The construction industry added 48,000 jobs in February—the largest monthly increase since March 2007. Year over year, the industry has added 140,000 jobs, or 2.5 percent, according to the March 8 employment report by the U.S. Labor Department. The construction industry unemployment rate declined to 15.7 percent in February, down from 16.1 percent the previous month and down from 17.1 percent from one year ago.

The nonresidential building sector added 6,200 jobs for the month and has added 20,600 jobs, or 3.1 percent, during the last 12 months. Nonresidential specialty trade contractors added 14,600 jobs last month and the segment has added 23,000 jobs, or 1.1 percent, during the past year. Heavy and civil engineering construction employment increased by 8,200 jobs in February and is up by 32,100 jobs, or 3.7 percent, compared to February 2012.

Residential building construction added 2,300 workers in February, but has only added 400 jobs, or 0.1 percent, compared to the same time one year ago. Many of the jobs added during the past year show up in the residential specialty trade contractors segment, which gained 17,100 jobs in February and has added 63,800 jobs, or 4.3 percent, during the past 12 months.

“Despite worries over automatic sequestration, high gas prices, the end of the payroll tax increase and a number of tax increases, the U.S. economy appears to be gaining momentum,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Thanks to rising home and corporate equity prices, total U.S. household wealth appears to have established an all-time high.

“Corporate earnings remain solid, and for the most part balance sheets remain healthy,” added Basu. “Data also indicate that lending standards are easing, including with respect to commercial real estate. After today’s jobs report release, U.S. stock futures climbed higher.

“Perhaps even more surprising than the overall employment report was the performance of the construction industry, which ranked second in terms of job growth behind only professional and business services in February,” Basu said. “Job growth was reported in every significant construction segment, with specialty trade contractors responsible for approximately two out of every three jobs added last month.

“Heavy and civil engineering, often thought to be a leading indicator for the overall nonresidential construction sector, added 8,200 jobs in February, which represents a meaningful acceleration over prior months,” said Basu. “With the broader economy still gathering momentum and with leading indicators for both residential and nonresidential construction remaining positive, there is reason to believe that further construction job growth is ahead.

“This is not to suggest that the economy is completely out of the woods,” Basu added. “The effects of automatic sequestration, which represents roughly $44 billion in federal spending cuts during the next seven months—and then additional cuts beyond that—will gradually seep into the economy and potentially cause it to decelerate during the second quarter.
“But for now, economic performance is exceeding expectations and overall job creation is becoming more brisk even as the nation continues to trim aggregate public sector employment,” said Basu.

Things started out so well.  The State Senate, way back in February, passed a package of bills to tweak the state’s workers’ compensation system.  The Senate was responding to concerns from employers who are facing the prospects of $110 million in surcharges for each of the next ten years in order to build up the system’s reserves.  Building reserves is important, but it does not have to be done by hitting employers with huge surcharges just as the economy is finding its way out of the great recession.

The Senate-passed bills included one that would have allowed more workers to accept lump-sum payments instead of lifetime pensions.  The number of lifetime pensions provided in Washington State is waaayyy above the national average, and allowing the lump-sum payment option as 44 states do is one way to reduce costs for the system and to build reserves.  SB 5127 would have lowered the age of injured workers for whom lump-sum payments is an option from 55 to 40.  Younger workers may be interested in using upfront money to set up a new way to make a living…the choice would be theirs.

Of all the workers’ comp reform bills passed by the State Senate, SB 5127 passed with the most bi-partisan support,suggesting it had a shot in the House.  However, the House leadership reportedly won’t even give the bill a hearing.  Who knows what sort of political brinksmanship will occur toward the end of the legislative session that could resurrect a bill like SB 5127, but for now, the idea seems to have run into a dead end.

Over the past few budget cycles, the Legislature has greatly reduced the amount of funds available in the PWTF through budget transfers and legislation diverting certain revenue streams. Because the PWTF is a revolving loan fund, such actions continue to undermine the PWTF over time, even though the program is a national model that is widely supported throughout the state. These actions negatively impact job growth, economic development, and regulatory compliance in Washington State. During the recent application process, local governments and special purpose districts submitted over $1 billion in project requests for the available $685 million – even the available funding is inadequate to cover the demand for these basic infrastructure loans.

State investment in basic infrastructure is a strong and necessary foundation for economic growth, and the construction industry has yet to fully recover from the recession. The current mission of the PWTF—to fund essential infrastructure including water, wastewater, road, bridge, and solid-waste and recycling projects—is a vital part of the state’s overall economic-development strategy. According to the Department of Revenue, every dollar invested by the PWTF in basic infrastructure yields an additional $3.60 in statewide economic activity. The more than $2 billion total investment by the PWTF has generated $10.7 billion in gross construction-related economic activity.

These benefits of PWTF investment in basic infrastructure include construction contracts; production, transportation, and purchase of equipment and related goods and services; and purchases made by workers employed on PWTF-financed projects. Without this infrastructure funding, many Washington communities could not sustain, expand, and attract businesses vital to economic development, and could not meet the variety of regulatory requirements under the Growth Management Act, Clean Water Act, and other laws.

The PWTF is one of the rare programs in state government that has broad support from the full spectrum of stakeholder interests – business, labor, local government, and the environmental community.

House Bill 1440 would completely change the independent contractor law and redefine employer and employee.

Ostensibly this bill supplants the current seven-part independent contractor test with a three-part test. However, buried in this is language that says an individual is an employee if the party for whom the services are performed exercises or has the right to exercise general control over the individual’s physical activities. This language belies the fact that there is actually a one-part test and it is entirely problematic for all employers, but especially contractors.  Ever since the Supreme Court’s decision in Stute, general contractors have a non-delegable duty to direct the general activities or all construction workers on a jobsite for safety purposes.  What effect would this declarative language have on general contractors and the complex interactions that occur daily between general contractors and subcontractors and all individuals working on construction sites?

In addition, the bill’s definition of employer is broad enough to include the principals of a corporation and an employee would be anyone whom an employer exerts even “general indirect control over their physical activities”.  These definitions are then spread over all aspects of labor law – prevailing wage, wage payment act, minimum wage act, and unemployment compensation.

The bill provides organized labor with legal standing to enforce the bill’s provisions on behalf of any individual, and creates new private rights of action and provides that violations of certain aspects are presumed to be a gross misdemeanor.  The bill also has severe civil penalties and punitive damages clauses.  Lastly, the bill provides for new lien rights against the personal and real property any employer against which an award is made.

The bill has been passed out of both the Labor and Workforce Development and Finance Committees.  It awaits further action in the House Rules Committee.

A team led by local Skanska employees pitched in again this year in the Associated Schools of Construction Student Competition in Nevada.

The employees developed a problem statement on sustainable building and LEED that 11 student teams answered with written proposals and oral presentations.

The winning teams and their prize money were: Virginia Polytechnic Institute and State University (first place, $1,500); California State University, Fresno (second place, $1,000); and the University of Washington (third place, $500). Arizona State University won $500 for best presentation.

Skanska’s group consists of 12 employees from Washington, Oregon and California. It collaborates from October to February to develop a problem statement. This is the eighth year the employees have helped out.

Pictured on the UW student team are: (back row, left to right) Matt Watson, Kevin Marck, Eddie Baker and professor John Schaufelberger; (front row) Melody Lian, Michael Abbate and Ben Leventer.

Legislation to reauthorize and revise the State’s alternative public works contracting procedures was passed by the State Senate today.  The law authorizing the use of GCCM, Design-Build (DB) and Job Order Contracting (JOC) on certain public projects is set to sunset at the end of June, 2013.  However, Senate Bill 5349 reauthorizes the statute for eight more years while making a few tweaks.

The Capital Projects Advisory Review Board (CPARB) has been working on the legislation for months.  Its Reauthorization Task Force gathered input and made recommendations on any changes. All of the changes included in SB 5349 were unanimously approved by CPARB.  Changes include:

• Allows certified public bodies to use GCCM on any size project without going to CPARB’s Project Review Committee (PRC) for approval, and DB on no more than five projects between $2 million and $10 million during the certification period.
• Changes the number of DB projects between $2 million and $10 million that the PRC may approve from 10 to 15 projects, and requires the PRC to report annually to CPARB on these projects and recommendations for further use.
• Increases the maximum total dollar amount that may be awarded through JOCs in counties with a population of more than 1 million to $6 million.

The House version, HB 1466, is in the House Capital Budget Committee where a hearing has been held but no action taken yet.

Pittsburgh-based safety equipment manufacturer MSA has come up with a way to make hard hats greener — it uses sugar.

While it sounds like construction workers would be in for a sticky mess after that first rainstorm hits, that’s not the case. MSA developed the hats in Brazil using high-density polyethylene sourced from sugarcane.

“By developing a hard hat sourced from sugar, we have reduced the overall carbon footprint that’s associated with the entire life-cycle of this particular product, from start to finish,” said Eric Beck, MSA’s global director of strategic marketing, in a release.

The “green” polyethylene is made from sugarcane ethanol, which results in a smaller carbon footprint because, for each ton of the material produced, up to 2.5 pounds of carbon dioxide are captured from the atmosphere. Conversely, Beck said one ton of polyethylene sourced from petrochemicals emits more than 2 pounds of carbon dioxide into the atmosphere.

The final kicker is that green polyethylene is 100 percent recyclable.

MSA claims the hats are the first industrial safety product produced from nearly 100 percent renewable resources. I wonder if the U.S. Green Building Council has LEED points for that.

For more information, check out www.MSAsafety.com.

In addition to the spate of workers’ comp bills Jerry wrote about, there are also numerous prevailing wage reform bills that have been introduced. Some seek to expand the scope of the act — to continue what seems to be a never-ending expansion of who must be paid prevailing wage, some seek to shrink the act back to its original job site boundaries, another requires certified payrolls on all projects. There are others that seek to increase transparency through public postings of wage determinations or remove the payment of prevailing wage from certain school construction. It’s much too early to predict where these bills might end up, but it certainly is proof that prevailing wage reform is a hot topic for organized labor and for construction firms — and should be for public owners and taxpayers who ultimately foot the bill when the application of prevailing wage increases the cost of roads, schools and other publicly funded construction projects.

A trio of workers’ comp reform bills were passed by the State Senate last week. Three others may be voted on soon.

The bills that passed are:

• Senate Bill 5112 – Allows claims representatives for retro employers and groups to schedule independent medical examinations and vocational rehabilitation assessments, subject to certain conditions. Click here for vote tally.
• Substitute Senate Bill 5127 – Addresses the arbitrary 55-year-old age limitation on structured settlement availability. Original bill would have removed the age restriction on voluntary claims settlements but an amendment lowered the age restriction to 40 rather than eliminating it. Click here for the vote tally.
• Senate Bill 5128 – Also deals with structured settlements, the bill streamlines the program in keeping with the legislation that passed in 2011 with a strong bipartisan vote. Click here for the vote tally.

These bills must still be passed by the State House of Representatives. The three other workers’ comp bills are:

• Senate Bill 5124 – Streamlines the way time-loss benefits are calculated for injured workers by replacing the current formula, which varies based on the worker’s marital status and number of children to a standard two-thirds percent.
• Senate Bill 5126 – Addresses a recent Supreme Court ruling by reaffirming that the state and self-insured companies can reimburse their benefit costs when a third party outside of the employment relationship causes a workers’ injury on the job.
• Senate Bill 5125 – Redefines “occupational diseases” to be a condition that must arise out of the course of employment and be proximately caused by the distinctive conditions of that employment. The increased frequency of occupational diseases for the natural aging process is one that has been seen on many cases. This legislation would put back in place the original intent of what the law was designed to cover for Industrially related Occupational Diseases.

These bills will help stem a looming $110 million a year surcharge on employers. The reforms passed in 2011 slowed big rises in premiums but didn’t solve all of the problems plaguing the system. Unless lawmakers take the next step, employers are facing a $110 million surcharge for each of the next 10 years as L&I attempts to rebuild its depleted reserve fund. Building reserves is a good thing, but doing it with large surcharges will hinder job creation.

Contractors should keep an eye on House Bill 1007 about covered loads.  The bill:

• Requires that from August 1, 2013, through June 30, 2014, any vehicles operating on a paved public highway hauling dirt, sand, rocks, or gravel susceptible to escaping must use a cover if the vehicle is equipped with a load cover.
• Requires that after June 30, 2014, a vehicle operating on a paved public highway hauling dirt, sand, rocks, or gravel susceptible to escaping must use a cover and must not exceed the horizontal freeboard of the bed of the vehicle hauling the load.
• Provides an exemption for the Department of Transportation when applying deicers and sand for snow and ice control, maintenance operations for emergencies, or maintenance on closed roads, but still requires six inches of freeboard.
• Requires the Washington State Patrol to conduct random emphasis patrols to enforce covered load requirements.

The bill is sponsored by Reps. Kagi, Clibborn, Stanford, Ryu, Moscoso, Hudgins, Reykdal, Fitzgibbon, Appleton, Maxwell, Green and Fey.