Butch Brooks, vice president of the Associated General Contractors of Washington, speaks Wednesday at the Alaskan Way Viaduct replacement project in Seattle.
SEATTLE, Dec. 5.—The Associated General Contractors are offering a word of warning to the state’s congressional delegation: If Congress chooses to jump the “fiscal cliff,” Washington stands to lose thousands of jobs in the construction industry, which is just beginning to recover from years of recession.
At a Seattle news conference with the state’s Alaskan Way Viaduct replacement project as a backdrop, AGC-Washington vice-president Butch Brooks said the massive tax increases and federal spending cuts that would come if Congress reaches no agreement would have a devastating effect that would ripple through the Washington state economy. According to a report released Wednesday by the Associated General Contractors of America, some $6 billion in federal construction projects would be slashed by the mandatory spending cuts, many in Washington state.
The Seattle news conference, one of several around the country coordinated by the national group, might be considered direct mail to U.S. Sen. Patty Murray and other Democratic members of Washington’s congressional delegation, who have suggested they might be willing to allow the Bush-era tax cuts to expire without replacement. That would trigger “sequestration” on Jan. 2 and $1.2 billion in cuts throughout the federal budget. “We are hoping to send a message to all of our elected officials,” Brooks said. “Construction, like many sectors of our economy has been hit very hard and our industry and our people can just can’t afford another recession on top of the one that we are just coming out of.”
Brooks said the recession has had a devastating effect on the construction industry in Washington state, costing it about 25 percent of the 211,300 jobs that existed in June 2007. In the last year, however, the Seattle metropolitan area has been one of the few bright spots, posting a 10 percent gain, the second-best in the country behind Houston, Texas. That has been fueled by federally funded construction and a handful of large private-sector projects.
“We’d like to make sure that we don’t do anything with the construction upturn to a premature end,” said Brian Turmail of AGC-America. “We are still a little shellshocked from about five years of getting decimated.”
AGC is urging a one-year hold on all action until Congress can reach a compromise. Contractors are concerned about a proposal from the Obama Administration to end tax cuts at the highest levels of personal income because many contractors pay taxes for their businesses at the individual tax rate, Turmail said. “The vast majority of our members file taxes at the individual income tax rate because they are small businesses that employ 100 or fewer folks. Somewhere between 60 or 80%, depending on which year we surveyed our members, pay income taxes at the individual rate.
“So frankly we are concerned about the president’s proposal to increase marginal rate on top earners, not because our members are millionaires – most of them drive pickup trucks and wear muddy boots all day – but because their businesses would pay at a higher rate. We do worry that it will make it harder for our firms to continue adding jobs. We have proposed passing a one-year extension all current tax rates, putting a hold on the sequestration cuts and spending a year coming up with a sensible solution that is a grand compromise. We just worry that if we rush and do some sort of compromise right now, we could do more damage than it ultimately would help.”
Brooks’ Statement
Brooks’ full remarks follow:
“The past few years have been very difficult for the construction industry. Total spending for construction activity has decreased 30% in the past few years. Over 2 million construction workers have lost their jobs and the industry’s unemployment rate was almost 12% in October, higher than the national average for all workers.
“The Seattle area and much of Washington state have not been immune from the nationwide construction downturn. During the past five years of Seattle and the surrounding area has lost nearly 30,000 construction jobs, a 29% decline, while statewide more than 25% of the 211,300 construction jobs that existed in June of 2007 have disappeared. Some trades and craft around the state have reported unemployment rates at or above 50%. Yet largely thanks to new projects like the viaduct and growing private sector demand from firms like Amazon, we have some good news to share today.
“That is why I am here to announce that according to new data from the Associated General Contractors of America, the Seattle Bellevue Everett Metro area added more construction jobs than all but one other Metro area in the United States between October of 2011 and October of 2012. During the past 12 months, the Seattle area added 6,500 construction jobs, a 10% increase. While last year 66,200 people work in construction, today 72,700 construction workers are employed. There are more people working in construction in this area today than at any given time since the summer of 2009. Only Houston, Texas added more construction jobs than Seattle did in the past year.
“It has been far too long since we had good news to report like this in Seattle, and the area is not alone. All told 127 of 337 metro areas added construction jobs during the past year, including Tacoma, Bellingham and the Tri-Cities area.
“As welcome as this news is, the looming threat of the fiscal cliff and the massive tax increases and federal spending cuts that would come with it could cost this area thousands of construction jobs. It is important to remember that even after a year of solid construction employment gains the local construction industry is still 30% smaller than it was five short years ago. A new report being released today by the Associated General Contractors of America details how the mandatory federal spending cuts known as sequestration that are part of the fiscal cliff would cut over $6 billion worth of federal construction projects next year alone. And given that nearly $2 billion of those cuts will come out of military construction projects, sequestration is certain to have a major impact on local firms and the thousands of employees that perform work on the region’s military bases. And of course the massive cuts to defense spending would naturally have a major impact to employers such as Boeing.
“Even highway projects will suffer because of sequestration. That is because nearly half a billion scheduled to be transferred into the highway trust fund would be cut next year, making reductions in federal projects or projects like this almost inevitable. Most economists agree with the whole economy will suffer should the administration and Congress fail to act and allow the fiscal cliff to occur. The Congressional Budget Office predicts our economy would shrink and unemployment would increase, threatening the kind of private sector demand that is helping boost construction employment here and in other parts of the country.
“The fiscal cliff isn’t just a threat to areas that are adding jobs. It will also make matters worse for many parts of the country that are still losing jobs. 156 metro areas lost construction jobs between August of 2011 and August of 2012, including the Bremerton-Silverdale area and Spokane. Meanwhile construction employment numbers were stagnant in 54 other areas.
“We need to find a way to address out-of-control spending, especially for entitlement programs, and we certainly need to cut our debt further before it hobbles generations to come. The best way to do that is to make wise policy choices that allow our economy to expand, more people to earn a living and more revenue to flow into the treasury. Allowing the fiscal cliff to occur will only make our nation’s fiscal problems worse. This area and these construction workers behind me that are in good family wage jobs can ill afford the kind of recession that the fiscal cliff will surely bring.”
“Were construction employment to fall again the entire Seattle area and the surrounding region would suffer as the impacts of these job losses ripple through the broader economy. After all, construction projects support as many non-construction jobs as they do employees on the site. That is why the Associated General Contractors of America will continue working with members of Congress, including the state’s delegation, to make sure these jobs don’t soon become a fond memory of better days past.”
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