How COVID-19 Is Impacting the Construction Industry

April 14, 2020
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Author: Mara Zemicael

COVID-19’s impact on the U.S. economy has been swift and devastating. March unemployment numbers showed that almost 10 million people lost their jobs in just two weeks. Though industries like travel and tourism and leisure and hospitality have been hit the hardest, the job losses and slowdown reach across many sectors, including the construction industry.

Residential construction had been in demand in areas with low housing supply.

Once touted as one of the most in-demand occupations in 2020, the U.S. construction industry lost 29,000 jobs in March. Though some cities and states have designated construction as essential, and many parts of the country have not stopped all construction projects, the pace has slowed, with some cities refusing to issue permits for new projects.

Obstacles facing the industry during the pandemic include worker safety, funding, material shortages and a failure to meet contracted project timelines.

Coronavirus Prevention on Construction Sites

Construction sites often require proximity to other workers – moving heavy objects or multiple projects being completed simultaneously on the same site. This makes it challenging to keep the required 6 feet of physical distance between people promoted by public health officials. In fact, 70 percent of construction workers reported feeling anxiety as their top concern about the coronavirus in an informal Construction Dive survey.

Some metros, such as Seattle and Miami, have taken steps to help enforce virus prevention measures. In Seattle, the Associated General Contractors of Washington chapter has developed a Toolbox Talk for its members to help them remind their crews to frequently wash their hands, cover coughs and avoid touching their faces. Miami Beach officials are enforcing social distancing on construction sites and performing site inspections when they receive complaints from residents about unsafe practices.

Whether construction is essential depends on where you are in the country.

Many firms and contractors are also taking measures to prevent risk to their workers, including working with smaller crews and replacing paperwork with electronic approvals.

Lindsay Poulin, a construction project manager for Gonzales Development, a Chico, California development company, sees some of these changes in her own organization. “People who can are working from home, many caring for out-of-school children, while some employees have reduced hours,” Poulin said. “Fortunately, construction is an essential business. Specifically, housing-related projects in California are somewhat insulated from the coronavirus effects on the economy. As far as commercial construction goes, investors are holding on previously planned projects to see how this ordeal unfolds in the weeks to come.”

Material Shortages and Lending Hurdles

Besides worker safety, disruptions to international supply chains and lending threaten to further impede the construction industry. As COVID-19 is a global pandemic, delays will likely occur as firms aren’t able to receive supplies, such as steel from China, tiles from Italy or stone from Spain. Though the uncertainty of the pandemic may affect the amount of funding for current and future projects, the industry did have a recent win.

On April 6, the U.S. Treasury Department ruled in favor of the Associated General Contractors of America (AGC). The AGC had been lobbying the Small Business Administration to amend its rules about which small businesses would qualify for Paycheck Protection Program loans, part of the Coronavirus Aid, Relief and Economic Security Act. Initially, many construction contractors would not have been eligible for these loans because recipients had to meet both the 500-employee threshold and the annual revenue ceiling. The change now requires firms to meet just one of these criteria.

Related: A Safety Net for Business Arrives

Stephen Sandherr, AGC chief executive officer, expressed his gratitude for the decision in an April 7 statement. He said, “This change means the program is now more likely to help smaller firms continue to operate and retain staff.”

Like other economic sectors, the construction industry is having to adjust how it does business. However, as construction projects range from roadways and government buildings to office buildings and schools and employ people who work in architecture and engineering, as well as construction, the industry has a good chance of bouncing back from the pandemic.

ThinkWhy continuously monitors and forecasts labor data at all levels, measuring impact to MSAs and businesses across the country. Stay current with us. We are here to support organizations and provide insights during the economic downturn, as well as the recovery phase.