hawaii institute of public affairs infrastructure summit
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Hawaii Institute of Public Affairs Infrastructure Summit. July 13, 2010 Cheryl Soon, SSFM International “Economic and Workforce Impact”. Three Important Dimensions. What is the impact of the construction industry on Hawaii’s economy? - PowerPoint PPT PresentationTRANSCRIPT
July 13, 2010Cheryl Soon, SSFM International
“Economic and Workforce Impact”
Three Important DimensionsWhat is the impact of the construction
industry on Hawaii’s economy?What would a $14 Billion investment over six
years mean to the current economy?What would it mean for workforce
development?
1. WHAT IS THE IMPACT OF THE CONSTRUCTION INDUSTRY IN HAWAII’S ECONOMY?
Hawaii’s 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.
Input-Output Model DefinitionsDirect impacts– on the construction industry
itself; includes jobs in heavy civil engineering and construction
Indirect impacts – on other industriesMultiplier 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
Construction Job ImpactsFor every $ 1 million spent, there are 12.9
direct and indirect jobs createdFor every $ 1 million spent, there are 3 direct
jobs created in construction
HIPA ReportHIPA 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
HIPA $ 14 Billion Projection55% 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
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
Bottom Line - Impact on the Economy is GoodAdding 42,000 direct jobs over six years,
averages out to 7,000 jobs per yearThe 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
2. What would this investment mean to Hawaii’s 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
What are our current metrics?Real per capita personal income in Hawaii in
2010 is $38,443, which is down from 20084.8% of all mortgages are in foreclosureHousing starts are down 55%Median Household income is $64,000, yet8.7% are living below the poverty line and
7.7% have no health insurance, which is typically provided through employers.
Hawaii UnemploymentIn 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 it’s lower than the September 2009 high of 7%41,700 residents in Hawaii are counted as
unemployed out of a total labor force of 636,800Hawaii’s 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!!
STATE CIP IN 2009-10Last 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 jobs5,554 direct construction jobs
STATE CIP IN 2009-10: Geographic Distribution (Source: DAGS)LOCATION NUMBER DOLLAR VALUEOahu 491 $ 978,295,682Hawaii 149 $ 431,665,970Maui 100 $ 283,318,510Kauai 53 $ 108,063,444Molokai 21 $ 17, 166, 085Lanai 9 $ 16,398,233Statewide 4 $ 16,606,410TOTAL 827 $ 1,851,513,340
STATE CIP IN 2009-10: Distribution By Agency (Source: DAGS)AGENCY NUMBER DOLLAR VALUEDAGS 161 $ 225,923,212Agriculture 8 $16,888,465DBEDT 5 $ 11,980,223Defense 6 $ 4,036,800Education 375 $ 269,181,928DHHL 26 $ 164,944,751DHS 31 $ 53,066,441DLNR 47 $ 67,357,085Transportation 82 $ 789,471,682UH 86 $ 248,642,743
HONOLULU RAIL PROJECTConstruction value is $ 5.5 BillionAccording to the Final EIS published
recently, number of direct and indirect jobs created is:YEAR JOBS YEAR JOBS
2010 3183 2015 10,9022011 8,209 2016 6,2292012 11,680 2017 3,8722013 17,290 2018 3,0912014 15,020 2019 1,719Source: FEIS, pg 1-202
Table 4-35
“...if work started on the rail line that would probably have the effect of reducing unemployment by one to two percent because we’re a small labor market.”
Lawrence Boyd, Jr.Center for Labor Education & ResearchUH West Oahu
PBN, June 25, 2010
3. Impact to Workforce DevelopmentIf 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 21st 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
Types of Workforce Development Needed
All the skilled trades in constructionHeavy Equipment operatorsFinance and accountingProject Management – to keep up with
advances in scheduling, risk management and mandatory reporting of compliances
Equipment Maintenance has acute shortages
Developing the WorkforceCompanies need to have methods for
recruitment, training and retentionOutreach is needed to include minorities, women,
the currently unemployed and disconnectedWorkplace 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
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
Other SectorsThus, in addition to generating activity in
construction, activity is generated in- Real estate- Engineering- Banking- Medical care- Eating and drinking- Retail- Transportation
Impact of the Completed Public Infrastructure ProjectsHelps other business be more productive and
efficient, for example, when transportation facilities and improved and congestion is reduced
Construction ForecastsAccording to EconPost March 18, 2010, Moody’s
states:“Hawaii’s 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