Area Economy

In the construction sector, G.R. = Growing Rapidly

September 29, 2017
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As chief economist for the Associated General Contractors (AGC) of America, I identify future building trends, evaluate current trends and interpret the role our members play in the construction economy — and we see a lot of good news in Grand Rapids.

West Michigan, but particularly Grand Rapids, is on a prolonged growth spurt, and the local construction industry is both benefiting and contributing to it. Prospects remain bright for both the overall economy and for construction locally.

Like Michigan as a whole, which followed the state’s auto industry down into a steady decline in employment throughout the first decade of the 2000s, total nonfarm payroll employment in the Grand Rapids-Wyoming metro area fell from 2000 until 2009. Since then, however, the metro area has rebounded strongly. Total employment has increased for eight years in a row, reaching new records for the past three years.

Metro Grand Rapids employment has jumped more than 25 percent since 2009 to 555,000 in August, far outpacing state and national employment gains. While the state also has added jobs in each of the past eight years, its recovery has been more modest — 15 percent — and statewide employment remains well below the peak set in 2000. U.S. employment overall during that span has risen only half as fast as in the metro area — less than 13 percent.

The construction sector has shared in this comeback locally. Construction industry employment climbed by 45 percent between its low point in 2009 and August 2017, when the industry employed 25,900 workers. Construction employment growth actually has accelerated in the past year locally, even as it has slowed in the state and the nation as a whole. Industry employment in the metro area increased by 2,300, or 10 percent, from August 2016 to August 2017, compared with a gain of 5 percent in Michigan and 3 percent nationwide.

Equally important to further economic and construction growth, Grand Rapids has continued to attract new residents. The city’s population has been increasing at the same rate as the nation, both in the latest annual estimate — 0.7 percent from July 2015 to July 2016 — and in the time since the 2010 Census (4.5 percent). That is quite a contrast to the rest of Michigan, where the population has inched up by only 0.5 percent in the six years from 2010 to 2016.

It is unlikely the metro area can sustain a continuing 10 percent annual rate of increase in construction employment. But it is likely that with a diversified economy and ongoing population growth, construction will remain a vibrant contributor to well-being in Grand Rapids.

One issue of concern for Grand Rapids, the state of Michigan and the nation as a whole is the skilled trades workforce shortage that has affected the construction industry during this recovery. As the industry continues to pick up its economic pace, a shortage of skilled trades has become the norm. In Washington, AGC of America is working hard to address this crisis through additional funding for career and technical education, increased student access to job training programs and linking job training to any infrastructure bill. AGC of Michigan is engaged as a leader and administrator of joint labor-management apprenticeship training programs and will continue its legacy of promoting construction careers and recruiting new talent.

Ken Simonson is chief economist for the Associated General Contractors of America. 

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