Companies across the U.S. have felt the immediate impact of the COVID-19 pandemic in devastating ways. Many companies in some industries have come to a complete and total shutdown, displacing more than 40 million Americans from their jobs since March 2020.1 One in four Americans have filed for unemployment since mid-March.2
Other industries such as the health care and medical research fields have seen excessive stress placed on resources and equipment, as well as a significant impact on the personal lives of the professionals who administer these services. These are truly unprecedented times that were unforeseen just six months ago.
The government has tried to do its part to care for the unemployed, the small businesses, and even some large industries that have been most noticeably impacted by the government directed shutdowns and forced isolation. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) has gone a long way to help move toward recovery, but it is not enough and cannot be the end of the support to corporations across this country.
Essential Services
Caught in the middle ground and omitted from these often-discussed areas of our society are the essential operations that have been asked to remain working during this pandemic. These industries traditionally provide food, basic human necessities, or some service that our government has deemed critical to the well-being of our citizens or to contribute to the economy in some way that prevents a total collapse of our infrastructure.
Many construction industry sectors are essential in many states across the country and have continued to provide services to both private owners and government agencies alike. They have done so while adapting and adhering to a continuously updated and changing set of recommendations from health, state, and federal government officials.
During this time of essential operation, much of the construction workforce continues to receive their paychecks and contribute to their pensions and health funds (rather than drawing from them), and projects are being completed per the schedule. These are all positives for the economy; however, the unintended consequence of being deemed essential and working under these new mandates has fallen directly at the feet of the corporations that employ this workforce.
Most of these construction companies work on fixed price contracts and have limited (if any) financial relief per the terms of their owner agreements. So, the added costs and inefficiencies of being an essential business are directly taken from the corporate profits. Without financial aid from the government, this industry will also suffer from the impact of this pandemic, but it will look different than the earlier impact that the legislative branch has tried to mitigate.
It could be months or, in some cases, a few years from the start of this pandemic until construction companies experience failure because they have no clear channel for equitable adjustment and have been contractually mandated to continue operations. The new normal resulting from the health and social modifications during this pandemic is being shown early in the construction industry, and Congress should take note as to what the potential financial or profitability ripple looks like as we start to reopen America.