AGC Reports Rising Construction Layoffs, Potential CARES Act Loan Exclusions for Smaller Firms

Association says 27% of construction firms report coronavirus-related layoffs, while current loan guidance appears to leave out firms with fewer than 500 workers

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The Associated General Contractors of America’s (AGC) weekly survey issued April 3 suggests construction industry job losses are spreading rapidly as a result of the pandemic. It indicates the fast-worsening conditions arising from COVID-19 has triggered layoffs at more than a quarter (27%) of construction firms responding to its online survey.

The findings contrast with the government’s March employment report, which indicated construction employment declined by 29,000 as of mid-March.

“The March employment data does a better job reflecting market conditions before the pandemic than it does the widespread disruptions that have occurred during the past few weeks,” said Ken Simonson, the association’s chief economist. He noted that the federal employment figures are based on payrolls as of March 12, when relatively few states or individual owners had directed contractors to stop work. “Our survey, meanwhile, indicates rapidly deteriorating labor and market conditions for the construction sector.”

The share of firms responding to the AGC survey that said they had been directed to halt or cancel projects by their clients had jumped to 55% from 39% the week prior. Over one-quarter of respondents reported they had been directed to stop construction activities by government officials.

Smaller Firms Not Eligible for Paycheck Protection Program?

AGC’s Chief Executive Officer Stephen E. Sandherr called on the Small Business Administration (SBA) to revise its interim eligibility guidelines for the new Paycheck Protection Program included in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. He urged the SBA to make clear that any firm that employs 500 or fewer people qualify for loans under the program, regardless of the average annual receipts size standard used for construction.

“Congress and the administration were clear when enacting the coronavirus relief measure that any firm employing 500 or fewer people should be eligible for the Paycheck Protection Program loans,” he stated. “The purpose of these loans is to keep businesses open so they can continue to operate and employ millions of Americans.

“Unfortunately, the Small Business Administration is needlessly delaying the loan applications of thousands of construction firms that clearly would meet the statutory threshold of 500 employers or less because the agency appears to have added a secondary qualification that is not part of the statute,” he asserted.

Sandherr argues that the error undermines the purpose of the loan program by endangering the survival of many construction firms, the majority of which are family-owned businesses. The result, he adds, will be “tens of thousands of construction professionals will be forced to suffer new economic hardships because agency officials are misstating the law and subsequent eligibility guidance from the U.S. Department of the Treasury.”

Sandherr urged the President and SBA administrator to immediately clarify the program’s eligibility standard to ensure that all construction firms that employer less than 500 people are able to take advantage of the loan program. 

The AGC outlined its concerns and issued clarification in this statement.