Extending the First-Time Home Buyer Credit, five-year carryback of net operating losses will boost construction, add jobs, support economic recovery

More than any other sector of the economy, construction workers have borne the brunt of job losses.  Over the last year alone, more than one million construction workers have lost their job.  These losses have been fairly widespread, with new federal data out earlier this week indicating that every state except Louisiana lost construction jobs during the past twelve months.  While other parts of the economy may be showing early signs of a recovery, there is little reason to believe the construction industry is approaching a turnaround.

Office, retail and condo vacancy rates are projected to increase, demand for manufacturing facilities remains in free-fall, and public investments in construction will continue to be undermined by declining state and local revenue.  This of course is a problem for construction workers and companies.  But with construction spending at 8 percent of U.S. gross domestic product and construction accounting for one out of every 10 manufacturing shipments in this country, the construction depression is prolonging our national recession.

The point is, you can’t fix the economy and high unemployment without fixing the construction industry.  Fortunately, Congress has a unique opportunity to do just that by voting to extend the first-time homebuyer tax credit and the five-year carrbyback of net operating losses.  Combined, these two measures will boost economic activity, drive demand for construction and, most important, put Americans back to work.

Extending the first-time home buyer credit for an additional twelve months will encourage new residential construction, stimulate nearby infrastructure, commercial and retail development and boost tax revenue.  Expanding the carryback provision to cover net operating losses in 2009 and 2010 for all businesses, meanwhile, will allow cash-strapped construction firms to convert future tax benefits into cash today to expand payrolls, retain workers and invest in equipment.

With unemployment continuing to rise, there’s no time to wait.  Congress should insert language extending the two tax measures in legislation extending unemployment benefits scheduled for a Senate vote as early as today.  As we note in our construction industry recovery plan, “Rebuild Now for the Future: A Blueprint for Economic Growth,” both measures are crucial for stimulating private sector construction activity that accounts for up to 70 percent of annual construction activity.   

With a single vote, senators can give unemployed construction workers a better chance to find work, feed their families and contribute to our economic recovery.