Capitol Update 7/24/2023
State Legislature
The State Legislature is on its summer break and will return to Sacramento on August 14. Before leaving, they complied by passing a State budget that included several environmental policy changes sought by Governor Newsom to speed up project delivery and reduce endless CEQA litigation used to slow or halt construction. One type of project NOT included in the CEQA bill was new home construction.
Home construction starts declined 8% in June compared with May to an annualized rate of 1.43 million units, falling short of economists’ expectations. Applications to build, which provide an indication of future construction volume, declined 3.7% to an annualized rate of 1.44 million units. Full Story: BNN Bloomberg (Canada)
AGC offers mixed outlook for remainder of 2023
A rebound from the bottomed-out homebuilding market seems possible as a recession appears less likely in the near term, says Ken Simonson, chief economist for the Associated General Contractors of America. The outlook for construction for the remainder of the year remains cloudy, however, as costs continue to rise and as financing becomes harder to find. Full Story: Equipment World
After a 0.4% decrease in May, the Bureau of Labor Statistics’ producer price index increased 0.1% in June, thanks to a 0.2% increase in the final demand services category and to steady performance from goods. The unadjusted PPI for final demand increased 0.1% for the 12 months through June. Full Story: Dodge Data & Analytics
How contractors are responding to materials costs
Clients have been canceling projects in the face of construction materials costs, which have risen 19% since the onset of the pandemic, most respondents say in a Construction Dive survey. Respondents say they’re adjusting fees, searching for alternative materials and redoing contracts to shield against further cost increases. Full Story: Construction Dive
Treasury Secretary Says Cooling Labor Market Is Helping To Slow Inflation
Bloomberg reports Treasury Secretary Yellen “said a cooling – but not faltering – labor market is playing a key role in helping to slow US inflation, among a raft of factors imposing disinflationary pressures.” In an interview with Bloomberg News Tuesday, Yellen said, “The intensity of hiring demands on the part of firms has subsided. … The labor market’s cooling without there being any real distress associated with it.” In addition to “job-market shifts, Yellen cited housing costs and vehicle prices among factors that are likely to keep pushing down cost pressures. She also suggested that corporate profit margins could play a role.” But “she urged against excessive optimism based solely on June’s consumer price data.” Yellen “cautioned against reading too much into the June data, calling it ‘one month’s numbers.’” However “she saw other positive points in the underlying data, especially in housing, that she thinks will continue.”
Building Trades’ Housing Bill Stalls
Senate Bill 584, a proposal to tax Airbnb and other short-term rentals to fund affordable housing projects, is dead for this legislative session. The State Building and Construction Trades Council-sponsored measure cleared the state Senate at the end of May with no votes to spare. Still, Sen. Monique Limón, the Santa Barbara Democrat who authored the bill, pulled it from consideration in the Assembly several weeks back, reports CalMatters. Her office said Limón did not have time to resolve a disagreement with the Assembly housing committee over wage and labor standards for projects that would be eligible for the grants. Limón intends to revive the measure next year, though it may include additional changes. Her office said the senator is exploring whether she could reduce the proposed 15% tax rate or exempt small operators while raising enough money to make the fund worthwhile. “While the bill is part of a desired and needed conversation about the impact short-term rentals have on our housing market,” Limón said in a statement, “it is clear this bill could benefit from more time to continue discussions at the state and local level to understand the underlying issues the legislative process has uncovered.”
Senate bill to encourage more apprenticeships
New Senate legislation would update the National Apprenticeship Act of 1937 and provide federal funding to help employers set up apprenticeship programs in new industries. The bill advanced by Sens. Tammy Baldwin, D-Wis., and Lisa Murkowski, R-Alaska, also seeks to encourage wider access to childcare, eldercare and other services. Full Story: HR Dive
OFCCP Publishes CSAL for Construction Contractors
In June 2023, the Office of Federal Contract Compliance Programs (OFCCP) published a new Corporate Scheduling Announcement List (CSAL) for construction contractors. The latest CSAL identifies 250 federal contractors, federally assisted contractors, and federally assisted subcontractors for compliance evaluations. While the agency is not required to publish the CSAL, it serves as a “courtesy notification” to contractors selected by the OFCCP for a compliance evaluation. According to the OFCCP, the CSAL provides contractors with notice to prepare for the compliance evaluation and encourages them to take advantage of the agency’s compliance assistance offerings. Story
No single OSHA heat protection standard in sight
Contractors have no single enforceable standard for protecting their workers from the ongoing heatwave, but OSHA health scientist Gary Orr advises the best practice is to follow guidelines recommending access to water, rest periods and shade. The pointers are part of OSHA’s National Emphasis Program, which includes sending inspectors to job sites even as the agency offers no timeline for when its heat standard will become final. Full Story: Construction Dive
California Court Clarifies Employer’s Obligation to Reimburse Expenses
On July 11, 2023, the California Court of Appeal in Thai v. IBM held that whether an employer is obligated to reimburse expenses incurred by an employee working from home turns on whether the expenses were a direct consequence of the discharge of the employee’s job duties, not on whether the employer directly caused the expenses. This case is important for all employers whose workforce suddenly began working from home due to the COVID-19 pandemic and employers who continue to permit employees to work from home today.Story
How public policies can embrace low-carbon concrete
Public policies are failing to keep up with progress made to reduce carbon embedded in concrete, says Matthew Adams, co-director of the Materials and Structures Laboratory at New Jersey Institute of Technology. However, Adams notes an example in New York state of a village’s commitment to use low-carbon concrete, backed by education and well-informed support, leading to projects that use the material. Full Story: Building Design + Construction (free registration)
Op-ed: Diversity is key to the US infrastructure drive
The construction industry needs to embrace diversity in its workforce and provide greater opportunities for advancement to find the workers it needs to take full of advantage of the groundbreaking bipartisan infrastructure law, writes Carlo Scissura, president of the New York Building Congress. Immigrants in particular have historically played a major role in construction, and “to maintain this strong labor force, we need to remove barriers that inhibit recent immigrants from pursuing jobs in the industry,” Scissura says. Full Story: Construction Dive
$441M Calif. freeway intersection upgrade begins
Construction has begun on the third phase of an effort to ease traffic congestion at the intersection of State Routes 57 and 60 in Los Angeles County, Calif. Skanska is carrying out improvements to the mainline freeway under a $267 million contract for the overall $441 million project. Full Story: Engineering News-Record (tiered subscription model)
L.A.-Las Vegas rail might give rise to community
The four-story Ariva residential development south of Las Vegas is the first evidence of hopes for a new community that could get a boost from high-speed rail between Los Angeles and Las Vegas. Plans also include a $10 billion resort, additional apartments, an arena, restaurants and entertainment. Full Story: Las Vegas Review-Journal (tiered subscription model)