Labor Market Trends in Construction during COVID-19 Crisis
The infrastructure industry, along with every other sector of the US economy, has been affected by COVID-19, yet infrastructure projects across the country are seeing faster rates of recovery, signaling an optimistic future in an otherwise uncertain economic landscape.
Current Market
On a macroeconomic scale, in periods of economic stagnation, the government aims to increase GDP (gross domestic product) to stimulate the economy. While facets of GDP such as investment, consumer spending, and net exports are critical, they each require other factors such as interest rates, consumer saving, and the exchange rate to be fully effective. The lone factor that remains independent in GDP is government spending. Hence, in any economic downturn, the response by the government is usually to increase spending and no industry benefits from this more than infrastructure. A new $1.5 Trillion infrastructure bill called Moving Forward is being introduced by the Democrats in aims to disperse money among highway, road, and transit projects.
On another positive note, the unemployment rate within the construction industry is on the decline as well. Industry unemployment dropped from its peak of 16.6% in April to 12.7% by May. While the national unemployment rate for all industries decreased by 9.5% from April to May, the infrastructure industry saw a 23.5% decrease. While these factors show promise for long term growth in the industry, the short term picture is a bit murkier. Although some projects have been put on hold, many never ceased construction, indicating that the post-COVID-19 era could see a period of booming construction projects. Despite the optimism, we must also acknowledge the fact that the industry is changing. The next section will dive into one such change by analyzing the supply and demand of labor in sample project regions.
Supply and Demand of Labor
Traditionally, when extrapolation occurs for the predicted labor movement, it is based on predictions made about industry trends, worker location movements, and regional growth. However in the infrastructure world, projects are planned years ahead so the demand and supply of labor can be predicted with more accuracy. Looking at the map above, it is no surprise that the most populous states such as California, Florida, New York, and Texas will be home to many large infrastructure projects over the next decade. What is surprising, however, is the promise North Carolina and Pennsylvania show as well with each having 30+ projects valued over $100 million.
Traditionally, North Carolina has had a poor infrastructure history. In 2013, the ASCE gave the state an overall C rating for infrastructure report cards. The biggest areas of concern were Aviation with a D+ rating, and Stormwater/wastewater with a C- and C rating respectively. To mitigate this, new projects such as the Stowe Regional Water Resource Recovery Facility and the Charlotte International Airport renovation were launched and are aimed to be completed within the next 5 years. While once overlooked, these large projects with a combined value of $3 billion turn North Carolina into a regional leader for growth in the infrastructure labor market for years to come.
Similarly, Pennsylvania has had infrastructure issues and was given a C- rating by ASCE in 2018. One of the largest issues for them was roads, as evidenced by the D+ rating for highways. To avail this, Pennsylvania has introduced approximately 15 projects targeted at improving highways and roadways from now until 2025, totaling roughly over $3 trillion.
With both of these states ramping up construction, the demand and supply for labor will follow suit. Unfortunately, the current COVID-19 crisis leaves room for unpredictability and may have a significant impact on their timely completion. To mitigate the short term industry slow down, the next section will highlight a few ways you can stay informed.
What Can You Do?
In this unprecedented time with uncertainty surrounding many projects, there are a few things you can do to come out of this period stronger and more prepared. Staying aware of specific construction project updates is vital through sources such as Construction Dive, Constructtech, as well as the JLM Newsletter. Things are changing daily so familiarizing yourself with the resources within the industry gives an opportunity to take all the information in. Furthermore, online certification classes are more important than ever. Taking the time to complete certifications puts you a step ahead of your competition. Finally, technology research is a key aspect of the future of infrastructure. Safety technology and automation are set to see exponential growth in the future, so familiarizing yourself with these technologies can be beneficial as projects boom. It is apparent that while the labor market in infrastructure may not be clear now, the future sees signs of growth with a shift of labor to new and exciting regions.
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