Article by Joseph Natarelli, National Construction Industry Group Leader, and Anirban Basu, Marcum's Chief Construction Economist, "Smooth Construction Industry Recovery Remains Elusive," Featured in Construction Accounting & Taxation
Construction Accounting & Taxation
By Joseph Natarelli, National Construction Industry Group Leader, and Anirban Basu, Marcum's Chief Construction Economist
Any momentum garnered during the final six months of 2013 was stymied by the brutal winter of 2013–14. According to the third estimate from the Bureau of Economic Analysis, the U.S. economy shrank at a 2.9 percent pace during the year’s initial quarter. The harsh winter and a decline in private inventories are primarily to blame for the dismal first quarter growth. Thankfully, most economic indicators suggest that both consumer spending and total production have already rebounded from their sluggish first quarter pace. Additionally, indications of forward momentum in nonresidential construction spending have begun to surface, suggesting that the second half of 2014 will be associated with solid growth.
While America is hardly on the verge of an economic boom, there are certain segments that are helping fuel more aggressive recovery and move the nonresidential construction industry forward. One of those industries is the oil and gas sector. The oil and gas industry added roughly 270,000 jobs between 2003 and 2012. This represents an increase of roughly 92 percent compared to an increase of 3 percent in all jobs during the same period. The Bureau of Labor Statistics reports that the U.S. average annual wage in the industry exceeded $107,000 in 2012, the latest full year for which data are available. According to the Wall Street Journal, that is more than double the average for all workers.
Communities aligned to America’s energy production renaissance have experienced significant increases in population and employment. Employment in Williams County, home to Williston, North Dakota, increased 276 percent between 2003 and 2012. In nearby Richland County, Montana, employment is up by 65 percent. Data indicate that before the boom associated with the Bakken shale formation, average wages for all jobs in Richland County and Williams County were roughly equal to their respective statewide averages. Richland County today has an average wage equal to 133 percent of Montana’s statewide average, while the corresponding statistic for Williams County, North Dakota, is 170 percent.