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July 13, 2010 Cheryl Soon, SSFM International Economic and Workforce Impact.

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Presentation on theme: "July 13, 2010 Cheryl Soon, SSFM International Economic and Workforce Impact."— Presentation transcript:

1 July 13, 2010 Cheryl Soon, SSFM International Economic and Workforce Impact

2 Three Important Dimensions What is the impact of the construction industry on Hawaiis economy? What would a $14 Billion investment over six years mean to the current economy? What would it mean for workforce development?

3 1. WHAT IS THE IMPACT OF THE CONSTRUCTION INDUSTRY IN HAWAIIS ECONOMY? Hawaiis Input-Output (I-O) Model, developed by the State Department of Business, Economic Development and Tourism, measures the inter-relationships among industries, the impact on final users and factors of production in the economy.

4 Input-Output Model Definitions Direct impacts– on the construction industry itself; includes jobs in heavy civil engineering and construction Indirect impacts – on other industries Multiplier effects on output, earnings, employment (jobs) Induced effects – Effects due to overall expansion of the economy. For example, you can look at earnings and consumption expenditures to see the effect on changes in household spending State Tax multipliers

5 Construction Job Impacts For every $ 1 million spent, there are 12.9 direct and indirect jobs created For every $ 1 million spent, there are 3 direct jobs created in construction

6 HIPA Report HIPA conservatively forecasts over six years: $14 billion in construction spending for public infrastructure Of this, $ 7.5 B (53%) is for new facilities $3.8 B (27%) is for upgrades $2.9 B (20%) is for repair and maintenance

7 HIPA $ 14 Billion Projection 55% is for transportation, much of this comes from Federal funds, which is new money in the economy 18% is for various water projects 26% is for public facilities and buildings 1% is for energy and disaster preparedness

8 Applying the I-0 model to this $14 Billion Expenditure on Public Infrastructure 14 B X 12.9 = 180,060 jobs (direct and indirect) Of these…. 14 B X 3 = 42,000 direct construction jobs

9 Bottom Line - Impact on the Economy is Good Adding 42,000 direct jobs over six years, averages out to 7,000 jobs per year The actual impact depends on - Timing of projects - Category of spending (e.g. wages versus equipment and materials purchased) - Sources of funding - Is offset by some negative effects such as traffic disruption - Is offset by reduced personal consumption when the source of funding is locally generated taxes

10 2. What would this investment mean to Hawaiis economy now? According to the US Bureau of Labor Statistics, the number of construction jobs in Hawaii has dropped 25% in three years - 2007 40,000 - 2008 38,500 - 2009 32,000 - 2010 30,700

11 What are our current metrics? Real per capita personal income in Hawaii in 2010 is $38,443, which is down from 2008 4.8% of all mortgages are in foreclosure Housing starts are down 55% Median Household income is $64,000, yet 8.7% are living below the poverty line and 7.7% have no health insurance, which is typically provided through employers.

12 Hawaii Unemployment In May 2010, the US Department of Labor reported the Hawaii unemployment rate is 6.6% This is higher than December 2007 when it was 3% But its lower than the September 2009 high of 7% 41,700 residents in Hawaii are counted as unemployed out of a total labor force of 636,800 Hawaiis unemployment rate of 6.6% is better than the national rate of 9.7% 7,000 direct construction jobs and 9,000 other jobs would certainly help!!

13 STATE CIP IN 2009-10 Last month, Russ Saito, State Comptroller reported that over an 18 month period, State agencies has awarded 827 projects amounting to $ 1.8 Billion in CIP This translated into: 23,884 direct and indirect jobs 5,554 direct construction jobs

14 STATE CIP IN 2009-10: Geographic Distribution (Source: DAGS) LOCATIONNUMBERDOLLAR VALUE Oahu491$ 978,295,682 Hawaii149$ 431,665,970 Maui100$ 283,318,510 Kauai53$ 108,063,444 Molokai21$ 17, 166, 085 Lanai9$ 16,398,233 Statewide4$ 16,606,410 TOTAL827$ 1,851,513,340

15 STATE CIP IN 2009-10: Distribution By Agency (Source: DAGS) AGENCYNUMBERDOLLAR VALUE DAGS161$ 225,923,212 Agriculture8$16,888,465 DBEDT5$ 11,980,223 Defense6$ 4,036,800 Education375$ 269,181,928 DHHL26$ 164,944,751 DHS31$ 53,066,441 DLNR47$ 67,357,085 Transportation82$ 789,471,682 UH86$ 248,642,743

16 HONOLULU RAIL PROJECT Construction value is $ 5.5 Billion According to the Final EIS published recently, number of direct and indirect jobs created is: YEARJOBSYEARJOBS 20103183201510,902 20118,20920166,229 201211,68020173,872 201317,29020183,091 201415,02020191,719 Source: FEIS, pg 1-202Table 4-35

17 ... if work started on the rail line that would probably have the effect of reducing unemployment by one to two percent because were a small labor market. Lawrence Boyd, Jr. Center for Labor Education & Research UH West Oahu PBN, June 25, 2010

18 3. Impact to Workforce Development If Hawaii is to add upwards of 6,000 jobs per year in construction, workforce development has to start now Construction work requires a skilled, well-managed and efficient construction industry The industry utilized 21 st century technologies and equipment which is constantly evolving Construction wages and benefits is substantially higher than other sectors by as much as 150% when construction is in a peak period

19 Types of Workforce Development Needed All the skilled trades in construction Heavy Equipment operators Finance and accounting Project Management – to keep up with advances in scheduling, risk management and mandatory reporting of compliances Equipment Maintenance has acute shortages

20 Developing the Workforce Companies need to have methods for recruitment, training and retention Outreach is needed to include minorities, women, the currently unemployed and disconnected Workplace changes may be in order regarding child care, schedules, and methods to reduce absenteeism Fortunately, Hawaii has several organizations and resource agencies in place to draw upon

21 Other Parts of the Economy will Benefit $ 1 Billion in construction generates: - $1.3 Billion in total output in the economy - 12,400 other jobs - $ 583,000 in household income and spending

22 Other Sectors Thus, in addition to generating activity in construction, activity is generated in - Real estate - Engineering - Banking - Medical care - Eating and drinking - Retail - Transportation

23 Impact of the Completed Public Infrastructure Projects Helps other business be more productive and efficient, for example, when transportation facilities and improved and congestion is reduced

24 Construction Forecasts According to EconPost March 18, 2010, Moodys states: Hawaiis construction growth is set to grow 2.8% in 2010 and continue robust well into 2013 According to Pearl Imada Iboshi, State Economist: Private construction declined in 2009, but State government construction increased 15% UHERO predicts construction will rise 4% in 2011 An increased emphasis on infrastructure can bring an economic boost



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