Federal funding would trickle down, so the impact on work in Utah would be significant. —Richard Thorn, president of the Associated General Contractors of Utah
SALT LAKE CITY — Construction jobs in Utah are 39 percent off the state's pre-recession peak in 2007, but the numbers are gradually improving with a growth rate of 2.5 percent during the past year, according to a contractors trade group monitoring the rates.
The slowest recovery among construction workers is in the specialty trades — including plumbing, electrical, concrete and painting — that service both residential and commercial projects. The most robust increase during 2010 and 2011 has been among heavy equipment construction workers.
Utah ranked 43rd among the states in construction-job recovery in a recent analysis by the Associated General Contractors of America, which is actively lobbying Congress to approve a transportation bill that would assure funding for highway, bridge and transit projects during the next five years.
"The construction industry remains a shell of its former self in too many states," association CEO Stephen E. Sandherr said in a press release. The contractors group ranked each state in relation to its peak job performance rate to the rate in November, 2011.
While the jobs ranking includes workers in both residential and commercial construction, the contractors association's push is for funding large-scale projects.
Utah's construction workforce has benefited from several large-scale construction projects, including the $1.5 billion City Creek project in downtown Salt Lake City that began in earnest with the demolition of two downtown malls in 2007 and is scheduled for completion in March. City Creek involved 2,000 construction jobs at its peak.
The $1.725 billion, state-funded I-15 CORE project, billed by the Utah Department of Transportation as the state's largest construction project ever, has 1,560 construction workers. It launched in April, 2010 and is scheduled for completion in December.
Residential contractors in Utah have been stuck behind a backlog of homes already on the market. "The issue now with residential is the inventory," said John Mathews, an economist with the Department of Workforce Services. "We have to clear the inventory before we can move on."
In Salt Lake County, there were more than 10,000 homes on the market at the front end of the recession in 2007. That inventory was down to 3,682 during the fourth quarter of 2011 — squarely a seller's market if it weren't for a hidden inventory of homes that would be on the market if selling prices weren't so soft.
James Wood, director of the University of Utah's Bureau of Economic and Business Research, said that hidden inventory includes houses, condominiums and townhomes that were built to sell but kept off the market because of falling selling prices. Those homes instead have been shifted to the rental market until selling prices rebound.
Commercial contractors wait for longer-term funding commitments at the federal level before replacing costly heavy equipment or hiring workers and funding health care benefits, said Richard Thorn, president of the Associated General Contractors of Utah. "Federal funding would trickle down, so the impact on work in Utah would be significant."
Just as large-scale projects boost jobs, job numbers subsequently drop sharply when those projects are completed. But Thorn said improvements in the economy mean an increase in smaller commercial jobs, like office construction and commercial remodeling work put off during the economic slump.
The Commerce Department reported Friday that the nation's economy grew at an annualized rate of 2.8 percent in the fourth quarter. It was modest growth, but economists said it likely means a second recession is not imminent.
Financing costs and construction bids are still a bargain, which is helping to prop up construction work while the economy is in recovery mode, said Alan Rindlisbacher, a spokesman for Layton Construction. "We're seeing some good increased level of activity in the private sector as companies are starting to kick the tires a little bit more and are taking on some construction they delayed based on the state of the economy."
"No state has gotten back to their pre-recession high," said Ken Simonsen, chief economist in Washington, D.C. with the national contractors association. He calls Utah "more volatile" than most states, partially because of spikes in construction activity in the recent past — like the surge building up to the 2002 Winter Games, which was followed by a slump once I-15 construction and other projects related to the Olympics were completed.
The national economy grew in the years after the Olympics in Utah, which made the post-Olympics slump short-lived. "Utah was adding (construction) employees at a faster rate than any other state, then came back down with the rest of the country as the economy soured," Simonsen said.
Toby Basta is the project manager for a Scheels All Sports store under construction in Sandy. Nevada-based Q and D Construction is the general contractor, but the project doesn't help the job statistics for that state, which is ranked dead last by the Associated General Contractors summary. "All of our sub contractors that are putting work in place are local (to Utah)," he said.
Utah tends to be predictably skewed from national ups and downs, Thorn said. "Our good times are generally not as good as other areas, but our bad times generally are not as bad as other areas."
Thorn said projections are that Utah has seen the worst of the current job cycle. "Is our economy robust and worth writing home about? No, but we do see positive trends."
No states have seen a complete pre-recession rebound. Utah is behind neighboring states of Wyoming, New Mexico and Colorado but doing better than Idaho, Arizona and Nevada.