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California and Hawaii's Construction Dollar Benefits

As of this writing, it is not clear yet just how much of a national economic stimulus package President-elect Obama will have presented to Congress for approval. It is widely hoped that California will be first in line for this important, livelihood-saving, infrastructure-building, construction-producing national economic stimulus package.

February 02, 2009

As of this writing, it is not clear yet just how much of a national economic stimulus package President-elect Obama will have presented to Congress for approval. It is widely hoped that California will be first in line for this important, livelihood-saving, infrastructure-building, construction-producing national economic stimulus package.

It is well-known that California has taken perhaps the hardest hit from the economic meltdown, especially in the construction industry. Worst-faring of all is Southern California's Inland Empire, where the counties of Riverside and San Bernardino have lost multiple thousands of construction jobs in just a few months. Things do not look very good in that sector for the near term.

AGC of America has an excellent online map that, with just a mouse click to www.agc.org/factsheets, shows how important each dollar invested in construction is to each state's economy. The information was researched and compiled by Ken Simonson, chief economist, AGC of America (simonsonk@agc.org); from Prof. Stephen Fuller, GeorgeMason University; and U.S. government sources.

The following is the state of the states of California and Hawaii as presented by AGC of America from the above website:

The Construction Industry in California

The economic impact of stimulus investment in California:

  • An additional $1 billion in nonresidential construction spending would add about $2.5 billion to the state's Gross Domestic Product (GDP), about $819 million to personal earnings and create or sustain 21,000 jobs.
  • 7,100 of these jobs would be on-site construction jobs located within California.
  • 3,400 of these jobs would be direct and indirect jobs associated with construction supply materials and services. The majority of these jobs would be located within the state, but there would be some out of state jobs supported.
  • 10,500 of these jobs would be created when construction, supplier and service providers spend their incomes. These jobs would be based in California and throughout the economy.

Construction Employment:

  • In 2007, a total of 1,451,000 jobs were supported by the direct and indirect outlays associated with the state's nonresidential construction spending.
  • The construction industry (residential plus nonresidential) employed 803,000 workers in October 2008, a decrease of 146,400 (15.4 percent) from February 2006, when construction employment in California peaked.

Nonresidential Construction Spending:

  • Nonresidential construction spending in California totaled an estimated $70.5 billion in 2007.
  • This direct construction spending in the state contributed a total of $177.5 billion (9.8 percent) to state GDP of $1.8 trillion.
  • Direct construction spending in the state added $57.7 billion in additional personal earnings to the benefit of California residents working in the state.

Construction Industry Pay:

  • In 2007 annual pay of all construction workers in California averaged $51,600, 3.4 percent more than the average for all private sector employees.

Small Business:

  • California had 78,000 construction firms in 2006, of which 87.5 percent were small businesses employing fewer than 20 workers.

The Construction Industry in Hawaii

The economic impact of stimulus investment in Hawaii:

  • An additional $1 billion in nonresidential construction spending would add about $2 billion to the state's GDP, about $685 million to personal earnings, and would create or sustain 19,000 jobs.
  • 6,500 of these jobs would be on-site construction jobs located within Hawaii.
  • 3,000 of these jobs would be direct and indirect jobs associated with construction supply materials and services. The majority of these jobs would be located within the state, but there would be some out-of-state jobs supported.
  • 9,500 of these jobs would be created when construction, supplier and service providers spend their incomes. These jobs would be based in Hawaii and throughout the economy.

Construction Employment:

  • In 2007, a total of 34,000 jobs were supported by the direct and indirect outlays associated with the state's nonresidential construction spending.
  • The construction industry (residential plus nonresidential) employed 38,000 workers in October 2008.

Nonresidential Construction Spending:

  • Nonresidential construction spending in Hawaii totaled an estimated $1.8 billion in 2007.
  • This direct construction spending in the state contributed a total of $3.6 billion (5.9 percent) to state GDP of $61.5 billion.
  • Direct construction spending in the state added $1.2 billion in additional personal earnings to the benefit of Hawaii residents working in the state.

Construction Industry Pay:

  • In 2007 annual pay of all construction workers in Hawaii averaged $59,300, 58.5 percent more than the average for all private sector employees.

Small Business:

  • Hawaii had 3,000 construction firms in 2006, of which 86.9 percent were small businesses employing fewer than 20 workers.

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