Are we maximizing multiplier effects on local employment?

The commercial construction industry is a proven jobs creator, but contracting needs to be sourced locally

Darcy Altizer

As the champions of the local construction industry, the Southwest Washington Contractors Association (SWCA) must initiate the conversation about how we bolster economic development and employment in the region.

Do you know how vital the commercial construction industry is to the economy of the state of Washington and Clark County?

A 2014 study using Washington State Department of Revenue and Employment Security data indicates the commercial construction industry had an average monthly employment of over 218,000 Washingtonians. The total construction payroll was $12.4 billion and contained 9 percent of all the payrolls in Washington.

The study also showed the commercial construction industry had more than $27.5 billion in sales, which accounted for 13.5 percent of all sales. This is larger than any other industry except for retail trade and services. Contractors paid over $1.48 billion in sales taxes – over 17.4 percent of all sale tax collected within the state – and $31 million on B&O taxes, totaling to over 9 percent of B&O taxes.

For every million dollars invested in new commercial construction in Washington state, $1.89 million in added sales are generated. As a result, new commercial construction contributes over $540,000 in additional household earnings, creating 11 additional jobs.

The multiplier effect of $1.89 of additional sales for every dollar invested is higher than any other urban industry other than the hospital industry. Those 11 additional jobs created are more than twice of what the airline manufacturing industry produced.

Local industry expert and philanthropist, Ron Frederiksen, conducted an informal survey of locally owned Clark County-based companies. He found that 94 percent of these employees live here in Southwest Washington. Roughly one-fourth of a construction project’s costs support wages paid directly to employees. When calculating in the additional benefits of contracting local, for example, monetary support for nonprofits and community organizations, the impact of contracting local is huge.

Since 2012, the commercial construction industry in Washington state has grown steadily at 8 percent each year. Locally, we are currently in an exciting time, with great economic momentum. Each week we hear updates from our ports about waterfront projects, and from our cities about new infrastructure improvements, parks and roads. We read about new multi-family complexes going into downtown and hotels and retail developments occurring in every part of the county. The CREDC reports on their successful local support and recruitment efforts. We were all highly enthusiastic when the CREDC announced that Banfield Pet Hospital was locating their corporate headquarters here and bringing 600-plus jobs.

How about we look at an existing industry that is already here, that has the potential to provide 10,000 additional jobs?

Statewide, the commercial construction industry provides over 9 percent of all payroll dollars. Here in Clark County we are a $500 million-a-year industry, employing 10,600 citizens, but are only 4.8 percent of the entire payroll. We attribute this to the use of out-of-state and out-of-region contractors.

The commercial construction industry is a proven jobs creator. Our question is how much of this local work are our local commercial construction industry contractors able to secure?

For nearly 70 years, the SWCA has served commercial and industrial contractors. We represent many successful companies and an industry that has a strong impact on our local economy.

We ask our port commissioners, city and county councilors, school boards, utility commissioners and all of their executives who have been singing the symphony of economic development and jobs since the Great Recession: are we doing everything in our power to make it as easy and fair as possible for the local commercial construction industry to gain work and create $1.89 of additional sales for every dollar spent, and maximize local employment?

Let’s contract local to maximize the multiplier effects on local employment.

Darcy Altizer is executive director of the Southwest Washington Contractors Association. She can be reached at Darcy@swca.org.

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