The Blog

The construction industry added 39,000 jobs on net in March, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data. On a year-over-year basis, industry employment has expanded by 270,000 jobs, an increase of 3.4%.

Nonresidential construction employment increased by 24,600 positions on net, with growth in all three subcategories. Nonresidential specialty trade added the most jobs, increasing by 16,300 positions. Heavy and civil engineering and nonresidential building added 6,000 and 2,300 jobs, respectively.

The construction unemployment rate fell to 5.4% in March. Unemployment across all industries declined from 3.9% in February to 3.8% last month.

“Today’s release was a blockbuster jobs report and indicates that recession is not arriving anytime soon,” said ABC Chief Economist Anirban Basu. “The 39,000 jobs added by the nation’s construction segment was roughly twice the monthly growth observed over the past year. If one focuses purely on nonresidential construction, monthly job growth was nearly 80% faster than the one-year average.

“Structural transformations in the economy, including replenished domestic supply chains, expanded data center demand and augmented infrastructure, are making it difficult for many project owners to wait for lower construction delivery costs,” said Basu. “Despite the effects of worker shortages, still-elevated materials prices, newly emerging supply chain issues and the high cost of project financing, both privately and publicly financed segments produced substantial employment growth in March. This comports with ABC’s Construction Confidence Index, which shows that a large share of contractors intend to grow their staffing levels over the next six months.

“As always, the jobs report was not completely positive,” said Basu. “Those in search of lower inflation and interest rates will not be comforted by this release. While economywide year-over-year wage growth softened to 4.1% in March, the monthly wage growth figure suggested a pace of compensation growth that will render it difficult for the Federal Reserve to substantially reduce interest rates in 2024. The notion that interest rates will remain higher for longer remains firmly in place, which means that project financing costs will likely be an ongoing issue for construction demand, especially in privately financed segments, for the foreseeable future.”

 

By: Joe Camilo, Tocco Building Systems

Last month I reported that the Springfield Water and Sewer Commission had withstood an all-out push from construction unions and their political allies and put its $350 million West Parish Water Treatment Plant project out to bid without a union-only project labor agreement (PLA). Sadly, the victory was fleeting. On March 18 the Commission added a PLA to the project via an addendum.

The about face came after U.S. Senators Elizabeth Warren and Ed Markey put out a statement calling for a PLA on the project. Pre-qualified open-shop contractors – several of them ABC MA members – had already expended resources developing bids for the project.

Commission Chair Vanessa Otero wrote in the Springfield Republican that the biggest reason why she supported the PLA was poverty, and because “union membership changes the trajectory of lives.”

The reality is that it changes the trajectory of some lives. That doesn’t include the vast majority of minority contractors in Massachusetts, who choose to be open-shop. In fact, there are so few minority construction workers who belong to unions in Massachusetts that the Water and Sewer Commission PLA includes a special carve out to allow more minority participation.

PLA’s also negatively affect the life trajectories of the more than 80 percent of the Massachusetts construction workforce that chooses not to affiliate with a union. They lose out on the opportunity to participate in local jobs funded with their own tax dollars.

Chapter President Greg Beeman has already sent multiple letters to the commission making the case for free and open competition rather than a union-only PLA. He also had a commentary on the topic published in the Republican. We are currently determining the best course for moving forward. But rest assured, ABC MA will continue to fight for our members and against this discriminatory project labor agreement.
 

 

 

On March 29, the U.S. Department of Labor’s Occupational Safety and Health Administration announced its Worker Walkaround Representative Designation Process final rule, which allows employees to choose a third-party representative, such as an outside union representative or community organizer, to accompany an OSHA safety inspector into nonunion workplaces during site inspections. This final rule is effective on May 31, 2024.

ABC issued a press release opposing the final rule, saying:

“Now, construction employees and employers could face serious safety concerns because the final rule has the potential to allow anyone on a jobsite,” said Greg Sizemore, ABC vice president of health, safety, environment and workforce development. “There simply is no business case for this final rule and no benefit during a compliance inspection.”

“By allowing outside union agents access to nonunion employers’ private property, OSHA is injecting itself into labor-management disputes and casting doubt on its status as a neutral enforcer of the law,” said Sizemore. “This final rule negatively impacts the rights of employers while simultaneously ignoring the rights of the majority of employees who have not authorized a union to represent them. OSHA’s rule also poses unnecessary risk to the individual joining the inspection and others on the jobsite if the authorized person is not trained to safely walk a construction jobsite. The rule does not include any requirement that the authorized person be equipped or conduct themselves to the same standards as OSHA safety inspectors. Further, the final rule fails to answer who is legally responsible if the third party gets injured during the inspection or harms someone else.”

ABC is currently considering all options in response to this rule.

 

Associated Builders and Contractors and its Florida First Coast chapter have filed suit in federal court to stop the Biden administration’s unlawful scheme to mandate project labor agreements on construction contracts procured by federal agencies. ABC’s complaint asserts that President Joe Biden lacks the legal and constitutional authority to impose a new federal regulation injuring economy and efficiency in federal contracting and illegally steering construction contracts to certain unionized contractors, which employ roughly 10% of the U.S. construction workforce. 

ABC estimates the Biden pro-PLA policy will affect at least 180 federal construction contracts valued at $16 billion across America on an annual basis, including several federal construction contracts for projects in Jacksonville and dozens of projects in Florida and the Southeast. 

“ABC seeks a national injunction against President Biden’s executive overreach, which makes a mockery of federal procurement laws and rewards powerful special interests with government construction contracts at the expense of taxpayers and the principles of fair and open competition in government procurement,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs. “ABC has heard from large and small federal contractors—including firms signatory to union agreements—and concerned federal agency contracting officers that the Biden administration’s controversial PLA policy has already stifled competition and raised costs on federal construction contracts in Florida and across the country. This policy will continue to do so absent a successful legal challenge.” 

“When mandated by government agencies, PLAs needlessly increase construction costs by 12% to 20%, reduce opportunities for qualified large and small contractors and their craft and noncraft employees, and exacerbate the construction industry’s worker shortage of more than half a million people by discriminating against the nearly 90% of the industry workforce that is not unionized,” said Brubeck. “PLAs discourage competition by forcing contractors to sign union collective bargaining agreements, which require them to follow inefficient and cumbersome union work rules, hire most or all workers from union halls and apprenticeship programs, accept compulsory union representation on behalf of any remaining members of its existing workforce and expose them to union wage theft of up to 34% of their compensation unless they join a union and vest in union benefits plans.” 

ABC and its Florida First Coast chapter filed the lawsuit in the U.S. District Court for the Middle District of Florida in Jacksonville in response to the Federal Acquisition Regulatory Council’s Dec. 22, 2023, final rule––and the related Dec. 18, 2023, White House Office of Management and Budget Memo––implementing President Biden’s Feb. 4, 2022, Executive Order 14063, which mandates PLAs on federal construction projects of $35 million or more. 

In its legal filing, ABC asserted that the Biden administration’s PLA rule is beyond the scope of executive authority and violates the Constitution, the First Amendment and the Administrative Procedure Act. The complaint also notes that the rule violates the Federal Property Administrative Services Act, the Competition in Contracting Act, the National Labor Relations Act, the Office of Federal Procurement Policy Act and the Regulatory Flexibility Act, among others, by limiting competition and forcing large and small businesses to sign union agreements as a condition of winning a federal contract for construction services. 

ABC members won 54% of the $205.56 billion in federal contracts worth $35 million or more during fiscal years 2009-2023 and built award-winning projects safely, on time and on budget, without unnecessary government-mandated PLAs. 

Learn more at abc.org/bidenplafaqs and the Build America Local coalition website at BuildAmericaLocal.com.
 

 

The construction industry added 23,000 jobs on net in February, according to an Associated Builders and Contractors analysis of data released by the U.S. Bureau of Labor Statistics. On a year-over-year basis, industry employment has expanded by 215,000 jobs, an increase of 2.7%.

Nonresidential construction employment grew by 24,200 positions on net, with growth in all three subcategories. Heavy and civil engineering gained the most jobs, increasing by 12,500 positions. Nonresidential specialty trade and nonresidential building added 7,400 and 4,300 jobs, respectively.

The construction unemployment rate rose to 7.0% in February. Unemployment across all industries increased from 3.7% in January to 3.9% last month.

“In February, we saw evidence that contractors continue to add workers, fulfilling expectations,” said ABC Chief Economist Anirban Basu. “Employment growth happened in a variety of nonresidential subsegments, which is quite remarkable given headwinds such as high project financing costs, elevated construction service delivery costs and lingering recessionary fears.

“Though the February jobs report and the Construction Confidence Index data both indicate ongoing industry momentum, there remain reasons for concern,” said Basu. “Contractors whose clients are project owners who rely on the availability of private financing have been reporting higher numbers of project delays. ABC’s Construction Backlog Indicator declined last month, indicating that, while the industry continues to expand, a growing fraction of nonresidential contractors may be feeling the effects of a still-restrictive monetary environment.”

 

 

By: Alex Tsianatelis, Rudolph Friedmann LLP

The organization of a legal entity offers many advantages to business owners, including the opportunity for limited liability. Unfortunately, these same legal entities can also be used to mask illegal activity and launder illegally gotten money. In an effort to combat white collar crimes and security threats to the United States, the Federal Government recently enacted the Corporate Transparency Act (“CTA”) as part of the Anti-Money Laundering Act of 2020. These acts are part of the National Defense Authorization Act.

Broadly, the CTA requires that a legal entity disclose and report to the Federal Government what is referred to as beneficial ownership information (“BOI”). Legal entities that are required to file BOI reports include, but are not limited to, limited liability companies, corporations and entities created by the filing of a document with a secretary of state or similar office under the law of a State or Indian Tribe, entities formed under the law of a foreign country that are registered to do business in any State or tribal jurisdiction with a secretary of state or similar office under the law of a State or Indian Tribe. Some of the legal entities that are excepted from the BOI filing requirement are publicly traded companies, governmental entities, public utilities, certain financial institutions including insurance companies, 501(c) tax-exempt organizations, large operating companies with more than 20 full-time employees and more than $5,000,000 in operating revenue, and wholly owned subsidiaries of exempt entities. The CTA includes additional exceptions and defines with specificity many of the exceptions.

The BOI report format requires a legal entity’s “beneficial owners” and “company applicant(s)” to provide personally identifiable information (“PII”). However, only those entities who are domestic reporting companies created in the United States on or after January 1, 2024 or foreign reporting company’s first registered to do business in the United States on or after January 1, 2024 are required to report their “company applicant” information.

A beneficial owner of an entity includes an individual who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise: exercises substantial control over the reporting company; or owns or controls at least 25% of the reporting company’s ownership interests. A company applicant is the individual who directly files the document that creates or registers the legal entity with a governmental entity and if more than one person is involved in the filing, a company applicant may also be the individual who is primarily responsible for directing or controlling the filing. The PII to be submitted by beneficial owners and company applicants includes: full legal name; date of birth; residential address or business address of applicants if made in the course of their business; unique identifying number and an image from one of the following non-expired documents or a Financial Crimes Enforcement Network (“FinCEN”) Identifier number: United States passport, State driver’s license, other government issued documentation, or foreign passport only if the person does not have the preceding documents. FinCen is a department of the U.S. Treasury Department.

For existing entities registered prior to January 1, 2024, the CTA provides a 1-year grace period to file a BOI report. The final deadline for such reporting period is January 1, 2025. For entities organized between January 1, 2024 and January 1, 2025, an entity must report within ninety (90) days of formation/registration. For entities registered after January 1, 2025, an entity must file its BOI report within 30 calendar days of registration. Failure to file BOI reports during those timelines may result in serious penalties including civil penalties of $591.00 per day or criminal penalties of up to $10,000 and 2 years in prison.

It is important to note that the duty to file is on the registered or formed entity, unless an exception applies, but the responsibility for filing will likely be the responsibility of the legal entities’ founders, executives, or other personnel they designate. It is strongly advised that each legal entity, with the advice of its legal counsel, examine the CTA to determine if they are required to file a report and whether they are excepted from providing the same.
 

 

Construction input prices increased 1.4% in February compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices increased 1.3% for the month.

Overall construction input prices are 1.5% higher than a year ago, while nonresidential construction input prices are 1.8% higher. Prices increased in 2 of the 3 energy subcategories last month. Crude petroleum input prices were up 7.5%, while unprocessed energy materials were up 3.6%. Natural gas prices declined 7.2% in February.

“For the last several weeks, inflation data have been coming in hotter than anticipated,” said ABC Chief Economist Anirban Basu. “This was also true for the February construction input price data, which indicated that upward price pressures are reemerging after a period of calm. Monthly inflation was apparent in several categories, including brick/tile, gypsum and steel mill products. With supply chains around the world rattled by military conflicts and other phenomena and workers’ wages far higher than they once were, there is reason to believe that inflation will remain stubbornly high for months to come.

“For contractors, today’s release is bad news for at least two reasons,” said Basu. “First, higher input prices implicate lower demand for construction services all else equal. With project financing costs already elevated, project owners are less likely to move forward with construction work given already high and rising input costs.

“Second, recent inflation data render it more likely that interest rates will remain higher for longer. For weeks, the conventional wisdom has been that the Federal Reserve was poised to reduce interest rates. Today’s inflation data, along with other releases, suggest that hopes for rapidly declining rates were somewhat premature.”

Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.1 months in February, according to an ABC member survey conducted Feb. 20 to March 5. The reading is down 1.1 months from February 2023.

View the full Construction Backlog Indicator and Construction Confidence Index data series.

Backlog fell for every size of contractor except for those with under $30 million in annual revenues in February. Over the past year, however, the largest contractors—those with greater than $50 million in revenues—have experienced the greatest decline in backlog.

ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels also decreased in February. However, all three readings remain above the threshold of 50, indicating expectations for growth over the next six months.

“Backlog is declining and confidence began to fade modestly in February,” said ABC Chief Economist Anirban Basu. “While it is far too early to predict an industrywide downturn given that confidence readings continue to signal growth along sales, employment and profit margin dimensions, it appears that a rising tide of project cancellations and postponements has begun to make its mark.

“With excess inflation remaining stubbornly durable, at least according to certain measures, interest rates are poised to remain higher for longer,” said Basu. “That gives higher borrowing costs more time to upset the economic momentum that has so surprised economists over the past two years and has provided support for various nonresidential construction activities. With so much federal money still entering the economy, there will continue to be support for growth in certain construction segments, including public works and manufacturing-related megaprojects, but industry weakness is more apparent in segments that rely more purely on private financing.”

Note: The reference months for the Construction Backlog Indicator and Construction Confidence Index data series were revised on May 12, 2020, to better reflect the survey period. CBI quantifies the previous month's work under contract based on the latest financials available, while CCI measures contractors' outlook for the next six months. View the methodology for both indicators.
 

 

Medford Wellington apprentice electrician Cheslie Sanon came to the U.S. from Haiti when she was 10 years old. “Since then, I’ve done everything I can to work hard and have a positive attitude.” You don’t need to talk to her for long to realize that those two traits are in her DNA.

“When I got out of high school, college wasn’t an option. I had to work.” And that’s exactly what Cheslie did. She’s been on her own since she was 17, first working as a home health aid.

After six years, she watched her cousin get into HVAC and decided to become an electrician. She found a job and enrolled in school to support herself and begin to accumulate the 8,000 hands-on hours and 600 classroom hours needed to sit for the journeyperson test, which she hopes to do this fall.

Cheslie says “you have to want it, and have patience and dedication.” She’s certainly lived up to that. For years, she went to work in the morning and had class at night. Her Mondays through Thursdays started at 6:15 am and went until 10:55 pm.

Now she’s enjoying her work at Medford Wellington. “It’s the best company I’ve ever worked for,” Cheslie says. “They acknowledge your work and give you the opportunity to grow.

She is certainly taking advantage of that opportunity, and it has built her confidence. “There’s nothing I put my mind to that I can’t learn,” Cheslie says. And she has a track record to prove it.
 

 

By: Joe Camilo, Tocco Building Systems

I’m pleased to say that I’ll be using this month’s message to convey some good news. Last month, I wrote about the Springfield Water and Sewer Commission’s split decision to use a union-only project labor agreement to build the $325 million West Parish Water Treatment Plant. But as of the end of February, I can report that the project has gone out to bid without the PLA.

The Commission wisely insisted that all the unions involved sign on to the PLA, and it set a February 16 deadline for them to do so because of the need to get construction of the treatment plant underway as quickly as possible. When the Regional Council of Carpenters missed the deadline, the Commission announced the project would proceed using free and open competition.

The decision brings a number of benefits. The more than 82 percent of the Massachusetts construction workforce that chooses not to join a union can now take part in the project, as can the many open-shop companies that are pre-qualified. The Commission and its ratepayers will benefit from the lower costs that accompany more competition.

The change of course is also a win for minority-owned contractors, the vast majority of whom are open shop. Earlier in the process, unions balked at a carve out in the PLA to allow non-union minority- and women-owned contractors to bid on contracts of $1 million or less. The unions proposed a $500,000 limit on the exception before agreeing to the $ 1 million.

As the Springfield Republican wrote in an editorial, “Now, bids from all parties will carry the same weight. And minority- and women-owned contractors will not be limited to bids of under $1 million.”

ABC MA actively advocated for the project to go forward under open competition. Chapter President Greg Beeman previously sent a letter calling on commissioners to reverse their decision to build the plant using a union-only project labor agreement. He also had a commentary on the topic published in the Republican.

It's impossible to know the outcome of the political battles in which our chapter sometimes finds itself. But you can be sure that we will always fight for the rights of our members. And when the outcome positive, as with the West Parish Water Treatment Facility, we should all take a moment to enjoy it and appreciate what ABC stands for.