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Construction economist says stimulus story fails to account for industry-specific factors (5/13)

May 13, 2009
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Ken Simonson, chief economist for the Associated General Contractors of America, issued the following statement in response to an Associated Press story filed yesterday noting the geographic distribution of transportation funds as part of the stimulus:

“Today’s Associated Press story detailing the geographic distribution of stimulus transportation funds fails to acknowledge several unique facts about the construction industry. First, construction jobs are not site-specific. While a construction worker from Bethlehem may be paving a road in Philadelphia today, he is just as likely to be working on a bridge project in Allentown next week, for example. Regardless of where the project is, that worker still spends most of his or her money in their home town. That is why the economic benefits of investing in construction have long been more geographically dispersed than manufacturing jobs linked to a single factory site.

Second, the Associated Press analysis fails to take into account the significantly higher unemployment levels within the construction sector than the rest of the economy. Construction unemployment is now nearing 19 percent, while the overall U.S. unemployment rate remains below 9 percent. As a result, even in counties where overall unemployment may be low, construction unemployment may be significantly, and surprisingly, higher.

And third, construction materials that are incorporated into transportation projects are not typically produced in the area where the project is being built. Aggregate, concrete, steel and a variety of other products needed to complete construction projects create jobs in those areas where the products are produced and for the shippers who move the product to the job site.

The intent of the infrastructure portion of the stimulus was clear; put unemployed construction workers back on the job. So far, as early reports from our members make clear, the stimulus’ transportation investments are doing just that.”

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