Study: Stronger R.I. construction industry could help bring unemployment down to 7.3%

The struggling Rhode Island construction industry could help reduce the state’s high unemployment rate by 1.4 percentage points if allowed to foster changes that would restore jobs, according to a study prepared for five trade groups by a Bryant University economist. More

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Study: Stronger R.I. construction industry could help bring unemployment down to 7.3%

COURTESY RHODE ISLAND CONSTRUCTION COALITION
IN A STUDY commissioned by the Rhode Island Construction Coalition, Bryant University economist Edinaldo Tebaldi said the construction industry directly and indirectly contributed 7.7 percent of Rhode Island's gross domestic product in 2013. Above, a map showing the distribution of construction employment across Rhode Island by county.
COURTESY RHODE ISLAND CONSTRUCTION COALITION
IN A STUDY commissioned by the Rhode Island Construction Coalition, Bryant University economist Edinaldo Tebaldi said the construction industry directly and indirectly contributed 7.7 percent of Rhode Island's gross domestic product in 2013. Above, charts depicting how construction GDP as a percent of total Rhode Island GDP has changed over time, and how Rhode Island's construction GDP growth rate compares with other states, the region and the country.
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Posted 4/22/14

EAST PROVIDENCE – The struggling Rhode Island construction industry could help reduce the state’s high unemployment rate by 1.4 percentage points if allowed to foster changes that would restore jobs, according to a study prepared for five trade groups by a Bryant University economist.

The state’s unemployment rate, currently 8.7 percent, is the highest in the country.

The five trade groups – Associated Builders and Contractors, Associated General Contractors, Construction Industries of Rhode Island, the RI Builders Association and Build RI – announced Tuesday that they are banding together as the Rhode Island Construction Coalition in an effort to promote the industry and support three broad policy recommendations made in the report that could help boost growth.

The groups released the report Tuesday morning at the RI Builders Association offices at 450 Veterans Memorial Parkway. Each trade group contributed equally to fund the $10,000 report, said RI Builders Association Executive Director John Marcantonio.

The report’s recommendations include reforming the construction permitting process, identifying issues that delay development and increase construction costs, and assessing opportunities to build and remodel public and private properties across cities and towns here.

According to the report, the construction industry favorably affected the state’s economy in 2013, supporting 29,916 jobs here and adding $3.9 billion to the state’s output, which economist Edinaldo Tebaldi, a Bryant associate professor of economics, said represents 7.7 percent of the state’s gross domestic product.

The construction industry’s GDP contribution includes $2.07 billion in direct output and $1.83 billion in “induced output,” Tebaldi wrote, which represents household spending by workers employed in the industry.

If the construction industry were able to return to the operating levels observed in 2001, the sector’s direct GDP contribution would rise from $2.07 billion to $2.75 billion, supporting 9,880 new jobs in Rhode Island, creating $404 million in extra income for Rhode Island households, and generating $60.2 million more in tax revenues for the state, Tebaldi said.

Tebaldi documented his findings using a multiplier calculation method specific to the state of Rhode Island and based on data provided by the U.S. Bureau of Economic Analysis. The multiplier reflects not only direct impacts within the construction industry but also indirect impacts in such industries as retail, health care and manufacturing.

In addition to the broad economic impact for Rhode Island projected in Tebaldi’s study, the boost in construction employment would also cause the state unemployment rate to drop 1.4 percentage points from its current level to 7.3 percent, he said.

While construction jobs in Rhode Island rose from 18,889 to 21,704 between 2001 and 2005 and stayed constant in 2006, they “plummeted” between 2007 and 2010, Tebaldi said, when the industry lost about 7,550 jobs – 26 percent of employment. Since then, construction employment has not changed much, he wrote.

“The current weak national construction outlook makes the short term a difficult time for construction in Rhode Island,” said Tebaldi. “The state has to align its cost-structure, improve productivity and seize all opportunities to expand construction activity.”

Tebaldi’s assessments do not reflect the opinions of Bryant University, according to a study disclaimer.

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