Construction employment



HRVR presents projected construction job numbers, and consequent benefits, using the following statements:

"Construction jobs: 1,364" (HRVR website, Economics page)
"Over 1,300 jobs during construction" (HRVR website, former DEIS page)
"Employment: 1,305 FTE-Yrs; Gross income: $49.2 million; Disposable Income: 40.8 million; Expenditures by Construction Employees: 31.8 million" (preliminary FEIS Table III.A.1)

This information differs from the usual understanding of a 'job' in three ways:

  1. 'FTE years' are equated to 'jobs'.  A Full-Time-Equivalent year is about 2,000 hours of work (50 weeks at 40 hours per week), sometimes adjusted depending on the job classification.  This work may be done by one person or by many.  Only if it is all done by one person, and within one year, is it equivalent to a full-time job.  A two-person team that cuts down trees for 6 months represents 1 FTE year, but they still have to look for work for the other 6 months. 

  2. Work that extends over multiple years is counted as multiple jobs, one for each year of work.  Since the project is expected to involve 10 years of construction, the average number of jobs at any time will be about 130, somewhat higher (261) during the first 2 years of commercial construction and somewhat lower (105) during the remaining 8 years (without explanation, the FEIS says 5 years, which would result in an average 157 jobs per year) when residences are being built.  While construction workers may be accustomed to this definition of a fixed-term 'job', the general public could easily get the mistaken impression that the work would employ 1300 people for the full 10 years, which is not the case.  It seems unlikely that someone who hangs sheetrock, after working for 9 years on the project, would describe themselves as having had 9 jobs.

  3. HRVR generally leaves the reader to assume that all of the created jobs will be local, which they define as being within 50 miles of the project.  Historically, however, a substantial percentage of the jobs will likely be farther away and will provide little in the way of local benefit.  Why?  The method used to calculate the number of jobs is based on statistics from the federal government, which considers that jobs far from a construction site are just as important as those nearby.  Because many of the claimed jobs will not be local, the amount of money flowing into the local economy will be significantly less than HRVR has stated.  Using reasonable assumptions (details below), about 50% of the claimed jobs and worker expenditure will be outside the local area, i.e. the numbers presented by HRVR are about double what is supported by analysis.  HRVR partially acknowledges this with the statement, on one page of their 7,650-page DEIS, that "It should be noted that the economic impacts will reach beyond the Town of Rosendale, as consultants and laborers are drawn from nearby communities, and construction materials and pre-fabricated components may come from greater distances still."

It would be more factual to say that over the 10 year buildout of the project, an average of 65 people will be working on the project in the local area (50 mile radius) on a given day, with the number being higher during the first two years and lower during the remaining years.


In the FEIS, HRVR has not provided a complete replacement for the detail originally available in the DEIS, but included only the material that changed, so the inputs in the following discussion are from a mix of the two documents.  The source of each number is identified.

Appendix I.1 of the HRVR DEIS contains a Fiscal Impact Analysis.  Section IV of that Appendix addresses Economics Impact and subsection A. deals with 'Short Term Impacts (Construction Phase)'.

The analysis is "based on the methods of Burchell & Listokin, 1994."  A footnote indicates that this is a reference to two books:

The analysis consists of several steps:

  1. The market value of the finished development is estimated.  For residential housing, the market value is estimated to be $400 per square foot.  HRVR plans a total of 344,250 square feet of housing; multiplying this by $400 results in a total residential market value of $137,700,000.

    For commercial construction (hotel, spa, etc.) the market value is estimated differently:

    Adding these up provides a total commercial market value of $62,900,000.

  2. Next, the 'contract value' of the project is determined by multiplying the market value by a percentage representing the amount a developer would typically pay to obtain each dollar of resulting market value. (If the developer paid full market value, there would be no profit and nothing would be built).

    For residential construction statistics, HRVR went to data from the National Association of Homebuilders.  The average sale price for a new home, and therefore its market value, is stated to be $373,349 (in 2009), while the average construction cost is stated to be $235,567.  Dividing the latter by the former results in a ratio of .63, i.e. 63% of the price of a new residence is construction cost or 'contract value' paid by the developer.  This does not incorporate HRVR's assertion that proximity to their spa will increase the market value of their homes well above average, without an equivalent increase in construction cost.  Doing so would have the effect of reducing all subsequent numbers.  Multiplying the $137,700,000 residential market value from Step 1 by .63 results in a residential contract value of $86,751,000.

    For commercial construction, HRVR arrives at a construction cost ratio of .92, i.e. 92% of the market price is contract value.  HRVR does not provide detail on how the .92 figure was obtained.  Multiplying the $62,900,000 commercial market value from Step 1 by .92 results in a commercial contract value of $57,868,000.

  3. The US Bureau of Labor Statistics (BLS) had compiled, based on survey data, a breakdown of how many employee hours of work were obtained for each $1000 spent on residential construction.  The resulting report, apparently from 1972, has not been found, although several others, from the early 1980s and addressing various non-residential construction, are available (see References). HRVR apparently used the same residential data for the commercial construction component of their project, although their source book separately lists values for hotel construction.  This data was divided into 5 classes of employment.

    For each employment class, the statistics showed how many hours of work were obtained for each $1000 spent and also what percentage of the total work was done by that class.  HRVR shows that in 1993, the year the Development Impact Assessment Handbook was being written, $1000 of construction expense would buy 26.8 hours of labor.  HRVR correctly states that the BLS no longer collects this data and attributes the data they use to 1993 when the Burchell & Listokin book was published, but BLS documents state that the program was discontinued in 1983, ten years earlier.  Actual 1983 data is not available on the BLS website, so HRVR took their data from the 1994 Burchell & Listokin book, Exhibit 7.1.  B&L, in turn, used 1980 data which they "adjusted for changes in construction cost and productivity".  Of course, due to inflation, the number of hours of work that is required per $1000 of contract value has changed since 1993.  To address this, HRVR used Consumer Price Index data to adjust the numbers from 1993 to equivalent 2009 values.  The BLS provides an inflation calculator for just this purpose.  This resulted in an adjusted value of 18.05 hours of labor obtained for each $1000 of contract value in 2009, divided unequally among the 5 employment classes.  Here's Table 15a from HRVR's DEIS Appendix I.1 showing the result:

    Table 15a: Total number of Labor Hours per $1000 Contract Value, 2009 dollars
    Employment class Hours per $1000 (1993) Percent of Total Hours Hours per $1000 (2009)
    Construction on site 9.2 34% 6.20
    Construction off site 1.5 6% 1.01
    Manufacturing 7.8 29% 5.25
    Transportation 5.7 21% 3.84
    Other 2.6 10% 1.75
    TOTAL HOURS 26.80 100% 18.05

    Note that this table makes no distinction between residential and commercial construction. 

  4. To determine the number of hours of work created in each employment class, the 2009 hours-per-$1000 number is multiplied by the contract value from Step 1.  Note that since the first number already incorporates the Percent of Total Hours from Table 15a, the hours of work are distributed in the same percentages.  For example, on site residential construction represents 6.2 hours * ($86,751,000 / $1000) = 537,856 (HRVR somehow gets 537,461) total hours of on site work, 34% of the residential total.  Similarly, on site commercial construction, using its own contract value, represents 6.2 hours * ($57,868,000 / $1000) = 358,781 (again, HRVR's DEIS gets a slightly different 358,518) total hours of on site work, 34% of the total hours for that type of construction.

  5. The number of hours of work for each employment class is then converted to a Full-Time-Equivalent job by dividing by 2000 hours, which represents 50 weeks of 40-hour-per-week work.  HRVR adds the results from all 5 employment classes to arrive at a total of 522 FTE years for commercial construction plus 783 FTE years for residential construction, giving a grand total of 1,305 FTE years for the project.

But where will these jobs be?  HRVR has already acknowledged that "economic impacts will reach beyond the Town of Rosendale", which is another way of saying that some portion of the total economic impact will not be within Rosendale.  To determine what portion will have local economic impact, it is first necessary to define 'local'.  In the FEIS, HRVR defines 'local' as being within a 50 mile radius of the project (FEIS p. 470).  You may define it differently.  For this analysis, to be conservative, 'local' has been defined as 'within the Town of Rosendale'.  To see how many jobs would be local, it is necessary to examine the 5 employment classes, estimating what percentage of each is likely to be local as it has been defined above.

By this analysis, about half of the FTE years announced by HRVR are likely to be local, and as a consequence the amount of additional money spent by workers in the local economy is also likely to be about half of what HRVR projects.  Based on this exercise, that amounts to $15,900,000 over the course of the 10-year project, or an average of $1,590,000 per year.


References not used (but perhaps useful elsewhere)

Last updated 19 Jun 2014.

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