Minnesota’s hard-hit construction industry, which has seen nearly a third of its jobs disappear over the past three years, sees no sign of relief anytime soon.
It’s almost as if there are two very different Minnesotas.
The state’s diverse economy has buffered it from the worst of the recession. Unemployment in Minnesota has consistently trailed a couple of percentage points below the national average, and 11,000 more people are working in the state now than a year ago.
But if you are one of the remaining 90,000 construction workers in Minnesota, you’re not feeling that same resiliency in the economy.
‘Our construction market here is still very much in a recession, and most people are thinking it’s going to be another couple of years before [we see] any type of recovery,” said David C. Semerad, CEO for Associated General Contractors (AGC) of Minnesota, an industry association for non-residential construction firms.
A recent state-by-state comparison of job gains and losses in the industry over the past 12 months points to some hopefuls signs nationally but offers little comfort for Minnesota construction workers. The state ranked 35th, posting nearly a 9 percent decline in seasonally adjusted construction employment from June 2009 to June 2010. Contrast that with a nearly 2 percent growth in overall employment statewide over the same period.
Change in Construction Employment and Total Employment June 2009 – June 2010
The Minnesota Department of Employment and Economic Development (DEED) reported recently that major metropolitan counties in the state have seen a 23 percent decline in construction-related employment over the past two years and 30 percent statewide over the last three years.
Ken Simonson, chief economist for the national arm of the AGC, which issued the study based on U.S. Bureau of Labor Statistics data, said that construction employment “edged closer to stabilizing in June, as half the states either added construction jobs or kept the same number as in May.” Compared with June 2009, construction employment rose in six states, the largest number of states to post year-over-year increases since October 2008, according to Simonson.
“It is encouraging to see some states adding construction jobs and the declines in others getting less severe,” Simonson said. “But there’s little room to celebrate with overall construction employment at a 14-year low and demand … still weak.”
Kansas posted the largest year-over-year increase, where construction jobs rose 7.7 percent (4,400 jobs), followed by Alaska (3.1 percent, 500 jobs), Arkansas (2.4 percent, 1,200 jobs), West Virginia (2.4 percent, 800 jobs) and New Hampshire (2.3 percent, 500 jobs).
Although California lost the largest number of jobs (-74,400, or 12 percent), Nevada, with a 24.4 percent drop (-19,500 jobs), posted the largest percentage job decrease, followed by Vermont (-18.5 percent, 2,500 jobs); Wyoming (-16.6 percent, 4,000 jobs); and Washington (-14.3 percent, 22,900 jobs).
AGC noted that projects funded by federal stimulus money have added construction jobs in many states but said that funding is running out. “Any improvements in the construction employment picture will be difficult to sustain unless Congress quickly passes long-term funding for transportation, drinking water and wastewater infrastructure,” said Stephen E. Sandherr, the association’s chief executive officer.
Minnesota’s Semerad, whose organization numbers several hundred construction companies, has maintained “fairly steady” membership through the recession by taking an advocacy role and offering education programs for members, he said.
He echoed concerns that highway construction will tail off, particularly if Congress fails to act on transportation funding. Semerad said that in the past, his organization played a leadership role in helping override Gov. Tim Pawlenty’s third veto of the state transportation bonding bill. “We said, ‘That’s enough!’ ” In addition, the group pushed for tax increment financing and historic rehabilitation tax credits as well. “We’re always looking at (ways to) help grow our markets,” he said.
He blamed the credit squeeze brought on by tighter lending standards, as partly responsible for the current dismal construction outlook. He also said that competition is “particularly intense … you’ve got a lot of contractors chasing smaller pieces of the pie … They need work so they’re cutting prices.”