Why There’s So Much Construction Still Happening
In California, Gov. Gavin Newsom labeled construction an “essential service.” New York Gov. Andrew Cuomo did the same, listing construction alongside child care, grocery stores, and hospitals. While some construction work easily passes this test, including repairs and maintenance of road, water, and transit infrastructure, what’s so essential about that building going up by my house?
Developers, contractors, and labor unions have offered a handful of reasons that construction ought to continue through the coronavirus shutdown, a combination of blue-collar bravura, engineering needs, hygiene logic, and societal necessity.
Mostly, the economic expediency of everyone involved.
Builders say shutting down a job site is less like shuttering a restaurant than firing the chef while the roast is in the oven. If you abandoned a project halfway, materials like insulation and exposed wiring degrade in the elements. “There’s a sense that a 100-year-old building will deteriorate but continue to perform its job,” said Ehren Gresehover, a structural engineer in New York. “But when you start opening things up, start demo’ing a little slab, you might unbrace a column, and that column has temporary shoring, or perhaps it’s only temporary braced, and that’s less stable.” What’s safe for a weekend might not be safe for several months unattended.
Once a project gets underway, developers say, the timeline is tight. Skilled workers are in high demand. “Construction is like a train,” one Chicago developer told me. “If you stop a welder, it could take two months to get them back on site.” Delays can break contracts, they say, triggering expensive legal fights or jeopardizing the leases that future tenants have signed.
Developers also take on a construction loan, a risky, high-interest chunk of cash that you don’t want to hold a moment longer than you have to. Unlike a typical real estate loan, which would likely be secured by the property itself, construction loans are often tied to other assets. No bank wants your half-finished hole in the ground. Instead, construction loans tend to be full-recourse—meaning the bank can come for everything you’ve got if you default. One Texas developer getting married this year told me he and his wife were working on a prenup to keep her assets safe if one of his projects fails. A delay of a few months could cost him hundreds of thousands of dollars.
Do those things make construction more sensitive to disruption than low-margin businesses like restaurants? That’s a judgment call. Some sites and companies have shut down their operations. And many other workers and businesses have made enormous sacrifices to halt the spread of COVID-19—why wouldn’t we expect construction to do the same?
But that gets to the No. 1 reason that construction keeps going: Powerful construction unions, contractors, and developers thus far seem to agree that job sites are not likely to be virus incubators in the same way that white-collar offices are.
That’s intuitive … but does it make sense? Men having lunch on an I-beam above midtown is not really representative of the average job site. Lots of construction occurs inside, in raw spaces where hand-washing has not typically been an accessible workplace perk. According to the New York news site the City, some workers are concerned about job site conditions. “People are working on top of each other, they’re dirty, they’re sweaty,” says Tom Iannelli, a contractor in New York who is working on projects with the state but spoke generally about conditions in the trade. “In an office at least you have a bathroom and a sink.”
In the industry rag Construction Dive, New York area superintendent James Lang wrote that most sites should be shut down immediately. “Lost revenue and schedule slip are not nearly as valuable as making sure you have a healthy, reliable, skilled workforce in the coming months when there very well may be actual construction emergencies that need to be staffed.”
Still, labor leaders have so far been happy to keep their members working. “As much as we possibly can, New York must maintain some level of economic activity, especially when it comes to ensuring that our middle-class workers continue to receive wages and benefits that sustain their livelihood, and that of their families,” Gary LaBarbera, the president of New York’s Building and Construction Trades Council, said in a statement. Robbie Hunter, the president of California’s equivalent group, has said much the same. That may reflect the risk-reward calculus of their members, but also: no wages, no union dues.
Nonunion construction workers, meanwhile, are low-paid hourly workers. Many are undocumented. They will not qualify for unemployment assistance or receive stimulus checks if job sites pause, and may live paycheck to paycheck. Given the choice between certain poverty and the risk of illness, they are voting with their feet and going to work—even if they don’t feel safe. More powerful people in the industry feel similarly, but won’t risk breaking contracts unless the state gives them cover.
Still, the argument from both management and organized labor is: If we can keep at least some people employed without exacerbating the public health risk, we should. Seven million Americans work in construction, nearly three times as many as work for the federal government. “This is going to be probably the greatest recession we’ve ever had in our history,” said Carlo Scissura, the president of the New York Building Congress, which represents contractors, engineers, architects, and other building professionals. “If there’s one thing that keeps our country moving, it’s building.”
There’s a big caveat to all this gung-ho talk. The high downside of stopping a project halfway—the very thing that’s keeping the cranes moving now—will also scare off contractors, developers, and lenders who haven’t yet broken ground. What if three workers came down with COVID-19? Also, the recession. Unless Washington decides to embark on a big public works program, these might be the last cranes you see for a while.
The article was published on slate.com