WTCABC News
2010 Begins with More Nonresidential Construction Job Losses 2/5/10
"Since the recession began, the construction industry has lost nearly a quarter of all jobs, and, if anything, today's report indicates more jobs losses will follow." —ABC Chief Economist Anirban Basu
The nonresidential building construction sector lost 12,100 jobs in January, bringing the total number of jobs lost since January 2009 to 104,300, according to the Feb. 5 report produced by the U.S. Labor Department. The total number of nonresidential construction jobs stands at 671,200, 13.4 percent below January 2009 levels. (See what this means below)
Nonresidential specialty trade construction posted its largest monthly job loss since March 2009, shedding 48,100 jobs in January. Year-over-year, nonresidential specialty trade construction has lost 383,400 jobs, or 16.1 percent of its workforce. Heavy and civil engineering construction employment was unchanged for the month but is still down 109,100 jobs for the year.
Residential building construction shed 8,800 jobs in January and is down 16.9 percent, or 119,700 jobs, since the same time last year. The construction industry as a whole lost 75,000 jobs for the month and 926,000 year over year.
Across all industries the number of jobs fell by 20,000 in January, compared to a revised report showing a loss of 150,000 jobs in December and a gain of 64,000 jobs in November. Year-over-year, employment shrank 3 percent – a loss of more than 4 million jobs. The unemployment rate is now 9.7 percent, marking the first time it has been below 10 percent since September 2009.
“Rarely is a data release as difficult to interpret as today's jobs report. Data emerging from the DOL’s establishment and household surveys, which make up the information in the report, provide plenty of ammunition for both economic optimists and pessimists,” said ABC Chief Economist Anirban Basu. “Optimists will undoubtedly focus on the unemployment rate, which is below 10 percent, and the evidence of job growth emerging from the household survey, which generally is believed to be an indicator of small business job growth in the short term, and therefore will find evidence that small businesses are expanding again.
“Pessimists are more likely to focus on the establishment survey, which shows that job losses not only continue but have been considerably worse than previously estimated,” Basu continued. “Based on revised data, it is now estimated that the nation has lost 8.4 million jobs since the recession began as opposed to the prior estimate of 7.2 million jobs.
“ABC members are likely to be more affected by the results of the establishment survey than the household survey,” said Basu. “After all, construction continues to hemorrhage jobs, most profoundly among specialty trade contractors. Since the recession began, the construction industry has lost nearly a quarter of all jobs, and, if anything, today's report indicates more jobs losses will follow.”
DOL BUDGET FOCUSES ON EMPLOYER ENFORCEMENT AND INDEPENDENT CONTRACTOR CLASSIFICATION (02/03/2010)
The U.S. Department of Labor (DOL) Feb. 1 requested a fiscal year 2011 discretionary budget of $13.98 billion that includes an increase in oversight of wage and hour rules and occupational safety and health laws in addition to funding an initiative to crack down on misclassification of independent contractors.
Under the FY 2011 budget, the Occupational Safety and Health Administration (OSHA) would get $573 million, an increase of $14 million from FY 2010. OSHA plans to significantly decrease funding for its Voluntary Protection Program (VPP) and shift 35 workers from cooperative safety programs to enforcement.
“We recognize that VPP companies do an excellent job; OSHA resources need to be focused on employers who don't understand the importance of protecting their workers, particularly small employers,” said Dr. David Michaels, OSHA assistant secretary.
As part of an initiative between DOL and the U.S. Treasury, $25 million of DOL’s budget will be dedicated to strengthening and coordinating federal and state efforts to identify and deter misclassification of independent contractors. A portion of OSHA’s budget also will be used to modify training curriculum and investigation guidelines to allow inspectors to indentify potential misclassifications. The Wage and Hour Division will hire 90 additional inspectors to focus on misclassifications during targeted investigations.
“The goal is to improve capacity to identify misclassification through increased information sharing and targeted audits in high-risk industry sectors,” said Jane Oates, assistant secretary at DOL’s Employment and Training Administration. “These efforts will prevent misclassification, increase statutory enforcement where appropriate, and enable collection of payroll taxes previously lost due to misclassification, such as in the Unemployment Insurance program.”
For more information, visit www.dol.gov/dol/budget.
Fourth Quarter GDP: 2009 Ends as Mixed Bag
"There are a number of encouraging elements to the report, including the fact that much of the fourth quarter's expansion had little to do with federal spending." —ABC Chief Economist Anirban Basu
Last year ended as a mixed bag as nonresidential fixed investment increased 2.9 percent from the third quarter to the fourth quarter of 2009, according to the January 29 gross domestic product (GDP) report by the U.S. Commerce Department. The increase was led largely by a 13.3 percent gain in equipment and software spending. However, investment in nonresidential structures declined 15.4 percent following an 18.4 percent loss in the third quarter. (See Analysis below)
Residential fixed investment increased 5.7 percent in the fourth quarter following an 18.9 percent gain in the third quarter. Exports continued to grow, surging 18.1 percent, arguably the most encouraging aspect of today's GDP report. Imports rose 10.5 percent. Personal consumption expenditures also grew 2.0 percent primarily due to a 4.3 percent increase in nondurable goods consumption. Durable goods consumption declined 0.9 percent for the quarter following a 20.4 percent increase in the third quarter. Private inventories grew by 3.4 percent in the fourth quarter while final sales (GDP less private inventories) increased 2.2 percent. Federal government spending increased just 0.1 percent in the fourth quarter following an 8 percent gain in the third. Defense spending decreased 3.5 percent after an 8.4 percent gain the previous quarter.
Gross domestic purchases also gained 2.1 percent for the quarter and increased 1.2 percent, excluding food and energy purchases. Overall, real gross domestic product increased 5.7 percent for the quarter, the fastest growth pace since 2003.
“While many observers will take comfort in today's GDP report, most nonresidential contractors will not,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “However, there are a number of encouraging elements to the report, including the fact that much of the fourth quarter's expansion had little to do with federal spending. Instead, output gains were largely attributable to America's technology sector, growing consumer activity and an improving global economy, which contributed to the surge in exports.
“The most surprising aspect of the report is the absence of federal spending as a primary economic driver, though non-defense spending was up for the quarter,” said Basu. “It is important for ABC members to note that GDP is subject to revision and one of the aspects that may be revised is the estimate of federal spending contribution.
“For the nonresidential construction industry, there are certainly elements of the report that are discouraging. Investment in nonresidential structures continues to decline even in the wake of the stimulus package passed last February,” said Basu. “Further, many economists are concerned that the fourth quarter surge in GDP will be largely a one-quarter phenomenon, and that the economic recovery still remains fragile, especially given anticipated increases in various tax rates and interest rates this year and next.”
ABC URGES OBAMA TO KICK START THE ECONOMY AND SUPPORT FREE ENTERPRISE (01/27/2010)
ABC Jan. 26 urged President Obama to include free enterprise solutions to stimulate the economy and help create jobs in his Jan. 27 State of the Union address.
“If history has taught us anything, job creation is best fostered in a pro-business environment where free enterprise and open competition are unconstrained. Free enterprise solutions are the key to kick-starting our lagging economy,” said ABC 2010 National Chairman James (Jim) W. Elmer, founder and president of James W. Elmer Construction Co., Spokane, Wash. “Creating jobs and invigorating our economy has emerged as an urgent need for Americans in general, and for ABC members in particular.
“With construction in this country nearly at a standstill and the industry unemployment rate at a staggering 22.7 percent – more than twice the national average – we call on President Obama to focus on a job proposal that will help put Americans back to work and the construction industry back on its feet,” said Elmer.
“In order to revive the economy and create jobs for the men and women in the construction industry, regardless of labor affiliation, we believe that it is imperative to focus on implementing free enterprise solutions to increase access to capital, provide meaningful tax relief for small businesses, speed up delivery of stimulus dollars to ‘shovel-ready’ projects, support a comprehensive energy plan, and increase access to training programs for all,” said Elmer.
“This is not a time to play favorites with special interest groups, such as big labor,” said Elmer. “Now is the time for the Obama administration to embrace policies that benefit all Americans, not a chosen few.” <!-- Content End Flag -->
James Overstreet: Construction lagging behind economy
By James Overstreet (Contact), Memphis Commercial Appeal
Sunday, August 16, 2009
While many economists, pundits and politicians have declared an end to the Great Recession, the construction industry isn't feeling it yet. But that's not unusual, because commercial construction typically lags economic recovery by several months -- if not years, says Associated Builders and Contractors chief economist Anirban Basu. The organization recently unveiled a new economic report called the Construction Backlog Indicator, which will be released every other month.
"Contractors always talk about their backlog as a means to answer the question, 'How's business? “says Mike Carpenter, president and CEO of the West Tennessee chapter of ABC. "The CBI is a natural measure to determine how robust (or not) this industry is."What the CBI shows is very consistent with what we are experiencing locally -- a declining backlog," Carpenter says. "This also meshes with what local architects are telling us about their backlog or lack of backlog." ABC has been projecting recovery for its industry in mid- or late 2010, and the new CBI report supports that prediction.
"This is in contrast to residential construction and the real estate market, which appear to be showing signs of a slight recovery," Carpenter says. "Commercial construction is always on the back end of a downturn and a recovery." Basu points out that the full benefits of the economic stimulus package haven't been felt yet in the construction trades. "We had a very good sense that shovel ready didn't mean immediately ready," Basu says, referring to the stimulus bills' advocates who claimed the money would be immediately injected into the economy. "Projects needed to be planned and bid out. It takes time before they are converted into contractual obligations." However, many construction companies will not get a piece of the stimulus-related projects, and their backlogs continue to decline. "Many segments of commercial real estate remain in very bad shape," Basu says. "There is a general lack of financing and job losses lead to decreasing office, retail and hotel occupancy rates. None of that helps construction. So although many economists are calling the recession over, the commercial real estate industry has many more months -- probably years -- before it recovers."
As the Apple Store at 7615 W. Farmington at Saddle Creek in Germantown closes for renovations until Sept. 3, local Macintosh dealers are seeing a welcomed increase in business. "Our business has been up about 25 percent already," said Jim Walton, co-founder of 31-year-old Computerlab of Memphis Inc. Computerlab, at 685 N. Mendenhall in East Memphis, is one of several companies filling the void. Another is MacAdvantage at 1000 Reddoch Cove. MacAdvantage has been a seller of new and refurbished Apple computers, accessories and equipment for more than 15 years. It has been awarded the Apple Authorized Service Commitment to Excellence Recognition award for all four quarters of 2008 and the first two quarters of 2009 -- the only company within Tennessee, Mississippi, Georgia and Kentucky to accomplish that feat. "We have parts here that you can't even find on the Internet," says Mignonne Wright. Securas Consulating Group is also accepting Apple laptops and desktops at its facility at 1125 Schilling Blvd., Suite 101, in Collierville, beginning Monday. Securas Consulating is also extending its hours from 9 a.m. to 7 p.m. Mondays through Saturdays and noon to 6 p.m. on Sundays.
Sunday, August 16, 2009
Health Care Reform - Proposed Provisions Would Hurt Employers and Employees
Major, wide-ranging legislation attempting to change the way Americans receive their health care is being rushed through Congress as a top priority of the Obama administration. While ABC supports health care system reforms that would increase access to coverage and lower costs, the proposals being considered would only hurt small businesses and the construction industry at large. Even the nonpartisan Congressional Budget Office (CBO) has made clear that the proposals put forth by the majority in Congress would not reduce costs. In fact, they will likely cause further damage to the U.S. health care system and economy with a price tag exceeding $1 trillion, requiring billions of dollars in new taxes on American taxpayers and small business owners.
This is one of the most important legislative debates many Americans will see in their lifetimes. If signed into law, these health care proposals will profoundly impact the way in which Americans access health care coverage. Health care decisions currently made by patients and their doctors will be put into the hands of government bureaucrats. Placing these potentially life or death decisions into the hands of an untrained bureaucrat in Washington, D.C. is not what American’s deserve. In addition, these proposals will jeopardize the solvency of private health care plans that currently work for millions of Americans, and once a government-run health plan is imposed, it will never go away.
Key concerns ABC has with the proposals are:
- employer mandates: a “pay or play” provision that would result in premium increases and more expensive insurance for employers and employees;
- a government-run public insurance option that would unfairly compete with private providers;
- an income “surtax” that would fall directly on the shoulders of small businesses;
- a dramatic increase in the national debt; and
- placing government bureaucrats in charge of health care decisions.
The proposed plans would increase the national debt, jeopardize the health coverage Americans already have, and cripple the ability of small businesses to compete—not the kind of change the United States needs as the national debt spirals out of control.
Make your voice heard on this issue by reaching out to your representatives in the House and Senate during their scheduled August district work period.
ABC OF WEST TENNESSEE HELPS MEMPHIS RESIDENTS LEARN SKILLS, FIND JOBS (08/05/2009)
ABC’s West Tennessee Chapter (WTCABC) July 31 received a $7,100 grant from the Trimmer Education Foundation, ABC’s educational affiliate, to continue training 11 minority and women students in basic carpentry skills.
In January, WTCABC was contacted by member company Caroma Construction and a representative from McCormack Baron Salazar, who also managed a program for the Memphis Housing Authority designed to revitalize two of the most dangerous housing projects in Memphis. The revitalization project required former residents to be employed before they would be allowed to return to their refurbished homes. WTCABC was asked to design a short-term training program that would provide basic construction skills at no cost to the students enrolled in the program. As part of the deal, WTCABC member companies Caroma Construction and Zellner Construction agreed to hire some of the program participants who could meet basic qualifications.
The training program was scheduled to run between April and August and cover the curriculum for the first semester of WTCABC’s carpentry training course. With the Trimmer Education Foundation grant, all 11 students will be able to continue on to the second semester of training and complete the one-year Basic Carpentry curriculum that will prepare them to enter Advanced Carpentry training in the future, making them even more marketable in the industry.
WTCABC extended the length of the training program to help the students brush up on their construction math skills. In addition, the chapter partnered with the RISE Foundation, a nonprofit that assists residents in public housing, to provide financial literacy instruction and free financial counseling for a year, and partnered with a member company to donate the time and resources for each student to complete the Occupational Safety and Health Administration’s 10-hour training.
"This program is a collaboration between private business and not-for-profits that addresses multiple needs and fulfills more than one mission,” said Mike Carpenter, president of WTCABC. “We're expanding the construction workforce, providing opportunities for minorities and women, and empowering people through financial literacy education. In the process, we're doing our part to deal with the pervasive poverty plaguing our community.”
For more information, contact Mike Carpenter with WTCABC, mike@wtcabc.org.
Construction Material Prices Rise in June
Prices for construction materials inched up 1.0 percent in June 2009, according to the July 14 producer price index (PPI) report by the U.S. Labor Department. Still, prices are down 6.1 percent from June 2008 (see graph below).
Material prices feeding the increase include prepared asphalt and tar roofing, up 5.6 percent from May, and 38.9 percent higher from June 2008. Softwood lumber prices jumped up 1.7 percent in June, but are still down 18.1 percent from last year. Nonferrous wire and cable prices were up slightly at 0.8 percent from May, but are down 14.3 percent from a year ago.
Meanwhile, fabricated structural metal product prices continue to dip, down 0.7 percent for the month, and down 4.2 percent on a year-over-year basis. Prices for fabricated ferrous wire products were unchanged on a monthly basis and are down 3.0 percent from June 2008. Plumbing fixtures and fittings prices were unchanged for the second consecutive month and have inched up 0.5 percent in the past 12 months.
Crude energy material prices climbed 10.9 percent in June, and prices for natural gas rose 3.5 percent and crude petroleum jumped up 20.3 percent. Overall, finished goods prices edged up 1.8 percent on the month but are still down 4.6 percent on a year-over-year basis.
What This Means
"The magic of economics rests with its self-equilibrating mechanisms. These mechanisms are designed to prevent economies from severe overheating or intolerable contraction," said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu.
"Producer prices represent a perfect example. When the economy is expanding, producer prices rise, making it more expensive for suppliers to expand, which limits the pace of expansion," said Basu. "However, with the economy shrinking as it is now, producer prices tend to decline, which induces cost-efficient supply and limits the extent of the downturn.
"Recent reports indicate that a combination of factors continues to place upward pressure on construction input prices despite the ongoing global economic downturn," said Basu. "One of those factors is China, which has introduced its own stimulus package of several hundreds of billions dollars with an intense focus on infrastructure.
"Moreover, the U.S. stimulus package is also likely having an impact on materials prices due to the anticipation of significant future construction. However, input prices are not declining as one would otherwise predict," said Basu.
For more industry economic news, click the link:
WTCABC Hosts First City Mayoral Forum
In our tradition of being trail blazers, WTCABC was the first to host five of the candidates interested in succeeding Mayor W.W. Herenton as Mayor of Memphis. Candidates and prospective candidates included, Charles Carpenter, attorney and former Herenton campaign manager, first-term Councilman Kemp Conrad, former Councilwoman and mayoral candidate Carol Chumney, Councilman Jim Strickland and Memphis School Board Commissioner Rev. Kenneth Whalum. Mayor AC Wharton and Council Chair Myron Lowery were scheduled to attend, but cancelled the night before the event. To a room of almost 150 ABC members and numerous representatives of the media, the candidates each delivered their vision for Memphis. To the candidates' credit, each talked issues and for the most part stayed away from personal attacks and criticisms of one another.
WTCABC has been criticized somehwat for not inviting all of the candidates and prospective candidates, but has also received extensive positive media coverage. As explained in these reports, ABC is a private organization and the purpose of the event was to meet candidates that our organization might support, not to provide a venue for the general public to assess the candidates.
To see the extensive media coverage we received, click any of the links below:
Commercial Appeal
My Fox Memphis
Memphis Flyer
WTCABC Hosts GOP Gubernatorial Contenders
WTCABC is pleased to announce that three of the top four Republican gubernatorial candidates were special guests at our annual PAC event. District Attorney General Bill Gibbons, Knoxville Mayor Bill Haslam and Lieutenant Governor Ron Ramsey all spoke at the event on Wednesday, July 29 at The Grove Grill in Memphis.
While WTCABC is a non-partisan organization, these individuals have a proven record and commitment to free enterprise principles. The winner of the Republican primary next August will likely receive the support of not only WTCABC, but all three chapters statewide.
The PAC dollars raised by this event will help fund Merit Shop candidates in the special election for City Mayor, next year's county wide races and of course the race for Governor of Tennessee. Like the forum of prospective mayoral candidates, this event will also raise our profile and demonstrate the influence of our chapter and its members.
To read media coverage of the event, click these links:
