Capitol Update 8/7/2023
Total nonfarm payroll employment rose by 187,000 in July, and the unemployment rate changed little at 3.5 percent. Job gains occurred in health care, social assistance, financial activities, and wholesale trade.
Compensation costs increased 1.0 percent for civilian workers, seasonally adjusted, from March 2023 to June 2023. Over the year, total compensation rose 4.5 percent, wages and salaries rose 4.6 percent, and benefit costs rose 4.2 percent.
June jobless rates down in 11 states; payroll jobs up in 5 states, down in 2
In June, unemployment rates were lower in 11 states and stable in 39 states and the District of Columbia. Nonfarm payroll employment increased in 5 states, decreased in 2 states, and was essentially unchanged in 43 states and the District.
Construction spending rose 0.5% month over month and 3.5% year over year in June, according to the Commerce Department, buoyed by growth in single-family and multifamily housing projects. The department has revised May’s month-over-month gain to 1.1% from a previous report of 0.9%. Full Story: Reuters
Dodge Construction Network data shows a 9% decline in June for construction starts to a seasonally adjusted annual rate of $1 trillion. Nonresidential starts declined more than other categories, dropping 14%. Full Story: Dodge Data & Analytics
The House Appropriations Committee has agreed on a fiscal 2024 bill that would cut funding for the Environmental Protection Agency’s Superfund cleanup program by 72% compared with fiscal 2023 and would reduce state and tribal funding, including loans for water and wastewater infrastructure, by 42%. The bill would also repeal the Biden administration’s definition of protected waters under the Clean Water Act. Full Story: Engineering News-Record (tiered subscription model)
Is Gavin Newsom Running for President? His Fundraising Strategy Signals White House Aspirations.
Gov. Gavin Newsom is taking fundraising steps often used by potential presidential candidates, setting up multiple committees that in their first three months have raised and spent millions of dollars. The three Newsom-affiliated committees are a political action committee, which limits contributions to $5,000 a year and can donate to individual candidates; a SuperPAC, which can raise unlimited amounts of cash but is restricted from promoting a specific candidate, and a joint fundraising committee, which functions like a bank, mostly collecting and distributing funds to the other groups. Newsom has repeatedly denied any interest in running for the nation’s highest office next year. But whether President Joe Biden wins or loses, there will be no Democratic incumbent in 2028. As governor of the nation’s largest state, the big winner of two elections and a recall, Newsom would be well-positioned for a White House run. Story
California Employers Are Not Liable for The Spread Of COVID-19 To Household Members
The California Supreme Court held this month that employers do not owe a duty of care under California law to prevent the spread of COVID-19 to employees’ household members. Kuciemba v. Victory Woodworks, Inc., S274191 (July 6, 2023). The decision resolves an open question for tort litigation in this jurisdiction. In 2021, the U.S. District Court for the Northern District of California determined that an employer’s obligation to provide a safe workplace does not extend to non-employees who contract a virus from the workplace premises. The plaintiffs appealed this decision to the Ninth Circuit Court of Appeals, which then posed two certified questions to the California Supreme Court concerning the scope of an employers’ liability when an employee’s spouse is injured by transmission of COVID-19. Story
Sen. Coons Warns Government Shutdown Is Likely In September
The Hill reported Sen. Chris Coons (D-DE) “warned on Friday that a government shutdown appears likely, as Congress faces down a September deadline to pass its annual spending bills.” Speaking at the Aspen Security Forum, Coons warned that lawmakers are “going to scare the hell out of you,” adding that there will be a “government shutdown because we’re gonna fight between the House and Senate about appropriations.” The Hill explained that “lawmakers have until the end of September to pass the 12 annual appropriations bills to fund the government, but with the August recess approaching, they are staring down a tight deadline.”
While 25% less warehouses are expected to be added to building stock in 2023 than in 2022, research from Interact Analysis suggests a revival in activity next year and onward. The popularity of e-commerce, along with a shift from a just-in-time supply chain to a just-in-case one, necessitates more inventory and storage capacity, which should stimulate construction, researchers say. Full Story: Plant Engineering
The Architecture Billings Index edged into positive territory in June with a reading of 50.1, up from 50 in May. Surveyed firms saw a slight uptick in value of new contracts, but new project inquires declined. Full Story: The Architect’s Newspaper
Robust growth in construction is likely to ease as higher inflation, labor shortages and other factors begin to have a more chilling effect, says Kermit Baker, chief economist at the American Institute of Architects. The group predicts a 1.7% decline in commercial construction spending next year, while growth in institutional spending is expected to ease to 3.6%. Baker expects inflation to worsen those figures. Full Story: Construction Dive
Construction technology companies are attracting investment, but a broader downturn in the technology industry is beginning to trickle into contech, experts say. There is growing evidence of constraint traced to construction customers, particularly in the office sector.
Full Story: Construction Dive
The construction pipeline for hotel projects was 5% short of an all-time high at the end of the second quarter, according to Lodging Econometrics. The project number was up 7% year over year, while the number of rooms planned was up 5%, all despite higher costs associated with interest rates and inflation. Full Story: The Construction Broadsheet
Reuters Analysis: For “Soft Landing,” Timing Of Rate Cuts May Be As Important As Speed Of Rate Hikes
A Reuters analysis says that while Federal Reserve policymakers “have focused on raising the benchmark overnight interest rate high enough” to kill inflation and doing so “fast enough to keep the public from losing faith,” in “the quest for a ‘soft landing,’ where inflation falls without a recession or big job losses, the other half of the conversation – of when to cut rates and lighten the pressure on households and businesses – will be just as important and perhaps even harder to get right.” Letting high inflation “become embedded in the economy is central banking’s cardinal sin, and Fed officials would still rather make the mistake of going too far to be sure inflation is controlled than stop short and risk its rebound,” according to Antulio Bomfim, a former special adviser to the Fed’s board of governors. Reuters says that may indicate “at least one more rate hike.”
High Temperatures Lead To Falling Productivity
The New York Times reports on research finding that high temperatures affect productivity in a variety of industries, and “increases absenteeism and reduces work hours.” One estimate is that “in 2021, more than 2.5 billion hours of labor in the U.S. agriculture, construction, manufacturing, and service sectors were lost to heat exposure,” and that “in 2020, the loss of labor as a result of heat exposure cost the economy about $100 billion, a figure projected to grow to $500 billion annually by 2050.” Other studies indicate that as temperatures reach “90 degrees Fahrenheit, productivity slumps by about 25 percent and when it goes past 100 degrees, productivity drops off by 70 percent.”
Higher interest rates, a tougher lending environment and waning demand took a toll on commercial and multifamily construction starts in the first half of 2023, with the total value falling 10% in the top 10 metropolitan areas compared with H1 of 2022, according to Dodge Construction Network. The nationwide value of $130 billion marked a 14% decline.Full Story: Dodge Data & Analytics
The Senate Appropriations Committee has approved a fiscal 2024 spending bill that would at least meet fiscal 2023’s outlay for the Transportation Department, in stark contrast with a House version that would cut the DOT’s budget by $5.4 billion. However, both bills would maintain previously agreed upon funding for federal-aid highway and transit formula programs under the bipartisan infrastructure law. Full Story: Engineering News-Record (tiered subscription model)
AI is expected to transform the construction industry, with particularly strong implications for modular construction, experts say. Besides indicating efficiency in time, materials and methods, including use of robotics, AI could match building plans with manufacturers with particular strengths while creating designs best adapted to particular purposes and sites. Full Story: Daily Commercial News (Ontario)
The Labor Department plans to step up enforcement against heat safety violations as workers face risk amid soaring temperatures. The emphasis is part of President Joe Biden’s order to issue the nation’s first hazard alert for heat to protect workers, including information for employers when advising workers of their rights under federal law. Full Story: HR Dive
Two drinking water projects by the Polk Regional Water Cooperative in central Florida are getting a $305 million boost under the Water Infrastructure Finance and Innovation Act loan program. Separately, the Interior Department is using more than $150 million from the bipartisan infrastructure law to support six water projects in three Western states.
Full Story: The Construction Broadsheet
The economy has continued to grow, with GDP rising at a 2.4% annual rate in the second quarter. The better-than-expected number compares with 2% growth in Q1.Full Story: BNN Bloomberg (Canada) The Wall Street Journal
Office space is on track to shrink this year as much of it is converted to other purposes or is destroyed, according to Jones Lang LaSalle. Office conversion and removal have totaled 14.7 million square feet this year, while 5 million square feet have been added, with the difference marking what is likely a first. Full Story: Bloomberg
Mass timber is gaining steady ground as a sustainable form of construction, especially in the Pacific Northwest. Jack Belcher explores the reasons for this, the advantages and history of mass timber and how it differs from other forms of construction. Full Story: The Bellingham Herald (Wash.)
Drainage improvement and construction of an emergency spillway have been completed at California’s Isabella Dam, letting the US Army Corps of Engineers lower a risk assessment to low urgency from the highest level. The upgrade occurred over 15 years and comes at a good time, given stress from last winter’s snowpack and from recent rains, says Col. Chad Caldwell, commander of the USACE Sacramento district. Full Story: KGET-TV (Bakersfield. Calif.)
Granite Construction has been selected to carry out $23 million in upgrades to Highway 101 in Mendocino, Calif. The work is scheduled to begin this quarter and to extend into Q2. Full Story: The Construction Broadsheet
An extensive upgrade to a century-old wastewater facility in San Luis Obispo, Calif., is nearly finished, introducing sustainable technology. The upgrade includes a membrane bioreactor that promises to improve water quality and to release far fewer chemicals. Full Story: KCBX-FM (San Luis Obispo, Calif.)
San Francisco hopes an effort to convert underused commercial space into residential and other nonresidential space can revitalize downtown. The city has issued a request for interest from entities that can identify projects in which officials can expedite or enhance building conversions through financial incentives, zoning changes or regulatory changes. Full Story: Building Design + Construction (free registration)
Construction is underway on a $1.7 billion revamp of Harbor-UCLA Medical Center in Torrance, Calif. Initial work by a design-build team of Hensel Phelps, HMC Architects and CO Architects will produce a clinic building spanning 370,000 square feet over six floors. Full Story: Urbanize Media
Los Angeles International Airport’s Midfield Satellite Concourse South is being built in nine sections a mile away before transportation to the site. The contractor, W.E. O’Neil, says the process for the $1.4 billion project has been used only once before at a domestic airfield and is meant to limit disruption during construction. Full Story: Construction Dive
The Associated General Contractors of America has honored Mid-Coast Transit Constructors by selecting an extension of the Blue Line Trolley to University Town Center in San Diego as the best construction project in the US for 2022. AGC Senior Vice President Tom Brown presented the top prize in the Construction Risk Partners Build America awards last week in La Jolla, Calif. “You can point to many reasons why this project is the best in the country,” Brown says. “It’s hard to imagine something more complicated than extending a transit line across the many hills and valleys around here.” Full Story: San Diego Community Newspaper Group
A proposal to expand Oakland International Airport in California has taken a step forward with the publication of a draft environmental impact report and the subsequent call for feedback. The plan would include adding a terminal with 16 gates, modernizing terminals 1 and 2, adding facilities for international arrivals and making other improvements. Full Story: KGO-TV (San Francisco)