The construction industry doesn’t need a bailout

| October 2 2012

One of the special interest groups that would benefit the most from passage of the proposed sales tax increase on Arizona’s November ballot – Proposition 204 – is the construction industry. They stand to have $100 million in government contracts funneled their way each year forever if the proposition passes.

Last week, State Treasurer Doug Ducey noted this is especially odious because the construction industry in the state is “doing just fine.” “I don’t think the contractors need any help” from taxpayers, he said. This sparked a rejoinder from David Martin, president of the construction industry lobbying group, the Associated General Contractors of Arizona. “I would have him ask the 120,000 people that are currently out of jobs because of the great depression in the construction [industry] that we’re in,” he said in theArizona Capitol Times.

Data from the Bureau of Labor Statistics, however, suggests that Mr. Ducey has a valid point. The construction industry saw an employment growth rate more than twice the rate of overall employment growth in the state during the economic boom of 2003 to 2007. They also saw the biggest percentage point drop in employment when the economy hit the skids. But that’s not surprising – they had further to fall.

Quoting job numbers without putting them into context of the overall economy or comparing them to the high-mark of an employment bubble paints a distorted picture. Here’s the full story: overall employment in Arizona began to pick up in July 2011, growing by about 2.5 percent in seasonally adjusted terms through August 2012. Construction employment, however, grew almost three times as fast, by 7 percent.

So, relative to overall job growth, the construction industry is indeed doing fine. Yes, they will do even better if Proposition 204 passes–but only by standing on the backs of taxpayers.

SOURCE:  Goldwater Institute

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