State transportation crisis hurting construction industry

As we've written before, many economists believe that budget cuts at the state level are hurting the stimulus efforts of the federal government. Well, it's starting to look like the federal government is getting into the act with cuts of it's own. Today, the Harrisburg-Patriot News has a troubling article about how Pennsylvania's construction industry is hurting because funding for transportation projects is drying up.

The expiration of federal stimulus money that kept 8,000 people employed in construction jobs last year — combined with the rejection of tolls on I-80 — have created a “dire” employment outlook for construction workers and those who work in related industries, said Robert Latham, executive vice president of Associated Pennsylvania Constructors.

That aside about I-80 refers to the other part of the problem here: The fact that the federal government rejected Pennsylvania's application to put tolls on I-80, which would have generated $472 million for repairs.

How does the lack of funds impact individual businesses? Obviously, companies that directly work on construction projects will hire fewer workers. But the problems trickles down to other parts of the industry. The article quotes Dennis Heller, who runs an equipment supply company:

Heller said his revenue was down about 25 percent last year and is down 15 percent this year because fewer companies are buying expensive construction equipment. With business essentially frozen right now, he can’t hire more workers either, he said.

“When the contractor that uses that equipment doesn’t have assurances he’ll have work beyond this season, he is unlikely to make the decision to purchase and finance that [equipment] over the next five or so years,” Heller said.

We can't help but note this article comes on the heels of news that Pennsylvania's unemployment rate has stayed steady at 9.2 percent. That's slightly lower than the national level, but it underscores that state residents still face deep economic insecurity. Now, that problem is being compounded by the lack of resources available to help create jobs.

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