Government can heal U.S. construction job pains

Ken Simonson, chief economist of Associated General Contractors of America, speaks during Reuters Infrastructure Summit 2009 in Washington, May 6, 2009.

WASHINGTON (Reuters) - After losing thousands of construction jobs last year, U.S. contractors are hoping the government will go beyond the stimulus plan to help revive the sector, the chief economist for the Associated General Contractors of America said on Wednesday.

President Barack Obama will release a complete version of his budget on Thursday with details of his infrastructure strategy, and the U.S. Congress is currently working on a blueprint for transportation spending that will deploy billions of dollars.

Both those federal moves could bolster construction payrolls, dramatically thinned by the housing slump, Ken Simonson told the Reuters Infrastructure Summit.

"They're in place," he said, referring to the workers. "They're waiting for a call-back."

Still, he said, the boost will not come immediately. Simonson expects Congress to miss its September 30 deadline for passing the surface transportation bill, which would force it to extend the current law and delay new projects.

The $787 billion American Recovery and Reinvestment Act passed in February had about $135 billion worth of "construction-related spending," but it still was likely "not enough to create jobs on net," Simonson said.

The U.S. government could also increase infrastructure spending by expanding the Build America Bonds program, which was created by the stimulus, he said.

Under the program, bond issuers may sell taxable bonds and use proceeds to finance public works projects eligible for tax-exempt bond funding. The U.S. government pays BAB issuers a cash subsidy equal to 35 percent of the interest cost.

One obstacle to expanding the BAB program is skepticism among some in Congress that more of the debt should be put out to market, Simonson said. But the program also has supporters.

"There may be momentum to expand that program," Simonson said, noting initial healthy demand for BABs, including California's bigger-than-expected sale last month of $6.85 billion worth of taxable general obligation debt that included more than $5 billion of Building America Bonds.

The conditions are ripe for building, Simonson noted, as labor along with building materials currently cost far less than in recent years

"This is a rare time," he said of the low prices.

Also unusual is the spike in construction companies wanting to take on work for the U.S. government, as they are usually reluctant to sign the contracts, which involve complex federal rules and regulation.

"Far more contractors than ever before are chasing those dollars," Simonson said.

(Reporting by Lisa Lambert, Michael Connor, Joan Gralla and Karen Pierog; additional reporting by Jim Christie in New York; Editing by Kenneth Barry)