Construction Spending Forecast Assumptions
Starting with the annual construction spending data for 2017 ($1.23 trillion), the estimate assumes 4 percent growth (to $1.28 trillion) for 2018, 4 percent on top of that (to $1.33 trillion) for 2019, 3 percent growth above the 2019 construction spending level (to $1.37 trillion) for 2020 and 3 percent growth above 2020 construction spending (to $1.42 trillion) for 2021.
Construction Spending and Job Creation
According to a model developed by Markstein Advisors to calculate the relationship between the volume of construction spending and demand for private construction employment (excluding the self-employed), every $1 billion in extra construction spending generates an average of at least 6,300 construction jobs.
Employment Demand Forecast
According to a model developed by Markstein Advisors to estimate total private construction employment demand based on the amount of construction spending, construction employers would like to hire 539,000 additional workers in 2018. The estimates for 2017 and 2018 are consistent with sources reporting employment and available jobs in construction (such as the BLS JOLTS report), given that all openings are not always reported.
The model adjusts for expected increases in construction costs because construction spending is in nominal dollars (i.e., not adjusted for inflation). Also, the model includes productivity gains in construction, reducing the amount of labor needed to produce a certain dollar amount of construction output. Finally, the model is based on construction wages and salaries remaining at 2017 levels. Higher wages and salaries would reduce the demand for labor.
Employment Demand Forecast With Additional Infrastructure Spending
The employment projections assume that the administration’s $1.5 trillion infrastructure plan, if enacted, would result in $50 billion in additional construction spending in 2019 on top of the baseline construction spending forecast; $150 billion additional spending in 2020; and $200 billion more in 2021. Thus, demand for additional construction workers above the baseline estimate for each year would be 323,000 in 2019, 960,000 more workers in 2020 and 1.3 million more workers in 2021.
The post was updated in October 2018.