When evaluating the trends of the business environment today the landscape looks very similar to 2018. Construction activity is everywhere in Southwest Washington. Survey results and compiled data indicate Southwest Washington continues to grow. We are experiencing an economic boom that keeps construction top of mind.
Sources report that payroll in Washington state generated $16.2 billion in 2017 in the construction industry. This number is up $1.2 billion from 2016 and has grown 40 percent over a four-year period. The experts are still finalizing 2018 numbers however they exude confidence. Most believe the current positive trend will continue.
Research tells us that nearly 260,000 people in Washington state were employed in the construction industry throughout 2017. The employment growth over the past five-year period was nearly 25 percent with the average salary hitting $58,800. The accelerated growth is no surprise. Our region ranks in the top 25 year over year in job growth. The state of Washington is listed as fourth, Oregon is number nine and Idaho finished at 22 on the roster.
Regionally the average construction-related income is 8 percent higher than any other industry. In the Portland-Vancouver Metro area, the average salary climbed to $60,800. This is all good news. However, the industry continues to be faced with many challenges.
The labor shortage is at the top of the challenge list. Experiencing a workforce shortage during a time when construction projects are high in demand is a formula that does not work in your favor if you own or run a construction company. This combination results in employees having the upper hand and gaining momentum on the higher wages. In short, the scenario drives up the prices.
We also face the challenge of the unpredictable political climate we live in today. This situation adds to the labor challenge and can impact the uncertainty in material costs. As a result, an increase in labor costs plus the rising price of material create a much higher cost of doing business.
Construction is one of the most impactful industries in the economic development chain. A sudden dip in the economy can create a lasting impact on the region.
To date, we have passed through 115 months of economic growth since the Great Recession. June of 2019 will mark the 11th year of consistent growth. The longest trend in U.S history is 129 months. We will tie this record 14 months from now.
While the forecast is positive, it’s no time to let your guard down. I urge you to take steps now that will insulate your business from any unforeseen economic downturn. Now is the time to identify and address risks specific to your business. What steps are you taking that will make your business more attractive to employees? How many of your employees are nearing retirement age? Have you diversified the type of projects your business works on? Is your business positioned to survive a recession when it hits? Position your business to ensure continued prosperity. Now is the time to invest in the people, technology and resources to generate a return on investment during more lean times.
Be proactive rather than reactive. Take action now and position your business to survive economic hardships.
Darcy Altizer is the executive director for the Southwest Washington Contractors Association.