Construction, specifically new builds (housing and commercial) are leading indicators of the economy. As of February 2020, there were about 125,000 Minnesotan workers employed in construction, representing a little over 4% of the total state workforce. Construction as a whole contributed a whopping 11.3 billion dollars to the MN GDP in 2018 (the most recent data available). While there are technically over 16,000 companies which employ construction workers, many are self-employed, independent contractors without permanent employment, meaning they are responsible for obtaining their own health care and insurance.
The most recent wage data from the Dept. of Economic Development shows that the average hourly wage for all construction in Minnesota was about $34 as of Q3 2019. While this number has surely dropped given the pandemic, it does tell us that construction provides an important pathway to the middle class. What does this tell us about the upcoming economy?
Since construction, in all varieties, was declared “essential” by Governor Walz, some construction workers have been able to continue current building projects. Given that the economy has abruptly come to a screeching halt, the data has not come in yet to show whether construction projects, like new housing starts, will continue to sustain. In the meantime, it is vital that construction workers are protected from sudden unemployment.
The latest stimulus bill, the CARES Act, contained a block of money, $349 billion, for the Paycheck Protection Program. This program would help small businesses, as well as sole proprietors and freelancers, by providing forgivable loans for small businesses to help keep them afloat. While there are many nuances as to what qualifies for forgiveness, most small business will be able to benefit greatly from this program. Courtney Ernston, a construction attorney with Minnesota Construction Law Services PLLC, has been following this development closely, as it potentially provides a lifeline to many of her clients.
Unfortunately, there has been a problem. A big problem, for Courtney and her clients –
“None of the banks that I have heard about are accepting applications for these loans. All the big banks, like Chase, Bank of America, they’re all saying no. Some of the websites are even down. Many other banks are projecting a mid-next week open date, but many are limiting it to existing customers only.”
So what is the hold up? Time is of the essence for many workers in this industry. Well, the source of confusion is from the law itself, and the poor guidance offered by the U.S. Treasury Dept. Evidently, the Small Business Administration (SBA) and the Treasury department have been making revisions to the Paycheck Protection Program, causing confusion among the banks trying to facilitate the program. For example, the interest rate on these loans was set at 4% in the CARES act, but then changed by the Trump administration to 0.5%, and then as recently as yesterday, it was raised to 1% to help mollify banks who complained that they are taking a huge risk with no reward. Further obfuscating the issue is the ambiguous language in the Act regarding eligibility requirements and the information applications must provide in order to be approved for the loan.
Certainly law makers were under enormous pressure to complete the CARES act expeditiously, but in doing so they may have cost small businesses and independent contractors precious time. The Trump administration and the Treasury department, led by Secretary Mnuchin, do not appear to be on the same page. Conflicting guidance between the two have only exacerbated the confusion and created widespread frustration. Effective policy must be well written, precisely communicated, and sustained by consistent messaging and guidance. The fumbled program roll-out is symptomatic of the larger inefficiency of the Trump administration to lead in the crisis response. We must hope that smoother roads lie ahead.
Reason For The Unreasonable 
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