#1UCA Annual Spring Showcase | April 2022 ILEPI ILLINOIS ECONOMIC POLICY INSTITUTE The Construction Outlook in Illinois and America Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#2The Illinois Economic Policy Institute (ILEPI) The Illinois Economic Policy Institute (ILEPI) has promoted thoughtful economic growth for businesses and working families since 2013 Studies on infrastructure investments, prevailing wage laws, apprenticeship programs, responsible bidding, and the value of union construction industry Four full-time staff Executive Director Transportation Director Policy Analyst Research Associate Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#3Growth Index: 100=2012 160 150 140 130 120 110 100 90 Gross Domestic Product: Past Decade 180 170 Recent Trends in GDP and Employment 172.8 154.9 141.5 Growth Index: 100=January 2012 160 Seasonally-Adjusted Employment: Past Decade 150 140 130 120 110 100 90 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 United States: All Industries Illinois: Construction United States: Construction National: Nonfarm Employment Illinois: Construction Employment National: Construction Employment Source: Bureau of Economic Analysis, 2022 Source: Bureau of Labor Statistics, 2022 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org Jul-21 Jan-22 135.6 114.2 113.3#4Consensus and Government Forecasts CONSENSUS CONSTRUCTION FORECAST, DECEMBER 2021 Click on each name to see their forecast Chart 1. Projected employment change by occupational group, 2020-2030 (percent) Expected recovery from COVID-19 recession Estimated Forecast Consensus % Change 2021 2022 2023 Dodge Construction Network Nonresidential Total 5.4 6.1 IHS Markit Commercial Total 4.7 5.3 Office ☐ 0.8 3.6 Healthcare support Personal care and service Food preparation and serving related Computer and mathematical Arts, design, entertainment, sports, and media Community and social service Healthcare practitioners and technical Educational instruction and library Management Transportation and material moving Moody's Analytics Retail & Other Commercial 7.5 4.9 Legal FMI Hotel Industrial Total 1 10 -0.4 13.5 9.4 8.4 Institutional Total 4.4 6.0 ConstructConnect Associated Builders and Contractors Wells Fargo Securities Health Education Religious Public Safety Amusement & Recreation 6.2 6.0 3.5 6.1 ☐ -1.1 1.2 -1.3 5.6 26 Protective service Business and financial operations Life, physical, and social science Total, all occupations Building and grounds cleaning and maintenance Installation, maintenance, and repair Construction and extraction Architecture and engineering Farming, fishing, and forestry Production Sales and related Office and administrative support 7.7 6.0 Markstein Advisors -5 5 10 15 Note: Expected recovery from COVID-19 recession represents the reversal of declines in employment between 2019 and 2020 for occupational groups that experienced declines during that period. 0 20 25 Source: American Institute of Architects Consensus, 2022 Source: Bureau of Labor Statistics, 2021 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#5Bipartisan Rebuild Illinois Capital Program ILLINOIS CAPITAL BILL NEW TRANSPORTATION FUNDING An additional $2 billion per year for transportation projects REBUILD ILLINOIS Provides sustainable funding by indexing the Motor Fuel Tax to inflation ELLINORS ECONOMIC POLICY INSSITUTE ILEPI 25% of transportation funding goes to local governments and transit agencies First time mass transit has dedicated annual funding from the state Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#6Bipartisan Infrastructure Investment and Jobs Act The Infrastructure Investment and Jobs Act (IIJA) will provide at least $16 billion in transportation funding for Illinois. The IIJA Provides New & Increased Transportation Funding for Illinois ++ $1.4 billion in new bridge funding 21% increase in existing road and bridge funding 26% increase in transit funding >>> ILEPI ILLINOIS ECONOMIC POLICY INSTITUTE Source: Illinois Economic Policy Institute, 2022 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org ILEPI LINDIN ECONOMIC POLICY INSTITUTE#7Examples of Other Tailwinds America is short more than 5 million homes, and builders can't make up the difference PUBLISHED TUE, SEP 14 2021-10:55 AM EDT I UPDATED WED, SEP 15 2021.4:14 PM EDT Diana Olick @IN/DIANAOLICK @DIANAOLICKCNBC @DIANAOLICK SHAREf in Expanding High-Speed Internet Will Grow Illinois' Economy The state's Rebuild Illinois capital program and the federal Infrastructure Investment and Jobs Act will invest hundreds of millions of dollars in broadband internet access. Expanding access to 238,000 households, businesses, and farms Boosting economic activity by $2.6 billion over six years KEY POINTS • Some 12.3 million American households were formed from January 2012 to June 2021, but just 7 million new single-family homes were built during that time. • Single-family home construction is running at the slowest pace since 1995. Source: CNBC, 2021 Raising worker incomes by an estimated $843 million annually $ Creating or saving 14,400 jobs over six years ☑ Delivering telework and telehealth opportunities to rural communities ILEPI LABOR & EMPLOYMENT PROJECT FOR MIDDLE CLASS RENEWAL I ILLINOIS RELATIONS Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#8Headwinds: COVID-19 and Related Effects Where are all the workers? ➤ 2.4 million excess retirements 460,000 families (still) without childcare 1.4 million drop in immigration 1.1 million workers with long COVID 1 million COVID-19-related deaths o more than 240,000 were between working ages of 18-64 years old 2.4 + 0.46 + 1.4 + 1.1 + 0.24 = 5.6 million Source: Upcoming ILEPI Report - Numerous Sources, 2022 COVID-19 Deaths Per 100,000 450 400 350 300 250 200 150 100 50 Correlation: -0.53 0 40% 50% 60% 70% 80% 90% Share of Population Fully Vaccinated (2+ Doses) Source: The New York Times, 2022 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#92 3 4 6 7 9 Headwind: Inflation, Inflation, and More Inflation Chart 2. 12-month percent change in CPI for All Urban Consumers (CPI-U), not seasonally adjusted, Mar. 2021 - Mar. 2022 Percent change 8 00 * * 5 1 Mar'21 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar'22 *** All items All items less food and energy Source: Bureau of Labor Statistics, 2022 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#1015.6% 14.8% U.S. Inflation vs. European Inflation Annual Rate of Inflation (March 2022) Lithuania Estonia 37/20221 April 2022 Netherlands 11.9% Latvia 11.2% Flash estimate - March 2022 Euro area annual inflation up to 7.5% Spain 9.8% Slovakia 9.5% Belgium 9.3% United States 8.5% Greece 8.0% Luxembourg 7.9% Euro area annual inflation is expected to be 7.5% in March 2022, up from 5.9% in February according to a flash estimate from Eurostat, the statistical office of the European Union. Looking at the main components of euro area inflation, energy is expected to have the highest annual rate in March (44.7%, compared with 32.0% in February), followed by food, alcohol & tobacco (5.0%, compared with 4.2% in February), non-energy industrial goods (3.4%, compared with 3.1% in February) and services (2.7%, compared with 2.5% in February). Germany 7.6% EU Average 7.5% 0 2 4 6 Euro area annual inflation, March 2022, % 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 Italy 7.0% All-items HICP Ireland 6.9% Food, alcohol & tobacco Austria 6.7% Energy Cyprus 6.2% Non-energy industrial goods Slovenia 6.0% Services Finland 5.6% ec.europa.eu/eurostat Portugal 5.5% France 5.1% Source: Bureau of Labor Statistics, 2022 Source: Eurostat, 2022 Malta 4.6% Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#11Drivers of Inflation? Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#12100% Issues Affecting Project Completion Times Supply Chain and Regulatory Issues Impacting Completion Times, 2021 Share of Contractors Experiencing Delays in Project Completion Times 80% 78% 80% 60% 40% 20% 58% 60% 32% 31% 0% Delays Due to Shortages of Materials Delivery Delays Union Contractors ■Nonunion Contractors Delays Due to Government Share of Contractors Experiencing Labor Shortage Issues, 2021 Share of Contractors Experiencing Labor Shortage Issues Union Contractors Nonunion Union Contractors Advantage Project Completion Time Delays Due to Worker Shortages Difficulty Filling Some or All Craft Positions 47% 68% -21% 72% 86% -14% Increased Headcount (Workers) in Past 12 Months 46% 38% +8% Source: Associated General Contractors of America, 2021 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#13Skilled Labor Shortage in Construction The Labor Market Competitiveness of Construction Firms Contractor Experiences: AGC Surveys Union Contractors Nonunion Contractors Joint Labor-Management Apprenticeship Programs Are the Gold Standard ILEPI JOINT CONSTRUCTION EMPLOYER-ONLY PROGRAMS ILLINOIS ECONOMIC POLICY INSTITUTE PROGRAMS Experiencing Project Delays Due to Worker Shortages 47% 68% Total Apprentices 74,500 1,900 Say Local Pipeline of Well- 29% 56% Trained Workers is "Poor" (2000-2016) Training 7,300 hours 6,300 hours Report Losing Hourly Craft Requirements 17% 30% Workers to Other Industries Completion 54% 31% Average Annual Pay of Rate Construction Workers $58,000 $39,700 African American 52% 18% Completion Because they invest in job quality, union contractors are better able to attract, develop, and retain skilled construction workers. ILEPI ILLINOIS ECONOMIC POLICY INSIENTE Military Veteran 60% 27% Completion I ILLINOIS LABOR & EMPLOYMENT RELATIONS PROJECT FOR MIDDLE CLASS RENEWAL Journeyworker $40 per hour $23 per hour Wage Source: Associated General Contractors of America, 2021 Source: Illinois Economic Policy Institute and University of Illinois at Urbana-Champaign, 2020 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#14Final Thought: Union Safety and Workers' Rights SAFETY FIRST Union Worksites are Safer in Illinois' Construction Industry Health & Safety Violations Union Worksite Nonunion Worksite Union Difference OSHA Inspections 60% 73% -13% with a Violation Average Number of OSHA 1.0 2.1 -52% Violations Unions represent 34% of construction industry workers, but union worksites account for just 8% of health and safety violations in construction. Source: "The Impact of Unions on Construction Worksite Health and Safety: Evidence from OSHA Inspections," by Frank Manzo IV, Michael Jekot, & Robert Bruno, 2021. ILEPI ILLINOIS ECONOMIC POLICY INSTITUTE ILLINOISELATIONS LABOR & EMPLOYMENT PROJECT FOR MIDDLE CLASS RENEWAL ILEPI In 2022, Illinois Will Vote on Whether to Protect Workers' Rights "No law shall be passed that interferes with, negates, or diminishes the right of employees to organize and bargain collectively over their wages, hours, and other terms and conditions of employment and work place safety" The bipartisan constitutional amendment passed: ⚫49-7 in the Illinois Senate (88%) 80-30 in the Illinois House (73%) The Workers' Rights Amendment promotes good jobs, safe workplaces, and a strong economy. Source: Illinois Economic Policy Institute, 2021 Frank Manzo IV, MPP | Illinois Economic Policy Institute | www.illinoisepi.org#15THANK YOU! Frank Manzo IV, MPP | [email protected] Illinois Economic Policy Institute | www.illinoisepi.org Facebook: @IllinoisEPI | Twitter: @IllinoisEPI | Instagram: @illinoisepi1 Work: (708) 375-1002 | Cell: (815) 245-0514 ILEPI ILLINOIS ECONOMIC POLICY INSTITUTE