Capitol Update – 11/01/2021
Unemployment Insurance Claims
Initial claims within California dropped 10.8% during the week of October 23, while claims in the rest of the country eased 2.1%. The seasonally adjusted number of claims dropped 3.4% for the US. In all, California continued to perform below the rest of the US, with 26.5% of all initial claims filed during the week. This performance would indicate a continued slowing in California’s recovery pace compared to the rest of the nation as reflected in the recently released job and employment numbers for September. California claims remained at levels previously seen in July and August 2021. The US number was the lowest since the beginning of the pandemic period and only 14% above the average in 2019
Compensation costs up 1.3% Jun 2021 to Sep 2021 and up 3.7% over the year ending Sep 2021
Compensation costs increased 1.3 percent for civilian workers, seasonally adjusted, from June 2021 to September 2021. Over the year, total compensation rose 3.7 percent, wages and salaries rose 4.2 percent, and benefit costs rose 2.5 percent.
Construction’s career crisis: Can the industry attract millennials and Gen Z?
Younger workers want flexibility and higher pay, and the industry is trying a variety of tactics to recruit them. This is the third in a series of articles looking at the skilled labor crisis in construction, its causes and potential solutions. Click here for the entire series.
Construction employment carries with it a perception that the work does not pay well or is more likely to be affected by an economic downturn than other fields. These fears are not entirely unfounded, said Priya Kapila, compensation practice leader at FMI Corp., a consulting and investment banking firm that works with clients in construction, engineering and similar sectors. Historically, contractors sought to control costs in part by leaning on lower base salaries, particularly for entry-level positions, and making up for it with bonuses, she said.
Layoffs that occurred in tandem with downturns such as the mid-2000s recession further the narrative. “There’s an inherent challenge of business cycles,” Kapila said. “Even today, we’ve seen people exit the industry who are less inclined to come back.” That does not play well with a generation of workers who are looking for economic stability, she added. But Kapila noted that construction’s reputation as a low-paying industry is not entirely deserved. Particularly for construction management graduates, FMI’s research has shown the industry offers competitive pay compared to other sectors. And with a competitive talent market that has led companies across industries to increase wages, “you can’t get away with low pay,” Kapila said. Other sources echoed that thought. “If you’re a drywall contractor and looking for people, drywall finishing is a skill … you can’t just take someone from off the street,” said Brent MacDonald, an instructor in construction management at Indiana State. “You have to train them to be a drywall finisher and pay them accordingly. And now that we have this competitive talent market, you can no longer pay someone $13 an hour.”
Survey: Young workers overlooking construction
Young American workers pausing their careers to consider new options are notably disinclined to consider construction, according to a survey. Industry observers attribute this reluctance to a number of factors, including education’s focus on digital technology and young people’s lack of experience working with their hands, as well as persistent stereotyping of the industry. Full Story: Construction Dive/HR Dive
Infrastructure bill could ease supply chain woes
The bipartisan infrastructure bill, as it currently stands, could help prevent a repeat of the nation’s supply chain crisis by injecting $78 billion into freight infrastructure over the next five years. There is a severe backlog of projects, and the Transportation Department was only able to award grants to 24 out of 157 applicants under the Infrastructure for Rebuilding America program this year. Full Story: CNN
Congress clears stopgap funding for highways, transit
Congress has approved another stopgap funding bill for highway and transit programs as the infrastructure bill remains in limbo. The measure provides funding through Dec. 3 for programs that had been due to expire at the end of this month, but many industry groups expressed disappointment over the unresolved status of broader infrastructure legislation. Full Story: For Construction Pros Engineering News-Record (tiered subscription model)
Calif., USDOT partner to fast-track port projects
California and the federal government have forged a strategic partnership to expedite billions of dollars of work on the state’s ports. The goal of the partnership is to prevent future supply-chain logjams like the ones many ports nationwide face. Full Story: Courthouse News Service
DOT intends to fund first project in project-delivery pilot
The Transportation Department has indicated its intent to obligate funds for a 6-mile extension of Bay Area Rapid Transit service from the Berryessa Transit Center into downtown San Jose, Calif., and Santa Clara, Calif. The BART extension, which will receive full grant funding if the Santa Clara Valley Transportation Authority fulfills the requirements of a letter of intent, is the first project under the federal Expedited Project Delivery Pilot Program. Full Story: Transportation Today
How construction can address gender, racial issues
A lot of work remains to be done, but this year is marking new paths for gender and racial equity in construction. There is much that companies can do to break down barriers by reaching out and being sensitive to these issues, but technology and innovation are also helping, writes Elizabeth Rosselle. Full Story: Redshift
White House announces guidelines to boost unions in the federal workforce
Vice President Kamala Harris and Labor Secretary Marty Walsh announced new guidelines last week to encourage federal workers to join unions. Federal agencies will be required to inform new hires and job applicants about unions during the hiring and onboarding process. Unions may also sit in during new employee training sessions, according to a memo from the United States Office of Personnel Management (OPM). Government employers will also need to communicate with current workers throughout the year about their collective bargaining rights and how to contact their respective unions, the memo said. The guidelines do not appear to extend to government contractors.
California officials fear COVID case decline has stopped as holidays approach
California’s coronavirus case rate, which has fallen steadily over the past month, has leveled off — and officials are worried about what will happen in the fall and winter as people gather indoors for holidays, and other respiratory viruses such as the flu start to take their toll. Kate Galbraith in the San Francisco Chronicle
Biden climate mandate raises industry concerns
Industry groups are expressing wariness over the Biden administration’s far-reaching executive order for government agencies to prioritize climate change and resiliency in their decision-making. The orders will affect policies relating to infrastructure, supply chains and many other areas, but critics are concerned about what this means for regulations and implementation. Full Story: Engineering News-Record (tiered subscription model)
Calif. assemblymember suggests pivot for rail project
Funding constraints could force officials to consider a lower-speed, diesel alternative to an electrified, 520-mile high-speed rail project between San Francisco and Los Angeles. Laura Friedman, chair of the Transportation Committee of the California State Assembly, has suggested spending funds on a station at Merced to provide commuter links to the coast, allowing for possible electrification and high-speed service at a later date. Full Story: Construction Dive
EPA loan to help L.A. water purification project
A water purification project in Los Angeles would serve to replenish the San Fernando Basin and make the city more resilient to drought. The Environmental Protection Agency is providing a $224 million loan for the $458 million project, which will purify 15.5 million gallons of wastewater daily.Full Story: KABC-TV (Los Angeles)
Granite posts flat revenue amid competitive bidding environment
Revenues fell marginally at Watsonville, California-based Granite Construction during the third quarter amid a hypercompetitive bid environment, owners dragging their feet on projects due to supply chain hurdles and higher prices for fuel and asphalt cutting into profits. The firm reported Thursday $1.06 billion in revenue for Q3 2021, essentially flat from its results in the year ago period, when it notched $3 million more in sales. Granite’s backlog, or the jobs it has won but hasn’t started working on yet, improved to $4.3 billion — up $135.4 million, or 3%, from the same time frame in 2020. But it declined sequentially by $117.4 million, or 2.6%, from the $4.4 billion it reported in the second quarter of this year. Gross profits in the third quarter decreased 4.8% from a year earlier to $119.9 million. The company reaffirmed its guidance of low- to single-digit revenue growth for the 2021 fiscal year, but narrowed its guidance for its earnings by half a percentage point on the low and high end of its range to 6% to 7% for the full year
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Mark Smith
Advocate
California Builders Alliance
5370 Elvas Avenue ǀ Sacramento, CA 95819
Cell: 916.335.5072
Email: mark.smith@calbuilders.org