demand soared. As fast as companies can complete jobs, they are starting the next day on another one—it is encouraging, but we will be cautiously looking at early next year to see what new projects and bids are announced on the horizon.”
Maltese said some small contractors also took on more jobs to utilize federal Paycheck Protection Program loans designated to be spent on payroll within a certain time frame.
Robert Clancy of Robert Clancy Contracting and ABC of Michigan Chairman, stated that initially some larger commercial projects were postponed due to economic uncertainty, only to be reopened and even expanded in some situations. While he expects available work to “level back out,” he doesn’t expect the industry to experience layoffs any time soon.
Releasing an additional revised forecast for the U.S. and Michigan economies, the University of Michigan’s Research Seminar in Quantitative Economics acknowledges it will take several months to get an accurate picture of the economic damage caused by the COVID-19 pandemic.
Economists projected payroll job count is expected to fall by nearly 1.2 million in the second quarter of 2020. For comparison, Michigan lost about 140,000 jobs in the first quarter of 2009, during the depths of the Great Recession. This leads to projecting combined General Fund and School Aid Fund revenues to be $2.6 billion lower in the fiscal year 2020, $3.2 billion lower in fiscal 2021, and $2.2 billion lower in fiscal 2022.
Though the Construction Industry is showing no signs of slowing, the state’s unemployment rate is forecasted to jump to 23% in the second quarter, easily the highest level since the state-level data series began in 1976. Michigan’s unemployment rate is then expected to fall to 9% in the third quarter of 2020 and decline more slowly after that to between 5% and 6% by the end of the forecast horizon in the fourth quarter of 2022.
And although Michigan’s unemployment rate is forecasted to be larger than the nation, due to the more cyclical nature of the state’s economy, the slowing of U.S. light-vehicle sales and the greater prevalence of COVID-19 in Michigan, it is still expected to see modest growth on the construction side.
“Our economy was growing significantly prior to the COVID-19 outbreak,” stated Ledbetter. “I believe that once the Presidential election is over, we will see all the indicators for a recovering economy across the state and nation emerge. And our ABC contractors will be poised to take full advantage of that when that day comes.”