Issues & AdvocacyGet Involved

The 800-Pound Gorilla That Neither Presidential Campaign Will Face

AIA Analysis Identifies Almost 50 Separate Federal Budget Accounts Targeted by “Sequestration”

You may think that you heard it all in all three of the three presidential debates, but think again. There’s been an 800-pound gorilla in the room that so far neither presidential campaign has been willing to confront head-on.

That gorilla has come to be known as the “Fiscal Cliff,” it may mean bad news just at a time when we’re seeing a rebound in the commercial and residential construction industry.

According to a recent report issued by my professional association, the American Institute of Architects, the design and construction industry, which is still reeling from the 2008 real estate crash, could face another $2 billion in lost work if Congress and the White House fail to reach agreement on a federal budget in time to avoid massive mandatory federal spending cuts on January 2. Read the full report here.

The Budget Control Act of 2011 requires some $1.2 trillion in spending cuts absent an agreement by Congress and the White House to reduce the federal deficit by other means. As of August 2012, numerous agencies across all three branches of government accounted for a seasonally adjusted annual rate of federal construction put in place of $25.2 billion, according to the U.S. Census Bureau.

In July, a study by the George Mason University Center for Regional Analysis found that the total employment impact of budget cuts on federal personnel in architecture and engineering occupations at 61,483. However, this number does not include the job losses incurred by government contractors or construction workers, which could possibly boost that number significantly higher.

The AIA analysis uses a 2007 Center for Regional Analysis study to further pin point job losses in the sector. According to that study, every $1 billion spent on design and construction yields 28,500 full-time jobs. Under that formula, as many as 66,500 full-time positions could be lost in a sector that accounts for roughly 11 percent of the nation’s economy.

For a closer look at how some key government design and construction budgets could be slashed, see the accompanying chart:

This situation is simply untenable. As an architect and as a member of the AIA, we recognize that spending must be cut to some extent. But cutting spending on needed building repair work ends up costing more in the long run, and this is especially true in our local communities.

At a time when both political parties are campaigning on being the best at creating jobs, both are risking the jobs of millions of Americans by placing ideology above governing. The design and construction industry is a significant portion of the national economy, and we urge both sides to put aside their political differences and come up with a budget that keeps people working, especially if they are working on a national infrastructure befitting of the 21st century.

Joe Smith is Executive Director of AIA-Minnesota