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OP-ED: Uneven recovery means more work is needed

OP-ED: Uneven recovery means more work is needed

SC2013_DJC_320x320This column originally appeared in The Daily Journal of Commerce in Buildings Bridges and Roads
By: Mike Salsgiver

Mike SalsgiverAs we approach the eighth anniversary of the start of the Great Recession, it is important to see how far we have come and the crucial investments that are needed to continue to move forward. Per the latest report from the Associated General Contractors of America, construction accounted for 3.5 percent, or $8 billion, of Oregon’s $216 billion GDP in 2014.

Private nonresidential construction was a significant contributor to this increase, with statewide spending topping out at $4.6 billion in 2014. This figure represents a huge leap compared to 2009, when the statewide total was $2.1 billion.

What these figures demonstrate is that there is clear – but uneven – growth across the industry. By that I mean that the vertical side of our industry has rebounded and is growing, but the horizontal side (the transportation sector) has not. What our industry really needs to experience full recovery is Congress and our state Legislature to fund our transportation programs.

Deferred maintenance on Oregon’s transportation infrastructure is likely the biggest thing holding the industry back. Oregon has 7,656 bridges and 74,493 miles of roadway. Per the American Society of Civil Engineers’ Infrastructure Report Card, these roads and bridges are rated a C-, which is slightly better than the nation’s overall infrastructure rating of a D+.

In our state alone, 23 percent of the bridges are either structurally deficient or functionally obsolete. With existing funding mechanisms, Oregon’s bridges will become structurally deficient at a rate of 25 per year by 2018. Of the state’s 59,262 public roads, 7,841 are major roads, and 6 percent are in poor condition. Without a comparable increase in funding, road conditions will continue to deteriorate even faster.

Until a solution is found, motorists will incur costs of $654 million a year from driving on roads in need of repair, which is $236 per year per motorist. Our roads, highways and bridges have deferred maintenance needs totaling billions of dollars, and it’s time for the state to put together a bipartisan plan to address those critical needs. The longer we wait, the more our transportation system will deteriorate, the more expensive it will be to fix it, and the longer it will take our industry to fully recover.

Another issue critical to the complete rebound and future growth of the industry is workforce development. After suffering severe job losses at the peak of the recession, Oregon’s construction sector has grown by more than 13,000 jobs over the past five years. Even with these gains, the job count remains 17 percent lower than the industry’s pre-recession peak of 103,300 in August 2007. While employment is slowly but surely regaining ground, we still have 22 percent fewer workers than our industry had eight years ago, and we face a dire skilled worker shortage.

Today, nearly 60 percent of construction firms report having some difficulty finding enough skilled workers to fill key professional and craft positions. These shortages can be contributed to a series of policy, education, demographic and economic factors that have reduced the once robust education pipeline for training new construction workers and has affected the entire chain of commerce. We as contractors know that quality, comprehensive craft training is fundamental to the development of a skilled workforce. In turn, a skilled workforce is essential to a productive and sustainable construction industry as it climbs its way out of recession.

The crippling of the education pipeline for construction can be seen in many places, including the dismantling of the public vocation and technical education programs and an increasing focus on college preparatory programs at the high school level. With the “university-for-all” mentality in education, there is an increasing demand for high school students to focus solely on college prerequisites, which prevents students from enrolling in elective courses such as the construction trades. There also exists an overwhelming impression among young people, their parents and teachers that career technical education is unacceptable, despite the fact that construction jobs often pay better than many post-college options, especially post-downturn.

As of Sept. 23, 2015, the average salary of a construction worker in Oregon was $53,300 – 16 percent more than all private-sector employees in the state. This figure demonstrates that success in our economy and society is not limited to the attainment of a bachelor’s degree. Students, teachers and parents need to understand that there is more than one path forward following high school graduation. Apprenticeships and other programs that focus on the development of technical, in-demand skills are examples of these other paths forward.

When you combine the aging of the baby boomers that make up a majority of Oregon’s construction workforce with the need to add more skilled workers, our state alone will need to add more than 25,000 skilled workers by 2020 (per the latest report from the Employment Department). If left unaddressed, shortages of new, highly skilled construction workers will ultimately undermine the industry’s recovery and impact broader economic growth as staffing shortages lead to construction delays.

Overall, although the industry has achieved uneven recovery, it is likely to be short-lived if the critical transportation investments are not made and skilled worker shortages are left unaddressed. One small bright spot is that Gov. Kate Brown officially recognized October as “Careers in Construction Month.” This proclamation alone will help further local and national efforts to standardize training, enhance the construction industry’s image by promoting the hard work and dedication of our state’s craft professionals, and narrow the skills gap by guiding our youth and displaced workers into opportunities that lead to long-term, rewarding careers in construction.

For that, we thank the governor and her recognition of the importance of skilled workers to our state’s economy. This is a small step forward for our industry, and we can only hope that, though the steps may be small, we can continue to effect positive change and celebrate the accomplishments of our industry as we pull it out of the depths of the greatest recession of our time. We hope this bright spot can be followed by proper funding mechanisms for critical infrastructure and further investment in career technical education or we are likely to face a bleak future.

To view the column online, please click here (DJC subscription required).

Mike Salsgiver is the executive director of Associated General Contractors’ Oregon-Columbia chapter. Contact him at 503-685-8305 or mikes@agc-oregon.org.

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